ECB WON'T MOVE ON RATES UNTIL Q3 2011 AS FISCAL TIGHTENING CONTINUES - The Federal Reserve issued its Beige Book - or national assessment of how the US economy is getting on - last night. It found that the economy kept growing overall in recent weeks, but the growth was uneven and it slowed in a few regions. The Beige Book reports on economic conditions in all 12 districts that are part of the Federal Reserve system. It says manufacturing expanded in most districts; retail sales were slightly higher, but car and house sales are not doing too well. There was a modest improvement in labour markets, with several reports of temporary hiring. Consumer prices held steady in most parts of the country while wage pressures were described as 'contained'.
Ulster Bank economist Simon Barry says that while the US economy has lost some momentum recently, his overall read of the latest Beige Book and the overall trend of US data shows that the economy there is still managing to record growth. For Ireland, he says it is critical that the global economic picture continues to improve and any signs that a double dip recession can be avoided is only good news for the Irish economy.
The economist says the Irish economy is focused on the country's public finances at the moment and he points out that the current cycle of fiscal tightening is going to continue beyond the December budget for the next few years. But he adds that things are starting to improve here with retail sales trends beginning to strengthen as well as improved consumer confidence.
The latest Reuters monthly forecast on ECB rates says that rates will now not move until the third quarter of next year. Mr Barry says this is because of the fiscal tightening that is continuing across many euro zone countries and not just Ireland. He says euro zone countries are less concerned about inflation and more worried about boosting their economies. While not committing to a timeline in the third quarter of next year, the economist says the next rate move from the ECB will definitely be upwards.
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MORNING BRIEFS - At least 15 files relating to Anglo Irish Bank have been referred to the Gardai by the Director of Corporate Enforcement, Paul Appleby. Gardai and the ODCE have been investigating the bank since February last year - the ODCE for breaches of company law, while potential criminal offences are being investigated by the Gardai. The offences are linked to the transfer of over €7 billion in deposits between Anglo and Irish Life and Permanent, loans to directors and the loan of €450m to investors to buy Anglo shares. A third of the ODCE's 50 staff are working on the investigation, along with 20 members of the Garda Fraud Squad.
*** Online insurance firm 123.ie has been sold to Royal Sun Alliance in a deal worth over €65m. Under the deal, RSA will take over the underwriting of all future policies sold by 123.ie, it will also take over its staff, offices, branding and online infrastructure.
*** United Drug, which provides services to healthcare manufacturers and pharmaceutical retailers, says trading across the group in the past few months has been satisfactory, with a strong performance in parts of the business. Group profits for the nine months to 30 June 2010 are in line with last year, and cash flows continue to be strong throughout the Group.
*** European shares ended lower last evening, ending a six-day rally. Banks were mixed after gains on Monday and Tuesday fuelled by strong earnings figures and the result of stress tests at the end of last week.
*** On the currency markets, the euro is trading at $1.3012 cents and 83.29 pence.
