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To: Les H who wrote (5514)	2/6/2003 12:05:35 PM
From: Softechie	Respond to of 29597

BoE Watch: Rate Cut Surprises, Worries Markets 06 Feb 11:56 By Gonzalo Vina Of DOW JONES NEWSWIRES LONDON (Dow Jones)--The Bank of England stunned investors and analysts Thursday by cutting interest rates a quarter of a point to 3.75%, the lowest level in almost half a century, and prompting feverish speculation about the causes and consequences of the unexpected move. Market participants quickly wondered whether the U.K. central bank was seeing danger others had missed. The bank's statement saying the move resulted from weaker domestic and international demand didn't dampen the speculation. Others worried that the central bank's move would fan the flames of a booming residential housing market and encourage consumers to take on dangerous levels of debt. With bank officials not commenting, as they traditionally don't after a rate decision, the quarterly inflation report, due Feb. 12, is likely to get close scrutiny for justification of a move virtually no one expected. Such was the surprise of the move that European markets spent 45 minutes reassessing whether the European Central Bank might follow with its own rate cut Thursday. But the ECB held steady, although many thought it had more reason to cut than the MPC. The FTSE-100 got brief help from the monetary easing, but quickly resumed its decline as traders concluded the U.K. easing offered more reason to worry about the economy than to hope the move would stimulate it. After several years refining the art of signaling its intentions to markets, the bank departed from that practice with Thursday's cut. "We feel a little cheated because there was nothing there in the body language suggesting that they would cut," said Geoffrey Dicks, senior economist at the Royal Bank of Scotland. "It's not a surprise that the ECB held steady, but it was certainly surprising that the bank of England chose to cut." Many economists concluded that the easing was a mistake, that itwould do nothing to stimulate the weak manufacturing sector or to shore up slumping share prices, and do everything to further heat up the housing market. "They are playing with fire," wrote HSBC economist John Butler. "Central banks are supposed to help reduce the risks rather than increase them.... The risks of a housing market bubble and rising consumer indebtedness have now been exacerbated." "The Bank of England have probably taken the biggest gamble any central bank has done in years," Butler added. "The manufacturing and investment sectors are unlikely to benefit from this. So the MPC thinking must be that they are still trying to offset this weakness through pushing up the consumer again." One interpretation of the bank's statement is that central bankers fed weaker demand forecasts into its econometric models, and concluded that a cut was needed to make sure inflation doesn't fall below its 2.5% target two years from now. Some of the Monetary Policy Committee members are likely to have opposed the move if minutes of recent policy-meetings are anything to go by. Whatever growth there is in the U.K. economy this year, government spending and consumer demand are likely to be the drivers. Business investment is in a deep slump. A long string of declining prices on the London Stock Exchange has also raised fears that even the consumer leg of economic support might be weakening. But Chief Economist Charlie Bean said last week that the Bank doesn't target asset classes when it sets policy. If the bank isn't trying to shore up share prices and if its easing isn't likely to stimulate investment, what was it trying to accomplish? Economists concluded it was treading a dangerous line by fueling the consumer portion of the economy. "We remain far more concerned about the imbalances in the UK economy than the Bank of England," said Katherine A. Shepperd, an economist at JP Morgan. "It is extremely hard to see that today's decision will helpto unwind these imbalances in a benign way." -By Gonzalo Vina, Dow Jones Newswires; 44 20 7842 9497; gonzalo.vina@dowjones.com. (END) Dow Jones Newswires 02-06-03 1156ET

To: Les H who wrote (5514)	2/7/2003 10:10:39 AM
From: Les H	Read Replies (2) \| Respond to of 29597

daily fed feed bag for Friday Feb 7, 2003 Reverse RP today O/N RP expired today running totals so far total onite multi notes F 02/07 9.500 0.000 9.500 subtracted 2.500 from 2/13 repo H 02/06 20.250 8.250 12.000 W 02/05 23.750 8.750 15.000 T 02/04 19.000 4.000 15.000 M 02/03 18.750 3.750 15.000 F 01/31 20.750 5.750 15.000 H 01/30 19.000 4.000 15.000 W 01/29 17.500 1.500 16.000 T 01/28 19.750 3.750 16.000 M 01/27 20.750 6.750 14.000 F 01/24 18.500 4.500 14.000 H 01/23 21.500 7.500 14.000 W 01/22 36.750 14.500 22.250 T 01/21 38.250 16.000 22.250 M 01/20 MLK holiday F 01/17 22.250 0.000 22.250 H 01/16 25.250 6.000 19.250 W 01/15 30.000 5.750 24.250 T 01/14 24.250 0.000 24.250 M 01/13 23.000 3.000 20.000 F 01/10 21.999 1.999 20.000 H 01/09 27.750 7.750 20.000 W 01/08 33.750 6.250 27.500 T 01/07 27.500 0.000 27.500 M 01/06 27.500 0.000 27.500 F 01/03 24.000 0.000 24.000 H 01/02 38.000 8.000 30.000 T 12/31 39.500 0.000 39.500 expired multi-day repos none accumulated multi-day repos total 9.500 H 01/16 1.500 28-day rp due 02/13 H 01/30 3.000 28-day rp due 02/27 H 02/06 5.000 28-day rp due 03/06