WASHINGTON – The U.S. central bank today joined with its peers at central banks in Canada, Europe and China in paring their benchmark interest rates. The cut was made “in light of evidence pointing to a weakening of economic activity and a reduction in inflationary pressures,” the Federal Reserve said.

The Fed, the Bank of Canada, the Bank of England, the European Central Bank (ECB), Sweden’s central Sveriges Riksbank and the Swiss National Bank announced their rate cuts in a coordinated statement this morning at 7. “The Bank of Japan expresses its strong support of these policy actions,” the Fed noted in an online statement.

Its policymaking Federal Open Market Committee (FOMC) lowered its benchmark federal funds rate (used for overnight loans between banks) by 0.5 percentage points, to 1.5 percent from the 2 percent level it has maintained since April. (READ MORE). And in a related action, the Fed’s Board of Governors unanimously approved a half-percentage-point reduction in the discount rate (used for direct loans from the central bank), to 1.75 percent from the previous 2.25 percent, a cut requested by the Federal Reserve Bank of Boston.

“Incoming economic data suggest that the pace of economic activity has slowed markedly in recent months,” the FOMC said. “Moreover, the intensification of financial market turmoil is likely to exert additional restraint on spending, partly by further reducing the ability of households and businesses to obtain credit.

“Inflation has been high, but the committee believes that the decline in energy and other commodity prices and the weaker prospects for economic activity have reduced the upside risks to inflation,” the panel added. Going forward, it said, “the committee will monitor economic and financial developments carefully and will act as needed to promote sustainable economic growth and price stability.”

One-half-percentage-point (50-basis-point) cuts in key rates also were made by the ECB (to 3.75 percent) and the central banks of Canada (to 2.5 percent), England (to 4.5 percent) and Sweden (to 4.25 percent), according to Bloomberg News.

Meanwhile, China’s central bank – in a separate announcement – lowered its one-year lending rate 0.27 percentage points to 6.93 percent and pared its one-year deposit rate by the same amount to 3.87 percent, effective tomorrow, in that nation’s second round of rate reductions in the past three weeks.

The rate-cut actions followed global stock-market declines that pared 3.9 percent from the Standard & Poor’s 500 Stock Index on Monday and 5.7 percent yesterday, when the S&P closed at 996.23 points, Bloomberg noted.

“Central banks of the world have finally woken up to the gravity of the current situation,” Charles Diebel, head of European rates strategy at Nomura International Plc in London, wrote in a note to investors this morning, according to Bloomberg News. But, he added, “it is potentially not the last we will see of central bank activity – particularly in Europe – as the macro situation is still weakening dramatically”

Information about the Federal Reserve System, U.S. monetary policy and today’s action of the Federal Open Market Committee is available at www.FederalReserve.gov. Additional information about the administration’s efforts to stabilize the financial markets is available from the U.S. Treasury Department at www.treas.gov.