The Federal Reserve cut interest rates by half a percentage point yesterday to 1 per cent and announced that it would lend $120bn to four key emerging economies, underscoring the increasingly global nature of the credit crisis.

The US central bank said it would lend $30bn each to central banks in Brazil, Mexico, South Korea and Singapore via currency swaps. The four central banks receiving the dollars will lend them on to local banks to meet demand for US currency.