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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Les H who wrote (49915)	5/9/2000 10:12:00 AM
From: SBerglowe	Respond to of 99985

Thanks for that link... I really like it.

To: Les H who wrote (49915)	5/9/2000 10:35:00 AM
From: Les H	Respond to of 99985

BUNDESBANK ECONOMIST: DANGER EURO DROP MAY BECOME 'DOWNWARD SPIRAL' BERLIN (MktNews) - The euro's current weak level is a "concern," and there is a "danger" that its decline could turn into a "downward spiral" that would severely harm the euro-zone economy, according to Albrecht Sommer, chief economist of the German regional central bank of Berlin-Brandenburg. The continuing decline of the euro "to an increasing extent presents a burden to price stability" in the euro zone, Sommer said in a statement distributed prior to a press conference by Klaus-Dieter Kuehbacher, Bundesbank council member and president of the Berlin-Brandenburg central bank. Sommer warned that a lasting deviation of euro exchange rates from economic fundamentals could lead to distortions in both investment and consumption decisions. While he argued that specific exchange rates cannot be an immediate goal of the European Central Bank's monetary policy, Sommer noted it does play a role in monetary policy because of its impact on inflation. Despite the inflation risk posed by the weak euro, and assuming that a worst-case scenario for the currency does not occur, Sommer said that "from today's view, there is no necessity (for the ECB) to tighten interest rate policy significantly" beyond the current level. Given the continued moderate outlook for inflation in the medium-term, "it would be wrong to conclude an automaticity to further rate steps" by the ECB. While euro-zone harmonised consumer prices rose 2.1% year-over-year in March, "much speaks in favor" of HICP declining in coming months, he said. Moreover, euro-zone core inflation has been broadly unchanged at about 1% y/y for more than year and the risks of secondary price effects have "clearly declined" following the drop in oil prices from late March and the moderation of wage agreements seen to date, Sommer said. Still, given the strong pickup in the euro-zone economy, producers may have some leeway to raise their prices to compensate for the sharp rise in producer input prices seen in recent months, Sommer warned. "The increases in (ECB) interest rates to date have not yet hampered economic growth in the euro zone," Sommer said, adding that euro-zone growth prospects are "as favourable as they have been in the past 10 years." He noted in particular that EMU industrial production was up 5.5% year-over-year in February and that business sentiment has "clearly firmed." In addition, real short-term rates continue to be "low" by historic standards and the euro's weakness is providing an "expansive stimulus" for foreign trade, he said. >>>Don't think they're that concerned. German exports were up 20% in latest month.