Greenspan rules out co-ordinated rate cut

ALAN GREENSPAN, chairman of the US Federal Reserve, disappointed markets yesterday when he failed to signal an interest rate cut in testimony to a Congressional Banking Committee, and said no attempt was being made to co-ordinate interest rate cuts among G7 nations.

"I think that I can safely say that at the moment there is no endeavour to co-ordinate interest rate cuts," he said. "We are in fairly extensive conversations among the G10 central bank governors and we are clearly exchanging views on all various different aspects of our economies and our views of the overall international situation."

Markets had been hoping for hints of co-ordinated moves to lower world interest rates. The hopes had been raised in recent days following a variety of statements from leading central bankers and finance ministers.

The Dow Jones index fell by 16.74 points to 8007.65 in early afternoon trading, retreating from an earlier 57 point gain. In London the FTSE 100 finished the day up 10 at 5,291.7. Investors were nervous ahead of Mr Greenspan's testimony, which was released after the London markets closed.

Sterling closed at DM2.835, over a pfennig up on the day.

Speaking in Tokyo early yesterday morning, Gordon Brown, the Chancellor, warned that he would not put UK economic stability at risk for the sake of intervention in the global financial crisis. His remarks were interpreted as meaning that UK rates would not come down unless domestic economic conditions were right.

Both the US Fed chairman and the UK Chancellor said the international community was ready to help economies in need, but only if these economies took appropriate steps towards reform. The Chancellor said the G7 nations would discuss options for intervention over the next few weeks.

In London, Mr Greenspan's impending testimony overshadowed the latest UK economic data, which revealed falls in both the rate of earnings growth and unemployment. Economists said the figures were "neutral to positive" for the interest rate outlook.

The minutes of the August meeting of the Bank of England's Monetary Policy Committee (MPC), showed the committee voted 7:2 in favour of keeping rates on hold, citing earlier increases in the rate of earnings growth and falls in unemployment as causes for concern. Willem Buiter voted for an immediate rise in rates, while DeAnne Julius called for a rate cut.

Headline earnings growth fell to 4.7 per cent in June, down from 5 per cent in May and better than market expectations. There were falls in the rate of earnings growth in manufacturing and services sectors.

Economists predicted that the rate could next month fall below the 4.5 per cent level considered by the MPC as being compatible with its inflation target. However, most forecasters, including the Bank itself, expect pay pressures to pick up again next year when the national minimum wage comes into force.

Unemployment fell by 16,400 in August on the claimant count measure, a sharper fall than the market had been expecting. The July figure was revised to show a slightly larger fall than first reported.

Some economists called the labour market data a "puzzle", saying they would expect a fall in the rate of earnings growth to be accompanied by a rise in unemployment. Several attributed the mixed picture given by the labour market data to statistical "blips", saying the data would soon start to show rising unemployment. Other analysts said the falling jobless total would give the MPC cause for concern.

Susan Sarandon described David Bowie as
peopleSusan Sarandon reveals more on her David Bowie romance
Arsenal supporters gather for a recent ‘fan party’ in New Jersey
sportDidier Drogba returns to Chelsea on one-year deal
Arts and Entertainment
The Secret Cinema performance of Back to the Future has been cancelled again
Life and Style
Balmain's autumn/winter 2014 campaign, shot by Mario Sorrenti and featuring Binx Walton, Cara Delevingne, Jourdan Dunn, Ysaunny Brito, Issa Lish and Kayla Scott
fashionHow Olivier Rousteing is revitalising the house of Balmain
Arts and Entertainment
Christian Grey cradles Ana in the Fifty Shades of Grey film
filmFifty Shades of Grey trailer provokes moral outrage in US
BBC broadcaster and presenter Evan Davis, who will be taking over from Jeremy Paxman on Newsnight
peopleForget Paxman - what will Evan Davis be like on Newsnight?
Life and Style
fashionCustomer complained about the visibly protruding ribs
The new dawn heralded by George Osborne has yet to rise
voicesJames Moore: As the Tories rub their hands together, the average voter will be asking why they're not getting a piece of the action
Dejan Lovren celebrates scoring for Southampton although the goal was later credited to Adam Lallana
newsComedy club forced to apologise as maggots eating a dead pigeon fall out of air-conditioning
Arts and Entertainment
Jo Brand says she's mellowed a lot
tvJo Brand says shows encourage people to laugh at the vulnerable
Life and Style
People may feel that they're procrastinating by watching TV in the evening
ebookA unique anthology of reporting and analysis of a crucial period of history
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Senior Risk Manager - Banking - London - £650

£600 - £650 per day: Orgtel: Conduct Risk Liaison Manager - Banking - London -...

The benefits of being in Recruitment at SThree...

£18000 - £23000 per annum + Comission: SThree: SThree, International Recruitme...

Test Analyst - UAT - Credit Risk

£280 - £300 per day + competitive: Orgtel: Test Analyst, Edinburgh, Credit Ris...

Trainee Recruitment Consultants - Banking & Finance

£20000 - £25000 per annum + OTE £40,000: SThree: SThree Group have been well e...

Day In a Page

Evan Davis: The BBC’s wolf in sheep’s clothing to take over at Newsnight

The BBC’s wolf in sheep’s clothing

What will Evan Davis be like on Newsnight?
Finding the names for America’s shame: What happens to the immigrants crossing the US-Mexico border without documents who never make it past the Arizona desert?

Finding the names for America’s shame

The immigrants crossing the US-Mexico border without documents who never make it past the Arizona desert
Inside a church for Born Again Christians: Speaking to God in a Manchester multiplex

Inside a church for Born Again Christians

As Britain's Anglican church struggles to establish its modern identity, one branch of Christianity is booming
Rihanna, Kim Kardashian and me: How Olivier Rousteing is revitalising the house of Balmain

Olivier Rousteing is revitalising the house of Balmain

Parisian couturier Pierre Balmain made his name dressing the mid-century jet set. Today, Olivier Rousteing – heir to the house Pierre built – is celebrating their 21st-century equivalents. The result? Nothing short of Balmania
Cancer, cardiac arrest, HIV and homelessness - and he's only 39

Incredible survival story of David Tovey

Tovey went from cooking for the Queen to rifling through bins for his supper. His is a startling story of endurance against the odds – and of a social safety net failing at every turn
Backhanders, bribery and abuses of power have soared in China as economy surges

Bribery and abuses of power soar in China

The bribery is fuelled by the surge in China's economy but the rules of corruption are subtle and unspoken, finds Evan Osnos, as he learns the dark arts from a master
Commonwealth Games 2014: Highland terriers stole the show at the opening ceremony

Highland terriers steal the show at opening ceremony

Gillian Orr explores why a dog loved by film stars and presidents is finally having its day
German art world rocked as artists use renowned fat sculpture to distil schnapps

Brewing the fat from artwork angers widow of sculptor

Part of Joseph Beuys' 1982 sculpture 'Fettecke' used to distil schnapps
BBC's The Secret History of Our Streets reveals a fascinating window into Britain's past

BBC takes viewers back down memory lane

The Secret History of Our Streets, which returns with three films looking at Scottish streets, is the inverse of Benefits Street - delivering warmth instead of cynicism
Joe, film review: Nicolas Cage delivers an astonishing performance in low budget drama

Nicolas Cage shines in low-budget drama Joe

Cage plays an ex-con in David Gordon Green's independent drama, which has been adapted from a novel by Larry Brown
How to make your own gourmet ice lollies, granitas, slushy cocktails and frozen yoghurt

Make your own ice lollies and frozen yoghurt

Think outside the cool box for this summer's tempting frozen treats
Ford Fiesta is UK's most popular car of all-time, with sales topping 4.1 million since 1976

Fiesta is UK's most popular car of all-time

Sales have topped 4.1 million since 1976. To celebrate this milestone, four Independent writers recall their Fiestas with pride
10 best reed diffusers

Heaven scent: 10 best reed diffusers

Keep your rooms smelling summery and fresh with one of these subtle but distinctive home fragrances that’ll last you months
Commonwealth Games 2014: Female boxers set to compete for first time

Female boxers set to compete at Commonwealth Games for first time

There’s no favourites and with no headguards anything could happen
Five things we’ve learned so far about Manchester United under Louis van Gaal

Five things we’ve learned so far about United under Van Gaal

It’s impossible to avoid the impression that the Dutch manager is playing to the gallery a little