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Economy - Friday
Friday April 18, 6:44 pm ET
Investor's Business Daily


Fed's Plosser: Rates low enough
The federal funds rate is low enough to boost economic growth as the lagged impact of earlier interest rate cuts kicks in, Philadelphia Fed President Charles Plosser said. He warned against seeing rate cuts as "the solution to most, if not all, economic ills." He noted that the real fed funds rate is negative for the first time since '03-04. He said it's important to defend the currency.

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Fed urged to use 'baseball bat'

The central bank should threaten banks to make them raise more capital as a step toward restoring faith in credit markets, said Paul McCulley, managing director at Pimco, the world's largest bond fund manager. He said the Fed should use not just moral suasion but also a "baseball bat" on banks.

ECRI's leading U.S. index edged up 0.1 point 14 the April 11 week to 132, a 2nd straight weekly gain. The annualized growth rate also improved for a 2nd week, to -10.2%. That's still deep in recessionary territory. ECB: No room at rate-cut inn

"No room" exists to cut euro zone rates and rate rises cannot be ruled out, European Central Bank Governing Council member Klaus Liebscher said. He told Reuters that the ECB had to hold firm to avoid a wage-price spiral and keep inflation expectations low. Fellow ECB policymaker Erkki Liikanen also said the central bank must head off a vicious circle of price and wage gains. ECB's Axel Weber said euro zone inflation is "very unsettling" and could top 3% for 2008.

All 15 nations using the euro brought their budget deficits below the 3%-of-GDP limit last year, with an overall deficit of 0.6% of GDP. Italy's industrial orders shot up 14% in Feb. vs. a year earlier. That's the best gain in 16 months and up from 7% in Jan. Chinese farm-good prices soar

China issued more gloomy inflation news, saying prices of farm goods jumped 25.5% in Q1 and housing costs rose 11% in March. Communist leaders, worried about a possible public backlash, are trying to ease food shortages, but winter storms disrupted the effort. Consumer prices rose 8.3% in March, a slight decline from Feb.'s 8.7%, the highest in nearly 12 years. Food costs rose 21%, with pork up 66.7%.