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A: What do you make of this decision by the, by the central banks to, to club together to ensure that, the credit market doesn’t free ~ ?

B: I think Wednesday’s report that they were working together to auction off the, er… extra funds, er… over 3 months period was sort of er…seen as a bit of er… a bit of positive for the markets and we saw most of the stock market’s rally. But since then, the market digested that information and realized that this injection isn’t really going to er…alleviate the problems that we’ve seen in the credit crunch.

A: It was like the interests rate cut, wasn’t it? Really, the day before, where from fair, it was interests rate cut which everyone want it, everyone said we would gonna get, but it didn’t go quite far enough. It was the same with…with what the central banks did, we’ve talking about a lot of money in you and me terms(turn?), something like 49 billion dollars, but it’s in bank terms, it’s a relatively small amount, isn’t it?

B: Yeah, indeed. It is a relatively small amount, because it’s for such a short period of time. That’s the reason why the markets have taken this negative impact. I mean in Asia, we’ve seen the… the stock markets over there, react pretty badly, and the Asian Central Bank is haven’t really follow suit with what the Europeans and the Americans doing, but the fear is still there that if the credit crunch continued, they can see their exports being crippled.

A: And what you’ve make the… the interests rate cut by the Fed earlier in the week, a quarter of percentage point, er.. it was what everyone wanted, as I said, but the reaction was more sort of “Come on guys, what planet are you living on there in the…in the Fed, you know, living in the same world as the rest of us?”

B: Exactly, I think it was came out much in lie, er… however, the rhetoric after meeting suggested that they are sort of …paving the way for further ~ rate cuts despite the inflation being pretty high, we saw both RPI and PPI coming out stronger than expected, em… and also we got CPI this afternoon, if we see this hotter than expected, it’s already expected to come out 4.1%, even if you strip out food and oil from there, it still expected to come out that 2.3 which is above the Feds to descend target.

A: It’s interesting to hear you talk about inflation, and the Fed obviously sound a note of caution about inflation, and yet we had a survey out earlier this week which said most of the American public thinks the economy is already in recession.

B: Exactly, em… I think the, the world rather than recession is stipulation. We have a problem with inflation at moment, and the Fed with the difficult position of trying to control, while at the same time, trying to prevent the er… American economy going into recession, that’s where we see the rate cuts going into play, the question now is whether the rate cuts are going to fuel inflation, or whether they are going to control er…growth as the U.S. is expecting.
A: And what’s your gut feeling about the CPI today with ~ and ~ ?

B: I think CPI’s gonna come out slightly hotter than expected, em… mostly due to higher fuel and energy cost, and the RPI and PPI give us a startled direction as well. If we see come ~ , I think the Fed gonna have to make another difficult rate decision about whether they are going to raise rates in January, and the …interesting to know the interests rate futures market is still predicting, 100% chance that the Fed are going to raise rate in January.