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International Outlook: Global Wrapup

GERMANY

Hopes are fading for a midyear cut in German interest rates to boost Europe's sagging economies. Despite a downturn that's lasting longer than expected, the Bundesbank is preoccupied with what it sees as a new inflation threat. Money-supply growth has recently accelerated beyond the central bank's target of 3.5% to 5.5% a year. That's helping to boost inflation--to nearly 5%. If wage settlements, currently averaging a stiff 6%, don't come down, the bank may well raise rates again rather than lower them.EDITED BY STANLEY REED


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