The US Federal Reserve could be poised to cut interest rates by a quarter of a percentage point in the wake of the Lehman collapse.

The futures market was today pricing in an 86% chance of an emergency cut as other central banks pumped extra liquidity into money markets.

The European Central Bank said it offered €30 billion (£23.8 billion) of one-day liquidity while the Bank of England pumped in
£5 billion of emergency funding, and said it was “monitoring the situation very closely”.

British Bankers' Association chief executive Angela Knight said Lehman's collapse should not set off panic-mongering in the UK. “The British banking system is safe and sound,” she declared.

Barclays today joined nine other lenders in a bid to bolster global liquidity. Barclays, Bank of America, Citigroup, Credit Suisse, Deutsche, Goldman Sachs, JPMorgan Chase, Merrill Lynch, Morgan Stanley and UBS are committed to establish a $70 billion (£39.1 billion) borrowing facility.

Each bank will plough in $7 billion, and any one of the 10 banks can borrow up to a third of the total facility, the banks said in a joint statement.

The financing may grow “as other banks are permitted to join,” they added.