The Fed's cautious first step
'Fed officials have signaled an end to credit easing', comments Economist Robert DiClemente, 'but the desire to maintain the cap on expected interest rates indicates that their confidence has not reached a level that would point to a timetable for unwinding extreme accommodation... amongst uncertainties, the continued retreat in bank lending remains a key headwind... falling home sales in the past week illustrate the importance of government aid in the housing recovery... also, while moderate growth in household spending and fading weakness in labor markets suggest recovery is approaching a critical stage, the latest softening in risk assets warns that policymakers on all sides need to be mindful of their role in sustaining the improvement in financial conditions'.
Portugal after Greece?
'Portugal: the next country under the spotlight after Greece?', asks the Euro Weekly, 'for Moody’s has singled out Portugal, together with Greece, as two countries that face the risk of “slow death”... due to competitiveness losses and resulting large current account deficits... to be sure, we see downgrade risks in the next few months... but Portugal is different from Greece and we do not see similar market turbulence happening... either way, barring a negative impact from
the Greek crisis on euro area banks, we believe the sovereign turmoil is unlikely to delay the ECB exit plans - for now'.
Japan's new deflation record
'A new deflationary record', opines Japanese Economist Kiichi Murashima, 'of the news that the share of items in the nationwide CPI that experienced a price decline rose to 64% in December 2009… compared with an overall decline in the core CPI of 1.3% YoY, non-fresh food prices fell 1.5%; housing -0.4%; furniture -4.8%, clothes - 1.9% and reading & recreation -3.3%... moreover
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