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To: T L Comiskey who wrote (67866)	9/27/1998 10:48:00 PM
From: Mohan Marette	Respond to of 176387

"The global economy is still expansive and not deflationary" German Economics Minister Guenter Rexrodt. Tim: It looks the Europeans are going to do ok after all. From:Fox newswire. ================================================ EU Plays Down Global Turmoil, Resists Rate Cut Talks 11.12 a.m. ET (1512 GMT) September 27, 1998 By Mark Thompson VIENNA — Europe's finance chiefs ended weekend talks confident the 15-strong bloc would ride out the financial storm battering the world economy and broadly united in opposing concerted interest rate cuts to boost growth. Wrapping up a two-day informal gathering of EU finance ministers and central bankers (Ecofin), host and chairman Austrian Finance Minister Rudolf Edlinger said preparations for the single currency had strengthened Europe's defenses. "Europe has shown itself to be a haven of stability which can serve to calm the global economic situation," he said. In a statement, the EU said the reduction of budget deficits and inflation ahead of the euro's launch — little more than three months away — had boosted economic confidence which should lift domestic demand and sustain growth. Nevertheless, EU gross domestic product (GDP) growth would not escape totally unscathed. Edlinger said the European Commission would have to trim its 1999 forecast of three percent when new estimates are released in late October. "I assume that the commission's forecasts for 1999 will have to be slightly revised (lower)," he said. Danish Economy Minister Marianne Jelved said the European Central Bank (ECB) was working on the basis of lower figures. Jelved quoted ECB President Wim Duisenberg as saying growth across the EU would be about 2.5 percent next year, while the Euro-11 states should see almost three percent growth, also below the Commission's 3.2 percent spring forecast. But ministers agreed the euro had already saved them from being swept up in the global financial crisis and resisted pressure from both inside and outside the bloc to seek lower interest rates from the ECB. Dutch Finance Minister Gerrit Zalm said independent central bankers would decide monetary policy. A call from British Chancellor of the Exchequer (finance minister) Gordon Brown for the EU to boost growth found little support. "There is no general opinion to strive for interest rate reductions," Zalm said. Brown, in a radio interview, said Europe should play its part in helping to prevent the world economic downturn involving "huge risks to ordinary people's lives." In their closing statement, EU finance ministers and central bankers said solutions to crises in other parts of the world "depend on national economic and political situations." They offered only verbal support to Russia, Japan and Latin America and played down the prospect of a global recession. "I think it is not right now to fall into general panic and to raise the spectre of a global recession," said German Bundesbank President Hans Tietmeyer. "The global economy is still fundamentally expansive and not deflationary. I expect that the impact on the robust economies of Europe and the U.S. will be limited," agreed German Economics Minister Guenter Rexrodt. Tietmeyer said monetary conditions in Japan, the United States and continental Europe were clearly different and that any policy moves not based on the real economy would further unsettle financial markets. Interest rates among the Euro-11 countries would converge towards the benchmark core levels by the end of the year, he said. Central bank governors from countries like Spain and Italy which have rates above the core level said they were committed to convergence but gave no indication of when the process would begin. In contrast to the generally upbeat message, European monetary affairs commissioner Yves-Thibault de Silguy cautioned about the potential impact of slower economic growth on the public finances of the Euro-11 states. While growth prospects remained relatively bright,....