Wednesday, February 9, 2011;
The People's Bank of China said Tuesday that it would lift rates for one-year deposits and one-year loans 25 basis points to 3 percent and 6.06 percent, respectively. After two increases late last year, many economists thought it was only a matter of time before the bank would announce another increase in an attempt to tackle inflation.
Financial markets took the news in stride. Copper, where Chinese buying is a big demand driver, slipped slightly before recovering most of the lost ground and trading at $9,974 a ton for three-month metal, down from $10,045 Monday.
Concern moved through emerging markets, where inflation is a concern, with an average fall of 1.2 percent on East European stock markets. "Most people expected a rate increase around now," said Mark Williams, a China specialist at Capital Economics, a British-based research company.
Most economists expect a further 25 basis point rise. With inflation expected to rise from 4.6 percent year-on-year in December to about 5 to 6 percent, interest rates remain in negative territory. So incentives remain to spend savings and borrow - notably to invest in the fast-growing property market.
However, the Chinese authorities have been cautious about raising rates amid concerns the economy could be held back at a time when China is contributing greatly to global growth. The country's GDP rose about 10 percent in 2010.
- Financial TimesTAXES
The Internal Revenue Service is offering reduced penalties for international tax cheats who come clean.
IRS Commissioner Doug Shulman said Tuesday that people who are hiding assets overseas can avoid jail and pay reduced fines if they turn themselves in and pay back taxes by Aug. 31.
The offer is similar to one the IRS made in 2009 that netted 15,000 tax evaders. Shulman said the IRS has closed 2,000 of those cases, collecting $400 million in revenue.
Shulman said the new offer won't be as generous because he doesn't want to reward tax cheats who waited two years to come forward.
The IRS has long had a policy that certain tax evaders can avoid jail as long as they come forward before they are contacted by the agency. But without the program, penalties can sometimes far exceed the value of hidden accounts.
- Associated PressALSO IN BUSINESS
Posted jobs down in December: Employers posted fewer jobs in December, the latest evidence that businesses are not ready to step up hiring.
The Labor Department said Tuesday that employers advertised nearly 3.1 million jobs in December, a drop of almost 140,000 from November and the second straight monthly decline. It's also the lowest total since September.
The report provides an indication of future hiring patterns because it can take several months to fill many jobs.
Openings have risen by more than 700,000, an increase of 31 percent, since they bottomed out in July 2009, one month after the recession ended.
Analysts expect companies will start hiring again soon, noting that other data suggest the economy is improving. Consumers are spending more, layoffs have slowed and the Dow Jones industrial average is above 12,000.
- Associated Press
Two airlines raising business fares: United and Continental airlines are raising fares for U.S. business travelers by $20 to $60 for a round-trip ticket. The airlines, owned by United Continental Holdings, raised fares Tuesday. American says it matched the increases. J.P. Morgan analyst Jamie Baker says that selective price increases on business travelers make sense and that price hikes on leisure travelers might have run their course.
- From news services