The Naples Summit: Clinton cool on interest rate rise
Saturday 09 July 1994
Mr Clinton's remarks after meeting Tomiichi Muruyama, the new Socialist Prime Minister of Japan, in effect confirmed an administration policy of 'benign neglect' towards the US currency. He made it clear that it was important 'not to overreact' to the dollar's recent plunge on the foreign exchange markets.
These comments coincided with an admission by both sides that they had made little if any progress on their dispute over America's demand that Japan open up its markets more widely to foreign competition. Despite this, the US called for more open Japanese markets to cut Japan's huge trade surplus.
After the talks, held just before the start of the 20th World Economic Summit, Mr Clinton said it would be a mistake to abandon the Group of Seven's goal of pursuing global growth, which was agreed on at the 1993 Tokyo Summit.
The President then gave another strong indication that he was reluctant to slow the expansion through higher interest rates - the most effective way of stabilising the dollar - so soon after recession had ended. 'I think it's important we not lose sight of the real economy in which the people of the G7 nations and, indeed, the people of the world live.'
Recalling the 1993 G7 agreement on growth, Mr Clinton pointed out that the US economy had recovered, Europe had cut interest rates and both were contributing to the world recovery from recession. But he was less generous about Japan. Tokyo, he said, had promised to stimulate its domestic demand and bring about recovery and Mr Muruyama had reaffirmed Japan's intention to do that.
The President concluded that the steep rise of the yen was a function of the movement of world currency markets and also of the macro-economic realities - in other words Japan's huge trade surplus and the widening US trade deficit. 'The United States does not seek to grow its economy or change its trade balance through a low dollar; we do not want that,' President Clinton said. 'We want the dollar to be properly valued, not undervalued.'
The upheaval in Japanese political life made it difficult to imagine how the hard questions of the US-Japan trade framework talks could have been resolved by now, the President added.
- 3 The enemy within: People who hear voices in their heads are being encouraged to talk back
- 4 Phil Neville backtracks on Tomas Rosicky 'I'd smash him' comments from Match of the Day 2
- 5 SAG Awards: Fake applause track interrupts Reese Witherspoon
Rowan Atkinson to sell £10 million McLaren 'supercar' he crashed into a tree and a lamppost
Paris attacks: Do not call Charlie Hebdo killers 'terrorists', BBC says
Asteroid narrowly scrapes past Earth: how to watch the closest space rock for decades as it flies by
UK weather: Snow to fall in the coming week with sub-zero temperatures to last until early February
Saudi preacher who 'raped and tortured' his five -year-old daughter to death is released after paying 'blood money'
Nigel Farage: NHS might have to be replaced by private health insurance
'We would evict Queen from Buckingham Palace and allocate her council house,' say Greens
French court convicts three over homophobic tweets, in case hailed as a 'significant victory' by LGBT rights campaigners
Greece elections: Syriza and EU on collision course after election win for left-wing party
George Galloway condemns 'racist, Islamophobic, hypocritical rag' Charlie Hebdo at freedom of speech rally
British Muslim school children suffering a backlash of abuse following Paris attacks
£90 - £140 per day: Tradewind Recruitment: On behalf of a successful academy i...
£45000 - £50000 per annum: Investigo: My client, a global leader in providing ...
Excellent Salary: Austen Lloyd: WEST LONDON - An excellent new opportunity wit...
£8 - £10 per hour: Recruitment Genius: A Florist Shop Manager is required to m...