14 January 2008

U.S. and Europe Ponder Divergent Rate Policies

This article is excerpted from the 12 January 2008 edition of “The New York Times”.

Can Europe’s economy stay on track even if the United States goes off the rails?

This old question is being asked with new urgency across the Continent, after a startling divergence this week in how the European Central Bank and the Federal Reserve are reading economic tea leaves.

The chairman of the Federal Reserve, Ben S. Bernanke, signaled Thursday that the

Fed would cut rates to try to ward off a recession. Earlier that day, Jean-Claude Trichet, president of the European Central Bank, told a news conference here that the signals on European growth were mixed.

A growing number of economists, convinced Europe is not as insulated from America’s woes