Hole in Euro policy threatens lower rates

Article Abstract:

Planned European monetary union (Emu) has been promoted as a way of reducing interest rates, but this may not necessarily occue. Demand for the new euro currency is initially likely to be unstable, which creates problems for setting interest rates. There is also uncertainty over what the aims of European monetary policy will be, though the European Monetary institute has set out options in a report. The UK would be able to maintain lower interest rates if inflation can be reduced to under 2.5%..

Interest Rates, Monetary policy, Monetary unions

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The myth beneath our demon deficit

Article Abstract:

The UK budget deficit is causing concern. Deficits can push up interest rates, which makes investment more expensive, but this is on a global level rather than for individual countries. Deficits have to be repaid in the future, but future generations are given wealth in the form of capital stock and technological expertise, as well as a tax burden. There are other reasons for reducing government spending, such as a reduction in bureaucracy, and control of entitlement progams.

Economic aspects, Fiscal policy, Budget deficits

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