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Strategies & Market Trends : ahhaha's ahs -- Ignore unavailable to you. Want to Upgrade?

To: ahhaha who wrote (5672)	11/27/2002 1:25:14 PM
From: ahhaha	Read Replies (2) \| Respond to of 24758

This quite an important, but small, item. ECB Worried Inflation Hasn't Slowed With Economy - Report Wednesday November 27, 5:35 am ET FRANKFURT -(Dow Jones)- The European Central Bank is concerned that inflation in the euro zone hasn't slowed as much as growth has this year, Chief Economist and Executive Board member Otmar Issing said in a newspaper interview. "It is, in effect, one of our worries that in the context of a slowdown in real activity, inflation hasn't declined in the same fashion," Issing was quoted as saying in Wednesday's edition of French daily Le Figaro. This points to a "big inertia" in euro-zone consumer prices, he added. In October, Eurostat reported a euro-zone inflation rate of 2.3%, above the ECB's targeted 2% ceiling. And core inflation, meanwhile, has proved even more troublesome. "The fact is inflation, excluding energy and unprocessed food prices, stayed at 2.6% for six months, then 2.5% for three months and is now at 2.4%. This shows that there are many rigidities, and notably in wages, which is reflected in service prices that are rising more quickly than they should in an environment of slowing growth," Issing pointed out. The ECB's Governing Council meets Dec. 5, and expectations have snowballed that it will cut the 3.25% minimum bid rate. When asked about the gap between interest rates in the euro zone and U.S., where the key lending rate is 200 basis points lower, Issing said this poses no problem for monetary policy. While interest-rate differentials may be something investors must take into account, "for a central bank this gap in rates can't be an objective or an element of decisionmaking. The Fed evaluates the American economy's situation, the ECB does the same for the euro zone and we react accordingly," Issing said. The FED has a negative real interest rate of 2.5% while Europe, as inefficient as it may be, has a real rate of 1%. This has negative consequence for the dollar vs the Euro whatever bad economic policies EC countries amy be putting in place.