Fed move doesn't herald coordinated rate cuts

By Sumeet Desai

LONDON (Reuters) - Top central banks worked hand in glove to get jammed money markets flowing again, but show no signs of the same teamwork to coordinate a round of global interest rate cuts.

The U.S. Federal Reserve was forced to cut its main lending rate 75 basis points on Tuesday, a week before its scheduled meeting, to shore up confidence and bring itself more in line with where financial markets thought interest rates should be.

The surprise action came after stocks around the globe had tumbled in the last two days as panic and fear over a looming U.S. recession prompted widespread selling whether in Tokyo, Mumbai or London and a feeling that central banks were flailing.

"There was a sense the Fed was behind the curve and they have taken action to address this," said Russell Jones, chief strategist at RBC Capital Markets. "In that sense, it is an admission of defeat, or rather misjudgment."

The Bank of Canada quickly followed the Fed with an expected interest rate cut but the reduction was only a quarter-point, not the 50 basis points that some investors had hoped for.

But other central banks are unlikely to follow suit straight away, creating a disconnect between market perception of economic needs and what the authorities are ready to give.

"Neither the ECB nor the Bank of Japan look ready to change tack," said Jones.

NOT FOR TURNING