The United States is expected to cut interest rates on Wednesday, a measure Japan, the European Central Bank and Britain are forecast to follow by the end of next week to bolster economies facing recession.
While dispensing with a repeat of the coordinated cuts made earlier this month, authorities fear the worst financial crisis in 80 years will usher in a long recession and are looking to individual rate reductions to soften the blow.
Hungary became the latest country to seek finance from global lenders, agreeing a rescue package worth $25.1 billion to to shore up its currency and markets.
Main lender, the International Monetary Fund, said if the crisis was prolonged and many more countries came calling for help, it would need more money.
The Federal Reserve is widely expected to cut U.S. rates by at least half a point to 1 percent, the lowest level since June 2004.
Norway's central bank was also seen reducing rates by 50 basis points to 4.75 percent on Wednesday.
"The picture is now so depressing that Norges Bank has to do whatever it can to decrease rates … as quickly as possible," said Inge Furre, economist at Sparebanken Moere.
The Bank of Japan will consider cutting rates at a policy meeting on Friday but will watch market conditions before deciding, a source with knowledge of the matter told Reuters.
Bets on a quarter-point cut to 0.25 percent reversed the recent surge in the yen, which has hurt exporters and helped force Japanese shares lower.
COOPERATION
A cut by the world's second biggest economy would "send a message to the world that Japan is cooperating with other nations in tackling the financial crisis", said Koichi Haji, chief economist at NLI Research Institute in Tokyo.
The European Central Bank and the Bank of England are expected to follow suit at their regular meetings next week.
An executive board member of the European Central Bank said growth in the euro zone would be lower than expected.
"Confidence will not return until we stop to think about the measures which have been taken and we can see financial institutions resuming their normal activity," Jose Manuel Gonzalez Paramo said in a newspaper interview.
Stock markets firmed on the expected rate cuts. Japan's Nikkei ended up 7.7 percent after the Dow Jones industrial average and S&P 500 indexes recorded their second-biggest points gains ever on Tuesday.
European shares climbed 3.2 percent.
But analysts said the market recovery would be short-lived.
"Given the severe recession into which the global economy is slipping, it is likely that we have not seen the bottom of the stock market yet, and this week's recovery presents a good opportunity to sell," said Dariusz Kowalczyk, chief investment strategist with CFC Seymour in Hong Kong.
BAIL OUTS
Governments have pledged about $4 trillion to support banks and restart money markets to try to stem the crisis set off by the bursting of a U.S. housing market bubble.
But as credit lines have dried up, a growing number of governments have had to look for help from global lenders.
The IMF, European Union and World Bank agreed to a $25.1 billion economic rescue package for Hungary.
"The Hungarian authorities have developed a comprehensive policy package that will bolster the economy's near-term stability and improve its long-term growth potential," IMF Managing Director Dominique Strauss-Kahn said in a statement.
Ukraine, which has been offered $16.5 billion by the IMF, was told to pass legislation through its fragmented parliament or risk no loan, higher inflation and a default on its debts.
"I spoke yesterday with the IMF. Its examination of the question of extending credits to Ukraine depends on the actions of Ukraine's parliament," parliament's chairman, Arseniy Yatsenyuk, told the chamber.
Central bank chairman Volodymyr Stelmakh said failure to secure the loan would lead to "double-digit inflation … as well as moral discredit and declaring default".
In neighbouring Belarus, run largely along command-economy lines, the deputy central bank head said the country was optimistic about agreeing a $2 billion IMF loan, and was ready to liberalise its economic policies.
"Our macro goal is for this credit not to be used at all. In the current situation we don't need this money … But we don't know how deep is the global crisis," Vasily Matyushevsky said.
Pakistan's central bank governor said it was in no danger of defaulting on its debt and was still considering whether to expand on technical help with the IMF.
The Fund has already agreed a $2.1 billion loan to Iceland, where the financial system has all but collapsed. It raised interest rates by 6 percentage points to 18 percent to try to defend its currency, part of a deal struck with the IMF.
The Fund said a prolonged crisis could mean it would need more resources.
"It is worth thinking that if the problems continue to grow that we might think about whether we would need additional resources and we will be discussing with our members that possibility," IMF First Deputy Managing Director John Lipsky told CNBC.
