Japan: Unchanged rates but slightly softer Boj
As expected, at todayÂ’s monetary meeting, the Bank of Japan (BoJ) kept rates unchanged. At the press briefing, Mr Fukui stuck to the main scenario that the Japanese economy will slow temporarily but that the overall trend remains moderate growth and hence the next move on interest rates will most likely be up. However, Mr Fukui clearly stressed that downside risk to this scenario is increasing because of the development in the US and increased volatility on the financial markets. Overall, the
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ECB: Concerned over inflation and growth
Overview: As expected, the ECB kept rates unchanged at 4%. The ECB continues to stress the upside risks to price stability but at the same time points to downside risks to growth. The staff projections reflect this as the inflation projection was increased markedly to 2.9% in 2008 and, interestingly, to 2.1% for 2009 – so above the ECB's inflation target even next year. At the same time the growth forecast was lowered to 1.7% in 2008 and 1.8% in 2009, and risks are still seen on the downside.
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