Finance Minister Paula Cox has described the current global financial turmoil as a "perfect storm" and says that says Government is looking at ways to help Bermudians protect their income during the downturn.

While she would not discuss tax cuts, she hinted that tax increases were unlikely in a wide-ranging interview with The Royal Gazette.

"There'll be an attempt — notwithstanding difficult times — to see what we can do to assist, using some of the tools within our armoury," Ms Cox said.

"I'm not going to pre-empt budget decisions, but I think that we will certainly be looking at how we can try to assist.

"I think it would be reckless and imprudent to talk now about budget cuts, but what we do want to do is minimise the pain in terms of tax increases."

Meanwhile, Government figures released yesterday show the inflation rate rose to five percent in August, with food prices up 6.5 percent on last year.

There was better news for mortgage holders, as Butterfield Bank cut their base rate by half a percent and later the Bank of Bermuda announced a quarter percent cut. This will translate into lower monthly repayments for borrowers by early next year.

The banks made their move after central banks around the world, including the US Federal Reserve, and its equivalents in the European Union, Britain and Canada, all cut rates by 0.5 percent.

Despite the unprecedented coordinated rate cut, US stocks plunged for a sixth successive day.

The Dow Jones Industrial Average ended a rollercoaster trading session 189 points down, at 9,258, a fall of two percent.

Most of Bermuda's international companies took a battering on the markets, in particular business insurer XL Capital, which lost more than a quarter of its value in a single day. XL's share price fell 27 per cent to close on $8.68, having at one point plunged to its all-time low of $6.22.

Ace Ltd. suffered a ten per cent fall, as did Allied World, while Bermuda-based investment company WP Stewart plunged 15 per cent, as its stock price dipped below $1.

US insurance giant American International Group, which employs 205 people in Bermuda, announced last night that it will receive up to $37.8 billion of extra liquidity from the US Federal Reserve, on top of its $85 billion bailout by the US Government last month.