Bush signs bill aimed at boosting economy

NEW YORK - President Bush on Wednesday signed the $170 billion economic stimulus package passed by Congress last week.

Bush, saying that Americans are "concerned about our economic future," said he believes the stimulus package will provide a "booster shot" for the economy.

The government hopes the measure, which will send most Americans tax rebate checks by May, will either prevent a recession or make one relatively brief.

The package also includes tax breaks for equipment purchases by businesses, as well as payments to disabled veterans and some senior citizens. The bipartisan measure moved through Congress at relative break-neck speed, going from initial discussions to enactment in less than four weeks.

The package will pay most individual taxpayers $600 and $1,200 for married taxpayers filing joint returns as long as they are below income caps of $75,000 for individuals and $150,000 for couples. There is also a $300 per child tax credit.

Spending on plastic cards slows

Latest figures from APACS, the UK payments association, show that spending on plastic (credit/debit cards) over the Christmas period reached £32.2 billion, with £5.4 billion spent online. Up 4% on the 2006 figures, the figure marks the slowest year on year increase over the same period for credit and debit card spending for 4 years.

The increase was due to the rise in spending on debit cards, which grew by 6.8% to £20.9 billion, although this was less than half of the increase between 2005 and 2006 (15.3%).

Credit card spending at Christmas fell for the second year running - £11.3 billion in December 2007 compared to £11.4 billion for the same period in 2006. There was a decrease of 2.8% in the volume of credit card transactions, down from 197 million transactions for December 2006 to 192 million transactions in 2007.

Overall spending on plastic cards accounted for 64% of total retail sales. There were 690 million plastic card transactions in December 2007, only 3.2% more than during December 2006. This equated to 263 transactions per second throughout the month, compared with 250 in December 2006.

Sandra Quinn, of APACS, says that despite talk of a slowdown once again we spent record amounts last Christmas. However, the increase on 2006 spending was just 4%, which compares to increases of just under 9% over the last couple of years. Worth pointing out too is that credit card spending fell for the second year in a row.

"This trend highlights what we have been seeing over the past few years with people increasingly opting to use their debit card rather than credit card; reflecting that people are thinking more carefully about whether they can afford to borrow," says Quinn.

Bank of England Reduces Bank Rate by 0.25 Percentage Points to 5.25%

The Bank of England’s Monetary Policy Committee today voted to reduce the official Bank Rate paid on commercial bank reserves by 0.25% points to 5.25%.

The prospects for output growth abroad have deteriorated and the disruption to global financial markets has continued. In the United Kingdom, credit conditions for households and businesses are tightening. Consumer spending growth appears to have eased. Although the substantial fall in the sterling exchange rate is likely to promote re-balancing of total demand, output growth has moderated to around its historical average rate and business surveys suggest that further slowing is in prospect. These developments pose downside risks to the outlook for inflation.

CPI inflation, at 2.1% in December, was close to the 2% target, but higher energy and food prices are expected to raise inflation, possibly quite sharply, in the coming months. And the lower level of sterling will boost import costs. The impact on inflation should begin to fade later in the year, but measures of inflation expectations are currently elevated. These developments pose upside risks to the outlook for inflation further ahead.

Given this outlook for inflation, some slowing of demand growth, by reducing the pressure on capacity, is likely to be necessary to return inflation to target in the medium term. The Committee needs to balance the risk that a sharp slowing in activity pulls inflation below the target in the medium term against the risk that elevated inflation expectations keep inflation above target.

Against that background, the Committee judged that a reduction in Bank Rate of 0.25 percentage points to 5.25% was necessary to meet the 2% target for CPI inflation in the medium term.

Bank of England cuts key interest rate

LONDON - The Bank of England cut interest rates by a quarter of a percentage point to 5.25% on Thursday, its second cut in three months as it attempts to shore up confidence in Britain's slowing economy.

The trim had been widely anticipated by analysts who had expected the central bank's monetary policy committee to set aside conflicting concerns about accelerating inflation