Europe, U.S. at odds over approach to interest rates - by Kevin Carmichael
Europe and the United States are deeply divided over interest rate policy as they head into critical meetings aimed at forging a common front to stanch the global credit crisis. Central bankers in the United States, Canada and Britain have been slashing interest rates, while the European Central Bank has been steadfast in its refusal to follow suit, citing fears over inflation.Canadian Finance Minister Jim Flaherty said earlier this week that his colleagues likely will endorse a report by the Financial Stability Forum that proposes 65 regulatory measures the might help prevent another credit meltdown, such as forcing banks to hold more emergency capital.
Greg Anderson, a senior currency strategist at ABN Amro in Chicago, said Mr. Trichet is simply following his mandate to control inflation, nothing that central banks in Australia, New Zealand and other countries are raising interest rates. The stronger euro will ensure Europe does its bit for the world economy, he said. "Their imports from China and the rest of Asia will continue to skyrocket," Mr. Anderson said. "That's supportive for global growth."
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