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Pastimes : Clown-Free Zone... sorry, no clowns allowed -- Ignore unavailable to you. Want to Upgrade?

To: NOW who wrote (97119)	4/21/2001 7:58:24 PM
From: patron_anejo_por_favor	Read Replies (5) \| Respond to of 436258

Duisenberg blasts Fed (and O'Neill) again today: quote.bloomberg.com 04/21 14:58 ECB's Duisenberg Defends Refusal to Reduce Rates (Update3) By James G. Neuger Malmoe, Sweden, April 21 (Bloomberg) -- European Central Bank President Wim Duisenberg defended his refusal to cut interest rates, saying the European economy may grow 2.7 percent in 2001 and will suffer only ``limited'' damage from the U.S. slowdown. ``We are confident that we are weathering this storm,'' Duisenberg said after a meeting of European Union finance officials. Europe is set for only a ``slight'' reduction in the growth forecast since the impact of flagging U.S. demand is ``not negligible but very limited indeed.'' Duisenberg's comments suggest the central bank will hold its main rate steady at 4.75 percent next Thursday, setting up a confrontation with U.S. policy makers when Group of Seven finance officials gather in Washington two days later. Alone among the world's major central banks, the ECB has refused to cut rates as inflation has exceeded its target for 10 straight months. The U.S. Federal Reserve on Wednesday reduced its rates for the fourth time this year, taking its overnight rate to 4.5 percent, below the main ECB rate for the first time. Duisenberg's bullish outlook rules out a reduction ``in the medium term,'' said Javier Perez de Azpillaga, an economist at Goldman Sachs in London. ``Certainly not this week.'' Asked by Bloomberg News if 2.7 percent growth is realistic, Duisenberg said: ``I would not take issue with that.'' The 12- nation economy grew 3.4 percent in 2000, the fastest pace in a decade. Duisenberg said growth of at least 2.5 percent is likely in 2002 as well. American `Misconceptions' EU Monetary Commissioner Pedro Solbes called the European Commission's prior estimates of 3.2 percent ``excessive.'' He declined to comment on an unsourced report in Il Sole/24 Ore that new forecasts next Wednesday will revise the prediction to 2.7 percent. Separately, an EU official said the International Monetary Fund next week will cut its growth forecast for the euro nations to 2.4 percent, and for the U.S. to 1.5 percent. Foreshadowing a G-7 clash, Duisenberg said U.S. Treasury Secretary Paul O'Neill fell prey to ``misconceptions'' when he suggested Thursday that Europe isn't playing its part in stoking the global economy. ``There may be some misconceptions on the American side if I at least listen to the comments made by the U.S. secretary of the Treasury,'' Duisenberg said. O'Neill said he was ``mystified'' by Europe's economic optimism. Exports to the U.S. account for 3 percent of euro-zone gross domestic product, the commission said. Duisenberg's wait-and-see policy is supported by figures released yesterday that show euro-zone factories upped production by 0.4 percent in February. The unexpected increase buttressed a claim by Italian Treasury Minister Vincenzo Visco that Europe is ``relatively immune'' to the U.S. investment slump. Following the Money Central bankers also cite the expansion of the money supply, a barometer of future inflation, as a reason to hold off. Money growth stayed at 4.7 percent in February, surpassing the ECB's 4.5 percent target. Inflation risks that ``have lessened but not disappeared'' are the ``overwhelming reason why we decided not to change interest rates at the current juncture,'' Duisenberg said. Bank of France Governor Jean-Claude Trichet said the fight against inflation will contribute to growth by boosting consumer confidence. ``Giving credibility to expectations of a low level of inflation is an element that can lift consumer confidence,'' Trichet said. France has the lowest inflation rate in the region, at 1.4 percent in March. Finance ministers also made a new pledge to cut their budget deficits or widen their surpluses, ruling out extra spending as a way to spur growth. Government efforts to talk up the economy come as business confidence in Germany, France and Italy -- the euro region's top three economies -- hovers close to the lowest level in a year and a half and companies such as Royal Philips Electronics NV of the Netherlands and Siemens AG of Germany cut jobs. Cutting Jobs Philips, Europe's largest consumer-electronics maker, said Tuesday it will probably lose money this quarter and will cut as many as 7,000 jobs, or about 3 percent of its workforce, as demand slows for mobile phones and computers. Siemens, Europe's No. 2 mobile-phone producer, will eliminate 2,000 jobs, or a quarter of those making handsets. After two weeks of hinting that they are getting impatient with the politically independent central bank, finance ministers such as Belgium's Didier Reynders and Germany's Hans Eichel eased the public pressure on Duisenberg. Reynders, who chairs the committee of euro-area ministers, spoke only of the need for ``dialogue'' with the ECB and didn't repeat an April 10 request for the ECB ``to draw its own conclusions'' from the economic slowdown. ``Why should Duisenberg resist non-existent pressure?'' the commission's president, Romano Prodi, said. ``We have not asked Duisenberg to come here to justify or explain.'' The only minister to break with the doctrine was Austria's Karl-Heinz Grasser of the Freedom Party, who called for ``an easing of monetary policy.'' Grasser later told Austrian television that a majority of the ministers pushed Duisenberg to cut, Austria's APA news agency reported. `No Majority' Spanish Finance Minister Rodrigo Rato said there is no such majority, and Duisenberg said that ``I can confirm Rato's statement.'' Ministers sought to quell the speculation swirling over how long Duisenberg will stay on as ECB chief by pledging to stop discussing his retirement in public, Luxembourg Prime and Finance Minister Jean-Claude Juncker said. The term of the ECB president runs for eight years. When appointed in May 1998, Duisenberg bowed to French pressure to retire early. He said he would stay on at least for the introduction of euro notes and coins at the start of 2002. Reynders, who had called on Duisenberg to set a firm departure date, said yesterday that ``the question didn't come up and doesn't come up.'' I think he see's what's coming down the pike with energy prices this summer, and he's making sure the ECB is out of the way.... Got Euro long bonds?