updated 10/7/2008 12:42:33 PM ET 2008-10-07T16:42:33

Hopes for a coordinated interest rate cut among the world's major economies to ease a global credit crunch have been anything but in sync the last couple days in Asia.

While the Reserve Bank of Australia cheered regional markets Tuesday by lowering its main rate by a whopping 1 percentage point, the Bank of Japan kept monetary policy on hold and reiterated that it would act independently.

India's central bank reversed months of monetary tightening late Monday as concerns about liquidity take precedence over the bank's long battle against double-digit inflation.

And in Indonesia, authorities went the opposite direction — raising a key interest rate a quarter point Tuesday, opting to tackle rising inflation and brushing off concerns about the global financial crisis.

Indeed, the region has produced a bag of mixed messages amid growing speculation that financial officials from the Group of Seven countries may propose a coordinated, emergency policy move during their meeting later this week.

Investors believe a rate cut will help revive credit markets that have been stagnant for weeks. The markets seized up after the failure of Lehman Brothers Holdings Inc., and banks have been reluctant to lend to most customers, including other banks, fearing they won't be repaid.

Australia's rate cut to 6 percent — its biggest since 1992 — spurred recoveries in several regional equity markets, sparking expectations that other central banks in the region would follow suit.

RBA Gov. Glenn Stevens said in a statement that the central bank had judged that a large reduction in the cash rate was needed after studying the outlook for global growth and its likely effect on Australia.

"I suspect we'll be seeing other rate cuts before too long from other central banks," David Cohen, head of Asian economic forecasting at Action Economics in Singapore.

But comments later in the day by Bank of Japan Gov. Masaaki Shirakawa threw cold water on that notion.

"It is not desirable to undertake policy coordination that would involve measures inappropriate for each country's economic and price situation," Shirakawa said after the central bank kept its uncollateralized overnight call rate at 0.5 percent.

Rather, central banks can respond most effectively by boosting liquidity, he said. Earlier Tuesday, the Bank of Japan injected another 1 trillion yen ($9.9 billion) into the money market to foster smoother lending among banks.

Despite heightened anxiety about the financial meltdown spreading from Wall Street to Europe and beyond, Shirakawa projected calm, voicing muted concerns about the crisis' potential impact on the world's second-largest economy.

Masamichi Adachi, senior economist at JPMorgan Securities in Tokyo, said he was surprised that there was no major shift in the central bank's economic outlook or assessment of prices.

"The BOJ has no intention to cut its current low 0.5 percent policy rate, even after observing the crisis in the international financial markets and deteriorated economic indicators," Adachi said in a report.

Other analysts said that any cut was unlikely because it left the BOJ with little ammunition for the future.

Rate cuts expected in Europe
In Europe, the Bank of England is expected to lower its benchmark rate from 5 percent on Thursday.

The European Central Bank left rates unchanged at the regular monthly meeting of its governing council last Thursday, but a somber assessment of the euro zone economic growth by bank President Jean-Claude Trichet has analysts predicting a rate cut is coming soon.

The British Chambers of Commerce's quarterly survey of 5,000 businesses reported on Tuesday that Britain's economy will shrink in the third quarter for the first time in 15 years.

The Fed, while not giving the market a rate cut that many traders have been clamoring for, has taken other steps to help unclog the credit markets. On Tuesday, policymakers provided more details about when it will make $900 billion in short-term loans available to squeezed banks.

With inflation concerns still lingering, Asian central banks are in a tricky position, but many seem to be adopting a more accommodative posture.

Worldwide turmoilThe Philippine central bank on Monday kept rates on hold at 6 percent, ending a series of increases since June.

South Korea's central bank, which raised rates in August to rein in inflation, is expected to leave its key interest rate unchanged at a regular policy meeting Thursday.

The Reserve Bank of India announced Monday night that it would cut the cash reserve ratio — the amount of cash banks have to keep on hand — by 50 basis points to 8.5 percent, releasing 200 billion rupees (US$4.5 billion) of funds into circulation.

The bank said the measure was a temporary, ad-hoc response to global financial pressures.

Indonesia's central bank, however, raised its key interest rate by a quarter point to 9.5 percent Tuesday, hoping the move would help bring down inflation, which had risen to a 2-year high of 12 percent, and stabilize the local currency, the rupiah, which fell sharply Monday against the dollar.

Budiono, the central bank governor, who like many Indonesians goes by one name, downplayed the potential effect of the financial crisis on his country.

"The center of this crisis is from abroad, we are getting its wave, which in my opinion, will have limited impact," he said.

© 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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