EU:RAISES INTEREST RATES & WARNS CHINA

[Anonymous]

Euro interest rates rise to 2.75%
The
European Central Bank (ECB) has voted to raise eurozone interest rates
by one quarter of a percent to 2.75%, a move that has been widely
expected.
There had been some speculation that the ECB would
go for a 0.5% rise, but analysts agreed that recent market volatility
made it settle for 0.25%.The ECB has raised interest rates to tackle
inflation which currently stands at 2.5%, above the 2% target
level.Inflation has risen on the back of high energy prices and
economic recovery.
‘Sensible action’
“The conditions are in place
for growth in the euro area, remaining close to its potential rate,
despite the impact of the rise of oil prices,” said ECB president
Jean-Claude Trichet at the news conference which followed the latest
rate decision.Analysts currently expect eurozone interest rates to rise
to 3.25% by the end of the year.”The 25 basis point interest rate hike
by the ECB means that it is maintaining a steady pace in the
normalization of interest rates,” said Howard Archer of Global
Insight.”This seems the most sensible course of action given that a 50
basis point hike would have represented a more aggressive stance by the
ECB and risked sending the euro up to new highs against the dollar,
with damaging implications for eurozone growth prospects.”
‘Spanish meeting’
The
latest ECB decision was made in Madrid at the headquarters of the Bank
of Spain, one of the two times each year that the ECB holds its
rate-setting meeting outside of its Frankfurt hometown.In both May and
April the ECB voted to keep rates on hold.Until December 2005, the
European Central Bank had left its rate unchanged at 2% for more than
two years.Some commentators worry that too fast a rise in European
interest rates could choke off the slow-starting recovery in the
eurozone, the twelve nations of the EU which use the single
currency.However, even with the current increase, interest rates in the
eurozone will still be well below those in the US and the UK.

EU warns China on piracy problem
Peter Mandelson’s comments have come during a visit to China
European
Union Trade Commissioner Peter Mandelson has made a fresh call for
China to do more to improve market access and cut down on piracy.He
warned China would face a backlash in Europe unless it did more to
“apply rather than circumvent the rules”.Mr Mandelson’s comments came
during a visit to Beijing for talks with his Chinese counterpart Bo
Xilai.European and US firms have long complained about the volume of
pirated goods on sale in China.Brussels and Washington have also
clashed with Beijing over a number of trade issues in recent years,
most recently accusing China of unfairly dumping clothing and shoe
products on their markets.This has led to both the US and European
Union tightening import quotas, although China insisted it was merely
able to produce goods more cheaply and was being unfairly victimised by
Western protectionism.
‘Responsibility’
“The more the Chinese
door swings open and the world sees a responsible China playing by the
rules, the more our citizens will be able to understand our shared
interest in deepening our relationship,” Mr Mandelson told students at
Beijing’s Renmin University.He added that both the EU and China had to
“commit to openness and resist protectionist pressures”.Despite a
number of crackdowns by the Chinese government, counterfeit goods are
still widely available in China, ranging from pirated movies to fake
branded clothes and copied medicines.The US government is also
continuing to call on China to tackle piracy, with Washington warning
earlier this week that it could take China to the World Trade
Organisation over abuse of intellectual property rights.

[Author]

June 8, 2006 at 11:11 AM