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BUSINESS NEWS JAN 17, 2008
Due to a technical problem on Wednesday Jan 16, we are upgrading the news management system which will be completed in coming days.

Business News Headlines to Jan 16 2008

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Jan 17 2008 News Links

Markets News Afternoon: US and European stocks slide; Dublin market rises

Annual Irish Consumer Inflation falls to 4.7% in December 2007

Euribor 3-Month Inter-Bank Rate falls to the lowest level since the onset of the Credit Crunch in August 2007

European Central Bank warns again that it may raise interest rates

Slashing Energy Waste in China - Energy efficiency would do 'the most, the quickest,' to reduce CO2 emissions - World Bank

Study links corporate performance to employee enablement - Economist Intelligence Unit

Markets News Thursday: Asia-Pacific and European stocks rise

Thursday Newspaper Review - Irish Business News and International Stories

Big drugs companies raided by European competition regulators

European Central Bank warns again that it may raise interest rates

The European Central Bank reconfirmed today that it is ready to raise interest rates if necessary to prevent a rise in price inflation in the Eurozone.

The ECB is particularly concerned about the impact of "second-round effects" - wage and price setting in reaction to the high levels of inflation at a rate of 3.1% compared with its target of "below but close to 2%." Inflation has been fuelled by spikes in both food and energy prices.

"The Governing Council remains prepared to act pre-emptively so that second round effects and upside risks to price stability over the medium term do not materialise," the ECB said in its January Monthly Bulletin.

"It is imperative that all parties concerned meet their responsibilities and that second round effects on wage and price-setting stemming from current inflation rates be avoided. In the view of the governing council, this is absolutely essential in order to preserve price stability in the medium run," it said.

The ECB said it is closely monitoring wage negotiations with particular attention.

In Germany, public sector unions have staked wage claims at more than double the current inflation rate.

The ECB said that risks to the inflation outlook are clearly on the upside.

The central bank expects inflation to remain significantly above 2% in the coming months and to moderate only slowly in the course of 2008, it said. The assumptions are based on a moderation of commodity prices and reasonable wage settlements.

The ECB said it still expects the Eurozone economy to continue growing around its 2.0% potential rate, describing the region's economic fundamentals as sound.

However, it also said that uncertainty about the economic impact of recent tensions in credit markets remains high and risks to the growth outlook lie on the downside.

The Financial Times reported today that the euro slid sharply on Wednesday after investors bet comments by a European Central Bank council member meant eurozone rate cuts were more likely.

Yves Mersch, Luxembourg’s central bank governor, said the ECB should “be cautious” amid the widespread economic uncertainty and hinted that Eurozone growth forecasts might soon have to be revised downwards.

Mr Mersch represents one of the Eurozone’s smallest states, but he is regarded as one of the more hawkish members of the 21-strong ECB council. His comments in a Bloomberg interview suggest at least some bank members are moderating their tone as the US Federal Reserve prepares to cut interest rates.

Earlier, Axel Weber, president of the Bundesbank, also appeared to be hedging his usually hawkish stance. He acknowledged that German inflation could have eased significantly by 2009.

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