Friday, September 28, 2007
European Inflation Expected to Jump
BRUSSELS, Belgium (AP) -- Inflation in the 13 nations that use the euro is expected to jump to 2.1 percent for September, according to preliminary figures released by the European Union's statistical agency on Friday.
The news added to worries that Europe is heading for an economic slowdown.
Eurostat's estimate did not give reasons for the rise from 1.7 percent in August, an increase that puts inflation above the European Central Bank's guideline of just under 2 percent.
A final figure is expected to be issued next month.
Germany's Federal Statistics Office on Thursday released preliminary figures which showed the consumer price index for Europe's biggest economy is expected to rise 2.5 percent in September.
EU Economic and Monetary Affairs Commissioner Joaquin Almunia told a meeting in Barcelona that the recent financial turmoil, including the high value of the euro against the U.S. dollar and the credit market turmoil in the United States, has increased the risk of growth slowing.
Almunia expressed worries that rising costs could dissuade investments and consumer spending.
"There are now more negative risks," Almunia said. "The key factor will be the impact (of the financial crisis) on confidence."
He said, however, that most forecasts are for world economic growth of over 4 percent next year.
Almunia earlier this month raised the EU's forecast for inflation for the full year, up 0.1 percentage points to 2 percent.
Almunia also said concerns are growing over the dropping U.S. dollar. He told Italian daily Il Sole 24 Ore in an interview published Friday that the dollar's decline is "worrying," adding the U.S. should assume more responsibility for the "imbalances in the global economy."
"Nobody should expect that we will remain passive if the consequences of those imbalances are dumped on the euro-zone economies alone," he said.
The dollar's declining value makes American exports more competitive overseas, but could make European products more expensive in the United States.
Almunia appealed to euro-group countries to ensure they speak with one voice in communicating their views with the ECB.
EU officials have warned that they were unsure of how well the euro economy could continue to grow amid a credit crisis triggered by problems in the U.S. housing market that has raised borrowing costs.
The European Commission said that Europe and the world economy had been in good shape until the August turmoil, when banks became reluctant to lend amid fears of spiraling losses from the U.S. housing loan market.
AND JUST HOW LOW WILL RATES GO IF THE STRONGER OF THE TWO CURRENCY HAS INFLATION TO FIGHT? lol
The news added to worries that Europe is heading for an economic slowdown.
Eurostat's estimate did not give reasons for the rise from 1.7 percent in August, an increase that puts inflation above the European Central Bank's guideline of just under 2 percent.
A final figure is expected to be issued next month.
Germany's Federal Statistics Office on Thursday released preliminary figures which showed the consumer price index for Europe's biggest economy is expected to rise 2.5 percent in September.
EU Economic and Monetary Affairs Commissioner Joaquin Almunia told a meeting in Barcelona that the recent financial turmoil, including the high value of the euro against the U.S. dollar and the credit market turmoil in the United States, has increased the risk of growth slowing.
Almunia expressed worries that rising costs could dissuade investments and consumer spending.
"There are now more negative risks," Almunia said. "The key factor will be the impact (of the financial crisis) on confidence."
He said, however, that most forecasts are for world economic growth of over 4 percent next year.
Almunia earlier this month raised the EU's forecast for inflation for the full year, up 0.1 percentage points to 2 percent.
Almunia also said concerns are growing over the dropping U.S. dollar. He told Italian daily Il Sole 24 Ore in an interview published Friday that the dollar's decline is "worrying," adding the U.S. should assume more responsibility for the "imbalances in the global economy."
"Nobody should expect that we will remain passive if the consequences of those imbalances are dumped on the euro-zone economies alone," he said.
The dollar's declining value makes American exports more competitive overseas, but could make European products more expensive in the United States.
Almunia appealed to euro-group countries to ensure they speak with one voice in communicating their views with the ECB.
EU officials have warned that they were unsure of how well the euro economy could continue to grow amid a credit crisis triggered by problems in the U.S. housing market that has raised borrowing costs.
The European Commission said that Europe and the world economy had been in good shape until the August turmoil, when banks became reluctant to lend amid fears of spiraling losses from the U.S. housing loan market.
AND JUST HOW LOW WILL RATES GO IF THE STRONGER OF THE TWO CURRENCY HAS INFLATION TO FIGHT? lol
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