*Australia's decision not to raise rates bringing them more in line with the rest of the world is going to backfire. Australia and Canada have been pretending, much like Europe and China did until they were forced by the facts to admit otherwise, that they have been mildly affected by the US and world recessions. Mark my words, the lagging effect will pummel both countries severely.
Australia's central bank defies expectations by holding rates
For the first time in seven months, the Reserve Bank of Australia kept its benchmark interest steady, trying to give previous rate reductions a chance to take effect. The central bank's cash rate, held at 3.25%, indicates that Australia is likely in a better position to withstand the economic downturn. "The Australian financial system remains strong," RBA Governor Glenn Stevens said. Analysts had expected a reduction of 0.25 percentage point or more. ClipSyndicate/Bloomberg (02 Mar.) , The Sydney Morning Herald (Australia) (03 Mar.)
Pressure mounts for ECB to cut interest rates
Faced with data showing that unemployment in the eurozone has hit 8.2%, the European Central Bank is expected to cut interest rates when it meets Thursday. ECB President Jean-Claude Trichet hinted that a cut of 50 basis points is likely. BusinessWeek/EUobserver.com (02 Mar.)
*a bright spot
January broke 6-month decline in U.S. consumer spending
After a record-setting six-month decline, consumer spending picked up in January, rising 0.6%, according to the U.S. Commerce Department. Driven largely by pricier food and nondurable items, the increase outpaced the 0.4% increase anticipated by economists. The New York Times/The Associated Press (02 Mar.)
*economists disagreeing about definition of a depression? no...
Experts unclear on when recession becomes depression
Economists and business leaders said the U.S. might already be past a recession and in a depression, but the matter is confusing because there is not a widely accepted definition of an economic depression. Peter Morici, a University of Maryland business professor, is among those who said the U.S. is likely in a depression, but it will not be acknowledge until years later "because you have to see it behind you." The New York Times/The Associated Press