The European Central Bank is likely to refuse to show its hand on how it will help cut Greece
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Consumer prices in the euro zone fell more than previously expected in December, the start of a retreat from a November peak that should give the European Central Bank more room to cut interest rates as the economy heads for recession.
Inflation in the 17 countries sharing the euro was 2.7 percent in December on an annual basis, revised down from an earlier estimate of 2.8 percent for the month, the European Union’s statistics office Eurostat said.
“The pressure is abating although the risks from energy are still there,” said Fabio Fois, an economist at Barclay’s Capital. “We think the ECB could bring rates as low as 0.5 percent in March,” he said.
The bank made two 25 basis points cuts after Mario Draghi took over as president in November before holding fire this month.
Many economists expect it to take rates below 1 percent for the first time ever in the coming months but comments by Governing Council member Ewald Nowotny published on Tuesday hinted that the bank was in no hurry to move again.
“We are all agreed that now the point is to allow these measures to take full effect. Only then will we take further decisions,” he told the Wall Street Journal’s German website.
“For the ECB ‘We never precommit’ always applies, but there are no plans whatsoever at the moment.”
Reuters’ latest polling of some 66 economists before the ECB met earlier this month suggested the bank will cut interest rates to a new record low of 0.75 percent in February or March no fax payday loans.
Economists had expected euro zone inflation to remain at 2.8 percent in December.
IRAN EFFECT
Stripping out volatile energy prices, the main driver behind a 3 percent peak in the headline number in September, October and November, inflation was 1.9 percent.
Without energy and food, it was 1.6 percent.
That sits better with the ECB’s target of below, but close to 2 percent, which the Frankfurt-based bank judges to be right for price stability and a healthy economy.
The euro zone’s economy, however, is anything but. The bloc’s gross domestic product probably contracted in the fourth quarter of 2011 and is expected to do so again in the first quarter of 2012 - showing it has fallen into a recession.
The weakening economy and rising unemployment across the bloc are cutting demand for goods and with it pressuring retailers to reduce prices. That has offset continuing high prices for crude oil globally due to concerns about a supply disruption in Iran.
Oil futures rose on Monday after Saudi Arabia told its Gulf Arab neighbors not to make up any shortfall caused by an embargo on Iranian crude oil exports.
In the euro zone in December, fuels for transport, heating oil, gas and electricity had the biggest impact on inflation in December. Energy inflation was a massive 9.7 percent in the month, compared to December 2010, Eurostat said.
As with fast payday loans, this recently used to be the case, but competitive lenders and higher demand has taken this loan type to mainstay levels.
The editor of a British tabloid has outlined a culture where reporters exaggerate headlines, dramatize stories, and occasionally go too far.
Daily Star Editor Dawn Neesom was speaking at the judge-led inquiry into British media ethics set up in the wake of the phone hacking scandal centered on the now-defunct News of the World tabloid
She shied away from claims that her paper played fast and loose with the truth, but acknowledged that the paper’s mission was “to put a smile on people’s faces payday loans.”
Neesom said Thursday: “Occasionally, I admit, we do cross lines. But we do have standards.”
The Star is owned by media magnate Richard Desmond, who is also to give evidence at the inquiry.
Desmond also publishes the Daily Express and celebrity magazines OK! and New!
Iran has begun uranium enrichment at a new underground site well protected from possible airstrikes, a leading hardline newspaper reported Sunday in another show of defiance against Western pressure to rein in Tehran’s nuclear program.
Another newspaper quoted a senior commander of the powerful Revolutionary Guard force as saying Tehran’s leadership has decided to order the closure of the Strait of Hormuz, a strategic oil route, if the country’s petroleum exports are blocked. Revolutionary Guard ground forces also staged war games in eastern Iran in an apparent display of resolve against U.S. forces just over the border in Afghanistan.
“The supreme authorities … have insisted that if enemies block the export of our oil, we won’t allow a drop of oil to pass through the Strait of Hormuz. This is the strategy of the Islamic Republic in countering such threats,” Revolutionary Guard deputy commander Ali Ashraf Nouri was quoted as saying by the Khorasan daily.
Iranian politicians have issued similar threats in the past, but this is the strongest statement yet by a top commander in the security establishment.
The latest statements are certain to fuel tensions with the U.S. and its allies, which are trying to turn up pressure on Iran with new sanctions to punish it over its disputed nuclear program. The West suspects Iran is trying to make nuclear weapons, but Iran denies this.
The United Nations has already sanctioned Iran for refusing to stop uranium enrichment _ which can produce both nuclear fuel and fissile warhead material. Tehran says its nuclear program is only for energy and medical research, and refuses to halt uranium enrichment.
Kayhan daily, which is close to Iran’s ruling clerics, said Tehran has begun injecting uranium gas into sophisticated centrifuges at the Fordo facility near the holy city of Qom.
“Kayhan received reports yesterday that show Iran has begun uranium enrichment at the Fordo facility amid heightened foreign enemy threats,” the paper said in a front-page report. Kayhan’s manager is a representative of Iran’s Supreme Leader Ayatollah Ali Khamenei, who has the final word on all important matters of state.
Iran’s nuclear chief, Fereidoun Abbasi, said late Saturday that his country will “soon” begin enrichment at Fordo. It was impossible to immediately reconcile the two reports.
Iran has a major uranium enrichment facility in Natanz in central Iran, where nearly 8,000 centrifuges are operating. Tehran began enrichment at Natanz in April 2006.
The Fordo centrifuges, however, are reportedly more efficient. And the site better shielded from aerial attack.
Nouri said Iran’s leadership has made a strategic decision to close the Strait of Hormuz, should the country’s exports be blocked. One-sixth of the world’s oil flows to market through the Strait of Hormuz, at the mouth of the Persian Gulf unsecured personal loans.
President Barack Obama approved new sanctions against Iran a week ago, targeting the central bank and its ability to sell petroleum abroad. The U.S. has delayed implementing the sanctions for at least six months, worried about sending the price of oil higher at a time when the global economy is already struggling. But the new sanctions nevertheless prompted a series of threats from Iranian officials about closing the Strait of Hormuz.
The newspaper paraphrased Nouri as saying that a 10-day naval war game which ended Tuesday was preparation for such a closure. The Guard, which is Iran’s most powerful military force and which has its own naval arm, has planned more sea maneuvers for February.
“The exalted leader (Khamenei) determined a new strategy for the armed forces, by which any threat from enemies will be responded to with threats,” Nouri said.
The U.S. and Israel have said that all options remain open, including military action, should Iran continue with its enrichment program.
Tehran says it needs the program to produce fuel for future nuclear reactors and medical radioisotopes needed for cancer patients.
The country has been enriching uranium to less than 5 percent for years, but it began to further enrich part of its uranium stockpile to nearly 20 percent as of February 2010, saying it needs the higher grade material to produce fuel for a Tehran reactor that makes medical radioisotopes needed for cancer patients. Weapons-grade uranium is usually about 90 percent enriched.
Iran says the higher enrichment activities _ to nearly 20 percent _ will be carried out at Fordo. These operations are of particular concern to the West because uranium at 20 percent enrichment can be converted into fissile material for a nuclear warhead much more quickly than that at 3.5 percent.
Built next to a military complex, Fordo was long kept secret and was only acknowledged by Iran after it was identified by Western intelligence agencies in September 2009.
Buried under 300 feet (90 meters) of rock, the facility is a hardened tunnel and is protected by air defense missile batteries and the Revolutionary Guard, Iran’s most powerful military force. The site is located about 20 miles (32 kilometers) north of Qom, the religious nerve center of Iran’s ruling system.
“The Fordo facility, like Natanz, has been designed and built underground. The enemy doesn’t have the ability to damage it,” the semiofficial Mehr news agency quoted nuclear chief Abbasi as saying Sunday.
The federal government is moving ahead with the first auction of offshore petroleum leases in the Gulf of Mexico since the Deepwater Horizon disaster _ despite a lawsuit challenging the sale.
Interior Department spokeswoman Melissa Schwartz said bids will be opened as scheduled on Wednesday in New Orleans.
Four environmental groups are challenging a study used to clear the sale _ but aren’t seeking a federal court order to stop the auction. Instead, an attorney said a judge might decide later to throw out the results if he agrees with the suit.
The sale covers the western Gulf off the coast of Texas. Officials said the auction has attracted 241 bids from 20 companies on 191 tracts.
Concordia honored
Prime Minister-designate Mario Monti of Italy says he is ready to present his new government to the president on Wednesday after winning wide backing from political, business and union leaders.
Monti expressed his “serenity” and “conviction” in Italy’s ability to overcome the difficult phase of its economic crisis. He told reporters Tuesday evening that he had received assurances from various parties that they would endure sacrifices for the greater good of the country.
The economics professor tapped to head Italy’s next government has been holding intense talks for two days, seeking support for his mission to steer the eurozone’s third-largest economy through its debt crisis.
Monti’s government must then win confidence votes in both houses of Parliament, expected later this week.
THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP’s earlier story is below.
ROME (AP) _ Italy’s prime minister-designate is ready to present his new government on Wednesday after winning wide backing from political, business and union leaders for his Cabinet and economic reforms during intense consultations aimed at steering the euro zone’s third-largest economy through its debt crisis.
Italian news reports said Monti would present details of his government on Wednesday morning. Monti’s government must then win confidence votes in both houses of Parliament, expected this week.
Monti, a respected economist and former European commissioner, is under pressure to quickly reassure markets that Italy will avoid a default that could tear apart the 17 countries that use the euro currency and push the global economy back into recession.
Monti, 68, has already shown his determination to press through deep reforms by making it clear he intends to serve until regularly scheduled elections in 2013, rejecting calls for an early vote.
On Tuesday, after rounds of meetings, Monti garnered support from the center-left Democratic Party, Silvio Berlusconi’s People of Freedom party and the Confindustria, a powerful business lobby.
“We strongly support the birth of this government because for us it is the last chance to regain credibility,” Confindustria leader Emma Marcegaglia said.
Union leader Raffaele Bonanni said Monti was close to completing his Cabinet at the time of their meeting Tuesday afternoon.
“Monti told us that he has reached an agreement with the main political forces that will give him a consistent parliamentary majority that will support him and he will very quickly be in a position to present the list of ministers,” said Bonanni, leader of the powerful CISL union no credit check payday loans.
Despite reports of progress, European markets closed lower Tuesday as investors worried that politicians might pull their support in the future if austerity measures proved unpalatable.
Amid the uncertainty, the yield on Italy’s 10-year bonds jumped again to 6.94 percent. Last week’s spike above 7 percent _ a level considered unsustainable in the long term _ raised fears Italy would eventually need a bailout like Greece, Ireland and Portugal.
But a financial debacle in Italy raises a whole new set of problems, because the country is considered too big for Europe to bail out.
Monti was asked to form a government Sunday after Berlusconi resigned amid weeks of market turmoil over Italy’s stagnant growth and high public debt, which at euro1.9 trillion ($2.6 trillion) is nearly 120 percent of GDP.
Many of those debts are coming due soon, with Italy having to roll over more than euro300 billion ($410 billion) of its debts next year alone.
Monti met Tuesday with the head of the Democratic Party and Angelino Alfano, leader of the Peoples of Freedom party.
“We think, in light of the facts and after this latest conversation, that Professor Monti’s attempts are destined to turn out well,” Alfano told reporters afterward.
Previously, his party had conditioned its support on the shape of Monti’s cabinet, his government agenda and the duration of his term.
Pierluigi Bersani, head of the Democratic Party, pledged support and placed no timeframe on Monti’s tenure.
Only the Northern League, Berlusconi’s allies, have refused to support his government. They wanted early elections this spring, something Monti has rejected.
The EU, meanwhile, says said new measures will be necessary for Italy to balance its budget as promised by 2013. The eurozone avoided contracting in the third quarter, thanks mainly to Germany and France, but is widely expected to fall into recession imminently as a result of its raging debt crisis.
Monti says Italians will have to make some sacrifices to get through the crisis but “not tears and blood.”
Wells Fargo 6,126
Edward Jones 4,965
Citigroup 3,800
U.S. Bancorp 3,750
Bank of America 2,815
Will a monthly debit card fee soon be the norm? Bank of America said Thursday that it plans to start charging a $5 monthly fee when customers make debit card purchases. The fee will be rolled out starting early next year.
Paying to use a debit card was unheard of before this year and is still a novel concept for many consumers. But several banks have recently introduced or started testing debit card fees. That’s in addition to the spate of other unwelcome changes checking account customers have seen in the past year.
Bank of America’s announcement carries added weight because it is the largest U.S. bank by deposits.
The fee will apply to basic accounts, which are marketed toward those with modest balances, and will be in addition to any existing monthly service fees. For example, one such account charges a $12 monthly fee unless customers meet certain conditions, such as maintaining a minimum average balance of $1,500.
Customers will only be charged the fee if they use their debit cards for purchases in any given month, said Anne Pace, a Bank of America spokeswoman. Those who only use their cards at ATMs won’t have to pay.
The debit card fee is just the latest twist in the rapidly evolving market for checking account.
A study by Bankrate.com this week found that just 45 percent of checking accounts are now free with no strings attached, down from 65 percent last year and 76 percent in 2009. Customers can still get free checking in most cases, but only if they meet certain conditions, such as setting up direct deposit.
The study also found that the total average cost for using an ATM rose to $3.81, from $3.74, the year before. The average overdraft fee inched up to $30.83, from $30.47
The changes come ahead of a regulation that goes into effect next month.
Starting Oct. 1, the regulation will cap the fees that banks can collect from merchants whenever customers swipe their debit cards. Those fees generated $19 billion in revenue for banks in 2009, according to the Nilson Report, which tracks the payments industry.
There is no similar cap on the merchant fees that banks can collect when customers use their credit cards, however free business cards. That means many banks are increasingly encouraging customers to reach for their credit cards, in hopes of reversing a trend toward debit card usage in the past several years.
An increasing reliance on credit cards would be particularly beneficial for big institutions like Bank of America, which have large credit card portfolios, notes Bart Narter, a banking analyst with Celent, a consulting firm.
“It’s become a more profitable business, at least in relation to debit cards,” Narter said.
This summer, an Associated Press-GfK poll found that two-thirds of consumers use debit cards more frequently than credit cards. But when asked how they would react if they were charged a $3 monthly debit card fee, 61 percent said they’d find another way to pay.
With a $5 fee, 66 percent said they would change their payment method.
Several banks are nevertheless moving ahead with debit card fees.
SunTrust, a regional bank based in Atlanta, began charging a $5 debit card fee on its basic checking accounts this summer. Regions Financial, which is based in Birmingham, Ala., plans to start charging a $4 fee next month.
Chase and Wells Fargo are also testing $3 monthly debit card fees in select markets. Neither bank has said when it will make a final decision on whether to roll out the fee more broadly.
The growing prevalence of the debit card fee is alarming for Josh Wood, a 32-year-old financial adviser in Amarillo, Texas.
Wood relies entirely on debit cards to avoid interest charges on a credit card. If his bank, Wells Fargo, began charging a debit card fee, he said he would take his business to a credit union.
If a debit fee became so prevalent that it was unavoidable, Wood said he’s not sure how he’d react.
“I might use all cash. Or go back to writing checks,” he said.
Bank of America’s debit card fee will be rolled out in stages starting with select states in early 2012. The company would not say which states would be affected first.