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The Bottom Line

By Anne D. Picker, International Economist, Econoday     Monday, February 5, 2001

The central bank focus will be on the Bank of England this week. The manufacturing sector has been suffering from the strong pound sterling vs the euro for some time. With Europe as their largest export market, the high pound sterling has made British goods less price competitive. Expectations are that the Bank will lower its policy making interest rate 25 basis points on Thursday. The Bank has not altered rates for 11 months.

The Reserve Bank of Australia also is expected to cut its key rate at least a quarter point from 6.25 percent when central bank policy makers meet on Tuesday. However, the Bank of Japan is expected to leave monetary policy on hold. Their current policy making interest rate is 0.25 percent.

There is a sense of general ambivalence about where the economies are headed. The unknown is, of course, how the "new" Europe will withstand a U.S. slowdown. The ECB thinks that Europe will do well and therefore sees no need to follow the Fed and cut rates. The data coming out in the next few weeks will be crucial in determining the fate of the euro-dollar.

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Introduction   •   Global Stock Market Indexes   •   Recap of Global Markets   •   Currencies   •  Indicator Scoreboard

The Bottom Line   •   Looking Ahead

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