The stewards of the world’s advanced economies have been forced to abandon their moves to tighten monetary policy. They are now rushing to increase global liquidity before the credit squeeze strangles capital markets – and maybe growth too.

The most dramatic reversal has been at the US Federal Reserve, which in September cut interest rates for the first time in more than four years. It was not just the quarter-point increment that has become de rigueur among policymakers. The Fed opted for a hefty half a point – measured to invigorate investors.