April 08 - 14, 2002
EUROZONE INTEREST RATES STAY AT 3.25%
The European Central Bank has left European
interest rates untouched at 3.25% for the fifth month in a row.
The decision comes as no surprise, and matches the
overwhelming consensus of observers.
The ECB is thought to be awaiting more evidence of
a sustained economic recovery before it begins to reverse the four
interest rate cuts it made last year.
Earlier on Thursday, the Bank of England decided to
leave its key interest rate untouched at 4%, having last lowered it in
The bank has a record — in comparison with some
central banks as being a hawk, and its brief orders it to focus on
keeping inflation in check.
But with Europe's economy still crawling out of the
doldrums after last year's downturn, growth in the first half of the
year is likely to remain flat, picking up towards the end of the year.
Inflation remains uncomfortably high, at 2.4% well
above the 2% ceiling the Bank has set itself.
Worries about the level of inflation are combining
with fears about rising wages German union IGMetall is demanding a
6.5% increment this year — to make economists believe that an
interest rate hike can be no more than a few months off.
Oil prices, driven higher by the escalating
violence in the Middle East are also likely to figure strongly in the
ECB's deliberations from here on.
UK RATES KEPT ON HOLD
Bank of England economists have decided to keep UK
interest rates unchanged at 4.0% for the fifth month in a row.
The decision had been widely expected by analysts,
most of whom expect the Bank to start raising rates later this year.
Recent figures have indicated that the UK's
struggling manufacturing sector is showing signs of recovery.
And as consumer spending has remained buoyant,
economists expect the Bank to lift rates at some point to prevent
"Today's decision is the right one," said
Stephen Radley, chief economist at the Engineering Employers'
"Talk of increases in interest rates is
premature as any rise would only serve to stop the tentative recovery
dead in its tracks," he added.
The Confederation of British Industry (CBI) agreed.
"With inflation well under control and pay
settlements slowing, the Bank had no reason to rock the boat,"
said Ian McCafferty, CBI chief economic adviser.
But Ruth Lea at the Institute of Directors warned
that a rate rise may not be far off.
"Recent economic data has been firm and point
to higher interest rates."
"Indeed we expect a rise by the end of the
second quarter, despite the benign inflationary picture."
Geoffrey Dicks at RBS Financial Markets thought
this would be too soon.
"Some City economists think the first rise
will come in May, but I think that is premature," he said.
"The most likely timing is August."
EQUATORIAL GUINEA APPLIES TO JOIN WTO
The West African nation of Equatorial Guinea has
asked for observer status at the World Trade Organization (WTO) and
plans to apply for full membership.
The government was acting because it could not
"remain on the fringes of the globalisation and development of
the world's economy", the WTO said in a statement.
"At the international level, Equatorial
Guinea's political philosophy is a free market economy within the
context of trade liberalization, which is also one of the principles
underpinning the creation of the WTO," it added.
President Teodoro Obiang Nguema Mbasogo — a
former brigadier general who seized power in a military coup in 1973
— has begun to liberalise the economy and tried to encourage US
Equatorial Guinea's economy was dependent upon
agriculture but this situation was drastically changed with the
discovery of large oil reserves.
IMF 'TO WITHHOLD ARGENTINA FUNDS'
The International Monetary Fund (IMF) is unlikely
to release new funds to help Argentina's struggling economy, according
to sources from the fund.
A delegation from the International Monetary Fund (IMF)
arrived in Argentina to decide whether to grant the country fresh aid
earlier this week.
"What they have to do, they can do it
alone," an IMF source told Reuters.
"This is a case where what they need is
adjustment, it is not financing," he said.
"This is for their own good and they should
Extra money is viewed as essential if Argentina is
quickly to pull itself out of its financial crisis, and revive its
virtually bankrupt banking sector.
Argentina is stuck in a four-year recession that
culminated in the default on its $141bn of debt and a currency
BANGLADESH HOPES FOR BUMPER JUTE CROP
Early rains in Bangladesh have boosted hopes for a
bumper jute crop this year.
Bangladesh dominates the global jute market,
accounting for up to 95% of total world supplies a year.
"The pre-monsoon rain will definitely help us
grow more jute this season," said Mohammad Ahsanullah, a senior
official of the Directorate of Jute.
Rainfall in the crucial two-week period after the
crop is planted has been about 20% higher than last year.
Jute exports from Bangladesh hit a record of 1.55
million bales between July 2000 and June 2001.
But this year's rains have raised hopes that the
record may be beaten.
JAPANESE BANKS SUE OVER LOCAL TAX
Sixteen major Japanese banks have filed a lawsuit
in the city of Osaka to overturn a local tax on their gross profits,
after they won a similar case in a Tokyo court last week.
The litigation aims to revoke a 3% tax on banks
over the next five years.
The banks have demanded 1.6bn yen (£10m) in
Among the 16 lenders going to court are the
Japanese mega-banks Sumitomo Mitsui Bank, Mizuho Holdings, Bank of
Tokyo-Mitsubishi and UFJ Bank.
The Osaka tax is due to be collected from May,
based on the gross profit of the banks in the year that ended in
March, said Hiroyuki Onishi, the Osaka tax official in charge of the
"Our current position is that we believe that
this tax regulation is correct and justifiable," Mr Onishi said.
ANDERSEN US PARTNERS DEFECT
Andersen has agreed that most of its US tax
partners will join rival accountancy firm Deloitte & Touche.
The agreement signals the start of the break-up of
the troubled auditor in the US. Andersen is trying to salvage the
remnants of its business both in the US and worldwide.
BA REPORTS FALL
British Airways has reported a 3.2% fall in
passenger numbers in March compared with a year earlier.
The global average was pulled down by a 5.6% fall
in traffic on its Americas routes.
AFRICAN BREWER CONFIRMS MILLER APPROACH
South African Breweries (SAB) has confirmed that it
is in talks with the tobacco giant Philip Morris about buying its
Miller Brewing company.
SAB said the talks with the US-based brewer were
"at a preliminary stage and no conclusions have been
On Wednesday, the Wall Street Journal reported that
SAB was to buy Miller for $5bn (£3.5bn) in shares and cash.
A combination of SAB and Miller would create the
world's second largest brewer, and give SAB a toe-hold in the US
ZAMBIA AGREES STOP-GAP OIL DEAL
Zambia has agreed a stop-gap oil import deal to
cover its domestic fuel requirements.
The one-off deal, which will see the southern
African country import 180,000 tonnes of crude oil, became necessary
following the collapse into receivership of the state oil purchaser.
The oil will cover Zambia's needs for April to July
It was needed because of a growing fuel gap, Energy
Minister Kaunda Lembalemba told Reuters.
BP PUTS UP COST OF PETROL
BP has increased the cost of a litre of petrol in
the UK by 1p, following rises in the price of crude on the world oil
The move means a litre of petrol at a BP station
will now typically cost 74.9p a litre.
Tension in the Middle East, together with output
cuts by members of the Opec oil cartel, has pushed the price of crude
oil to six-month highs of around $28 a barrel.
MICROSOFT CHIEF IN SURPRISE EXIT
Microsoft's president and chief operating officer
has unexpectedly resigned, after a year in the post, to start his own
Rick Belluzzo, who many analysts had seen as a
rising star at Microsoft, said he was leaving the post on 1 May to
start his own firm.
EU PROBES AID TO BMW
The European Commission has launched an
investigation into Germany's plans to grant state aid to a new BMW car
factory in Leipzig.
"The investigation aims at establishing
whether the planned aid meets the requirements of the state aid rules
for the automobile sector," a Commission statement said.
Germany could be forced to withdraw or reduce the
planned aid package if the Commission rules that it is in breach of
MALAWI HOPES FOR HIGHER TOBACCO PRICES
This year's tobacco auctions have begun in Malawi,
one of Africa's main producers of tobacco leaf, with producers hoping
for a better return.
Amid rising global prices, and with supply tight on
the Malawian market, tobacco producers want to see an improvement on
last year's average of $1.09 per kilogramme.
OIL DEAL FOR NIGERIA AND EQUATORIAL GUINEA
Nigeria and its neighbour Equatorial Guinea have
agreed plans for joint exploitation of crude oil reserves along their
In an approach that is starkly different from that
which has seen Nigeria and Cameroon slugging it out at the world court
over the oil rich Bakassi peninsular, the issue of the equally rich
maritime border between Nigeria and Equatorial Guinea is being handled
in a brotherly way.
Presidents Olusegun Obasanjo of Nigeria and Obiang
Nguema Mbasogo of Equatorial Guinea have signed an agreement which
allows companies on both sides of their maritime border to explore for
RUSSIA'S BANKS FACE 'HEALTH CHECK'
An inspection team from the International Monetary
Fund (IMF) and the World Bank start work in Moscow on Wednesday on
what is described as a "comprehensive health check-up" of
Russia's shaky financial sector.
The mission will identify the strengths and
weaknesses of the country's financial systems and determine how
potential risks to the system are being managed.
It will also address specific concerns such as
creditor protection, bankruptcy regulations and the problem of rampant
money laundering in the country.
Last year the Paris-based Financial Action Task
Force (FATF) blacklisted Russia for failing to deal with the problem
of money laundering.
Financial experts estimate that about $20bn
(£14bn) was spirited abroad from Russia last year alone.
MOSS BROS REJECTS NEW BID APPROACH
Menswear retailer Moss Bros has rejected the latest
takeover approach from Shami Ahmed, the entrepreneur behind the Joe
Bloggs label famed for its baggy jeans.
Last week Mr Ahmed said he was willing to offer
45-50p per share for the company, valuing it at £45.5m.
DAEWOO REDUCES LOSSES
The South Korean car firm Daewoo Motor has reported a net loss of
$2.73bn (£1.89bn) for 2001, a fall of 70% on the deficit recorded the