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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: NOW who wrote (15981)	11/16/2004 6:40:45 PM
From: mishedlo	Respond to of 116555

Fed in brief Tuesday, November 16, 2004 10:09:24 PM afxpress.com WASHINGTON (AFX) - Here's a quick look at the latest comments on the U.S. economic outlook and monetary policy from top officials at the Federal Reserve The Federal Open Market Committee will meet again to set monetary policy on Dec. 14. At the moment, financial markets believe there is greater than an 85 percent chance the Fed will raise rates by a quarter percentage point to 2.25 percent Nov. 16 Chicago Fed President Michael Moskow, a voting member of the FOMC this year, said the Fed has more ground to cover to get policy to the desired neutral level. He said higher energy costs were not derailing growth and not generating higher inflation expectations Philadelphia Fed President Anthony Santomero, who will be a voting FOMC member next year, forecast moderate growth with low inflation next year. If his prediction is accurate, Santomero said, the Fed would continue to raise rates at a measured pace. He said a slowdown might cause the Fed to raise rates more gradually, while "consistent" price pressure would cause the central bank to quicken the pace of its policy tightening Nov. 15 Fed Gov. Mark Olson echoed the FOMC's suggestion that more rate hikes are still to come because monetary policy remains "accommodative" even though the federal funds rate is now at 2 percent. "The real funds rate still seems low," he told a business group in Toronto Nov. 10 The FOMC hiked rates by 25 basis points to 2 percent. The vote was unanimous. The Fed made very little changes to its post-meeting statement, repeating that monetary policy remains accommodative and rate hikes will continue at a measured pace. Sept. 21 A summary of the Fed's Sept. 21 meeting revealed that Fed officials were more confident that the economy would remain on solid ground and inflation would be contained. Fed officials continued to see the need for further rate hikes in coming quarters. But Fed officials said they were no longer on auto-pilot. "Policy actions would need to be increasingly keyed to incoming data." In an important point perhaps aimed at giving the FOMC some flexibility in coming meetings, the summary noted that financial markets "did not interpret the removal of policy accommodation at a measured pace as necessarily involving the same policy action at each meeting." This story was supplied by CBSMarketWatch. For further information see www.cbsmarketwatch.com

To: NOW who wrote (15981)	11/16/2004 7:49:55 PM
From: mishedlo	Respond to of 116555

UK economy set to grow by only 2.4 pct in 2005 - BCC Wednesday, November 17, 2004 12:16:04 AM afxpress.com LONDON (AFX) - The UK economic recovery is set to slow down dramatically next year in the wake of weaker global growth, a leading business lobby group said today In its quarterly economic forecast, the British Chambers of Commerce predicts economic growth this year of 3.2 pct, down from its forecast in August of 3.4 pct, and 2.4 pct in 2005 compared with August's 2.6 pct prediction "One clear message in the forecast is that UK growth is set to slow towards, or possibly marginally below, trend somewhat earlier than was previously anticipated," said David Kern, the BCC's economic adviser That means Chancellor of the Exchequer Gordon Brown will meet his growth forecast for 2004, but not his 2005 prediction. In his budget earlier this year, Brown pencilled in growth in both years of 3.0-3.5 pct Most commentators think that Brown will downgrade his growth forecasts when he delivers his pre-budget report on Dec 2 Last week, the Bank of England downgraded its growth projection for 2005 to around 2.5 pct from just over 3.0 pct earlier this year, citing concerns about the global economy and the impact of falling house prices on consumption In light of lower growth expectations, Brown is expected to revise up his budget deficit projections The BCC's Kern said the budgetary position "remains stretched" Though the government is expected to meet its sustainable investment rule that net debt stays below 40 pct of GDP, there are doubts about whether it will meet its so-called 'golden rule' of balancing the budget, excluding investment, over the course of the economic cycle, expected to end in 2005/6 Lower-than-expected tax receipts and a pick-up in government spending in recent years mean the government has little margin for error At the half-year stage, the public finances were no better than last year despite the Treasury's projections of a moderate improvement. Over 2004/5, Brown predicted public sector net borrowing of 33 bln stg Analysts think that forecast may be unchanged, but lower growth in 2005 is likely to lead to a higher deficit forecast for 2005/6 Elsewhere, the BCC said it is still possible that the central bank's rate-setting Monetary Policy Committee will raise the cost of borrowing another quarter point to 5.00 pct before the middle of 2005, before stabilising and then edging downwards In addition, the BCC is predicting that the pound will continue to weaken gradually into 2005, and that manufacturing output will stage a "dismal" recovery, with growth at 1.1 pct in 2004 and 1.9 pct in 2005 Meanwhile, CPI inflation is expected to remain below 2.00 pct for the next 6-12 months, averaging 1.3 pct in 2004 and 1.7 pct in 2005