Sweden and newzeland makes dramatic rate cut

Sweden cut interest rates by a record 175 basis points on Thursday, prompting speculation of dramatic cuts elsewhere in Europe to try to stop a global slump spreading faster than policymakers had anticipated.

Japanese companies slashed spending, showing the economy was in a deeper recession than the government estimated, after U.S. data showed private sector employers axed jobs at the fastest pace in seven years.

"With indicators pointing to an intensifying global adjustment in employment and business spending, our forecast of the deepest four-quarter GDP slide in the developed world since World War Two appears to be on track," JPMorgan economists said.

In a deeper than expected cut, Sweden's central bank chopped its key interest rate by a record 175 basis points to 2.0 percent to prevent the economy sliding further into recession.

The Riksbank said it expected rates to remain at that level over the coming year. There was an "unexpectedly rapid and clear deterioration in economic activity since October," it said.

The Reserve Bank of New Zealand sliced interest rates by a record 150 basis points to a five-year low of 5.0 percent and said it would probably have to cut rates again.

Indonesia also made a surprise cut in its key interest rate, by 25 basis points to 9.25 percent, the first since December 2007 as the government sought to protect the economy.

Britain and the European Central Bank were due to announce rate cuts later on Thursday and with Britain heading into recession, the Bank of England could slash rates to their lowest in more than half a century.

A rapid deterioration in business conditions has raised fears Britain could be heading for a much deeper downturn than anybody expected.

"They need to do something aggressive again," said George Buckley, chief UK economist at Deutsche Bank,.

Analysts expect a 50 basis point reduction from the European Central Bank and twice as much from the Bank of England.