Germany's interest rate dilemma

Article Abstract:

The Bundesbank or German central bank is assessing whether interest rates should fall. A drop in German rates would mean lower rates across Europe. The bank is concerned with future inflation levels rather than unemployment, and sees structural factors as affecting employment more than interest rates. The money supply has grown but this is linked to investors using deposit accounts rather than volatile bonds. There is spare capacity so an increase in demand will not necessarily lead to a rise in inflation. The bank also has to consider how the bond market would react to a drop in interest rates.

Germany, Deutsche Bundesbank

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The Fed keeps the world guessing

Article Abstract:

There is concern that US interest rates could be raised in Mar 1997 following a Federal Open Markets Commission meeting. Interest rate rises have an impact on future inflation and there is some optimism that US inflation will be restrained in 1997. Economic indicators such as an increase in retail sales and a rise in orders for durable goods could lead to concern about the pace of economic growth and whether this is compatible with low inflation. There is disagreement as to whether a rate rise is necessary since other indicators are more favorable.

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Productivity poser

Article Abstract:

Productivity trends are important for the Federal Reserve in setting US interest rates.

Economic aspects, Industrial productivity

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