GLOBAL ECONOMY-Inflation and slowdown plague industrial world
By Brian Love
PARIS, April 30 (Reuters) - Soaring prices of food, oil and raw materials forced Japan's central bank to triple its inflation forecast on Wednesday, but fears of a U.S.-induced economic downturn also led it to abandon talk of raising interest rates.
In Europe, where forecasts of economic growth in the euro currency zone were cut this week, data showed inflation had dipped in April from record levels but remained well above the European Central Bank's tolerance level.
In the United States, the Federal Reserve is expected to announce yet another interest rate cut despite a similar inflation problem, as it tries to bolster an economy pummelled by a housing slump and collapse of the sub-prime mortgage market.
In all, news from the three regions highlighted the question of whether the industrialised world faces stagflation -- little or no economic growth combined with high inflation.
NOT SO FAST, JAPAN
The Bank of Japan said after a policy meeting that it had decided to leave interest rates at 0.5 percent. More remarkably, it chose not to signal the long-term need for a rate rise, abandoning a routine of the past two years.
The BOJ cut its growth forecasts for the current business year, which ends next March, to 1.5 percent from 2.1 percent, and almost tripled its inflation outlook to 1.1 percent from 0.4 percent. Continued...




