On Tuesday morning, very early DC time, there was a conference call between America’s Ben Bernanke, France’s Jean-Claude Trichet, the UK’s Mervyn King, Canada’s Mark Carney and Japan’s Toshihiko Fukui. The five policymakers decided on the interest rate cut and the language of the statement to be circulated around the world the following day.

A US Federal Reserve meeting (by videoconference) at 5.30pm that evening approved the decision. The scene was set.

The ball had been set rolling, however, last weekend in a series of hastily convened conversations between policymakers around the world. US government officials had been in almost continuous communication with their counterparts in Europe over the still intensifying financial crisis. Having spent the previous two weeks battling Congress over the bank bailout plan, US officials watched with mounting dismay as European governments seemed to be going through a similar period of potentially destabilising political indecision as they wrangled over plans to support their banks.

On Tuesday morning, President Bush spoke to Gordon Brown, Nicolas Sarkozy and Silvio Berlusconi, and urged them to do more to deal with the crisis.

One prominent concern was whether central banks were ready to do more and specifically whether they might, for the first time in seven years, come to the aid of the global economy with a co-ordinated interest rate cut.

As it happened, central bankers were already moving in the same direction. Like their political colleagues, they had been holding telephone conversations with one another as conditions deteriorated over the week.

On Monday morning the hyperactive Fed was already preparing new moves on multiple fronts. It was set to announce a huge injection of liquidity into the banking system. On Tuesday it would commit to lending directly to the non-financial commercial sector for the first time since the Great Depression.

But there was still uncertainty about interest rate cuts, and the question was whether the Fed should wait until its next regularly scheduled meeting on October 28. Given that opposition in Europe seemed to be softening, the case for going for a co-ordinated, early cut, and getting more bang for the buck, was powerful.

On Tuesday afternoon, Ben Bernanke signalled a US rate cut was imminent when he spoke to the annual meeting of the National Association for Business Economics. This weekend’s G7 meeting between central bank governors and finance ministers might provide an ideal forum to agree a global rate cut.

But central bankers, jealously protective of their independence, did not want to be seen as responding to the political pressure from the finance ministers that would inevitably surface. Better, it was agreed to do it before that meeting.

Hours after Mr Bernanke’s speech, after more conversations with his central banking counterparts, the Fed chairman convened an emergency meeting of the policymaking open-market committee. The language was agreed and the interest rate die was cast.

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