Here's an interesting graph from the Bank of Canada's Monetary Policy Report:
Yes, yes, I know; it's almost impossible to tell the difference between the UK and Canada in that graph, but if you look at the original document and zoom in to 200% of the original size, you can (just barely) conclude that the UK series is the one that has the second-highest spread as of April 2008. Someone at the graphics department of the BoC deserves a scolding.
Anyway, here is a summary of what the the four central banks in that graph have faced since mid-July, and how they've responded:
- The US: The spread increased by 175-200 bps since July. The Federal funds rate has decreased by 300 bps.
- The euro zone: The spread increased by 125 bps. The ECB hasn't changed its interest rates.
- The UK: The spread increased by 175 bps. The Bank of England reduced interest rates by 75 bps.
- Canada: The spread increased by 125 bps. After increasing its overnight target by 25 bps on July 10, the Bank of Canada has reduced interest rates by 150 bps.