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UPDATE 1-US inflation risks clearly face upward-Fed's Poole
Sat Apr 2, 2005 11:04 AM ET
PRINCETON, N.J., April 2 (Reuters) - U.S. growth is strong and the Federal Reserve must ensure it confronts the risk of higher inflation, one of its top policy-makers said on Saturday, clearly hinting at more interest rate rises in the future.
"The upward thrust to the economy appears quite substantial and the risk of higher inflation over the next six months or so seems clearly greater than the risk that inflation will fall below a desirable range," said Federal Reserve Bank of St. Louis President William Poole.
"Monetary policy should ensure that inflation pressures do not get built into inflation expectations. ... The aim of monetary policy should be to counter inflation pressures with a less accommodative policy stance," he told a conference on the future of the Fed hosted by Princeton University.
The Fed raised interest rates by a quarter percentage point to 2.75 percent on March 22 and is widely expected to hike borrowing costs again when it meets next on May 3.
The Fed used its accompanying statement to warn that the risks to inflation had grown, with U.S. firms better able to pass along higher costs to their customers.
Poole's remarks were in the context of the challenge facing the U.S. central bank in communicating with financial markets.
Markets took the most recent Fed policy statement as a hint the Fed may drop its assurance that policy changes will be conducted at a "measured" pace from its next statement, in preparation for faster rate rises in the future.
"From my perspective, the market reaction to that statement made a lot of sense and reflected my own assessment of a changing inflation environment," Poole said.
The Fed under Chairman Alan Greenspan has considerably expanded its use of statements following decisions to change interest rates in a bid to improve transparency and give markets more clues about what to expect in the future.
But Poole cautioned these should not commit the Fed to a preordained course of action and also warned against sudden shifts in the wording of the statements that confuse markets.
"Changes usually come as a surprise to the market, and the initial meaning of new phrases has not always been clear.
"I think the FOMC (Federal Open Market Committee) could improve clarity, especially when policy direction changes, by agreeing in advance on stock phrases to describe different situations," he said.
e due...
OPEC May Boost Oil-Output Quota in May, Third Quarter (Update2)
April 2 (Bloomberg) -- OPEC may boost its crude output quota by 500,000 barrels a day in May and add another half a million barrels in the third quarter in a bid to stop record oil prices from slowing economic growth, the group's president said.
``Prices should remain within a reasonable range to prevent a slowdown in economic growth,'' Sheikh Ahmad Fahd al-Sabah said in Kuwait City today at the Euro-Gulf Energy Forum. ``Because prices are at a record, we expect to resume discussions this coming week to add 500,000 barrels a day starting May.''
The Organization of Petroleum Exporting Countries, supplier of almost 40 percent of the world's crude, is pumping close to its limit to bring down crude prices that reached an all-time high of $57.70 a barrel in New York yesterday. High oil prices contributed to slowing job growth and faster inflation in the U.S. in March, signs that the economy may be slowing.
``Oil prices could reach $60 if the group doesn't calm the market and increase supply,'' said Sabah, who is also Kuwait's oil minister. Market fears of supply disruptions are driving up the oil price, he said.
OPEC states with quotas, all except Iraq, are now producing close to 28 million barrels a day, which is 500,000 barrels above the current output quota, Sabah said. The group has spare capacity of 2 million barrels a day and this will rise to 3 million barrels by the end of the year as members boost their production capabilities.
Effect on Growth
Crude prices of $55 a barrel have slowed economic growth in countries such as the U.S. and China, the world's largest oil consumers, said William Ramsay, deputy director of the International Energy Agency. The Paris-based agency advises 26 oil-importing countries on energy policy.
``Just because these countries continue to grow, doesn't mean oil price increases haven't affected them,'' Ramsay said today in an interview in Kuwait.
OPEC may raise its oil-output quota by 500,000 barrels a day in the third quarter and make further increases in the fourth quarter, Sabah said, without specifying the size of the potential fourth quarter increase.
The 11-member group agreed on March 16 to boost its official output quota by 500,000 barrels a day to 27.5 million barrels and pledged to add half a million barrels a day more as early as May, if prices rose and demand warranted more supply.
$105?
Saudi Arabia, the group's largest producer, has said it's prepared to raise output by 1.5 million barrels a day to its maximum capacity of 11 million barrels a day to meet any unexpected rise in demand.
Prices may touch $105 a barrel in the next several years as the market goes through a ``super spike'' period because of increasing demand, Goldman Sachs Group Inc. said March 31. The company's upper forecast was $80 previously.
Rising prices are needed to ``meaningfully reduce energy consumption and recreate a spare capacity cushion,'' according to the report, which helped push oil prices.
The IEA is preparing a study on energy saving measures that oil-importers could implement in the transportation industry to lower fuel consumption as oil prices rise, Ramsay said.
Gasoline rallied to records yesterday as the summer driving season in the U.S. approaches. About 10 percent of the world's crude oil is used to make gasoline for U.S. motorists.
...alla fine venerdi US ha chiuso in recupero su short covering legate al week end ed alle borse deboli - graficamente il bund o strappa in sù con forza o torna indientro nella conformazione "a catino" compresa negli estremi 116.89/118.35 - vedrem... buona domenica a tutti
