[Briefly]

◆Bank of England Faces Key Stimulus Decision

The Bank of England's injection of 175 billion pounds ($289 billion) into the economy hasn't yet pulled Britain out of recession, and the central bank now faces a difficult decision on whether to raise the stakes.

The bank's monetary policy committee began its monthly two-day meeting on Wednesday, a day before it announces its latest decision on interest rates and quantitative easing, its strategy of stimulating the economy by inflating the money supply.

Markets are waiting to see if the amount will be increased, and if so, by how much. Some think the bank could add 25 billion pounds or more.

"The decision appears finely balanced, although expectations are tilted towards an extension," said Simon Hayes at Barclays Capital.

The decision comes two weeks after disappointing news that U.K. gross domestic product, or economic output, fell by 0.4 percent in the third quarter, contrary to expectations that the economy would move into growth.

The key interest rate is expected to stay at a record low of 0.5 percent for the eighth consecutive month, but the market has been left guessing about the Bank's next move on monetary easing. The bank buys securities from banks, giving them ready cash, and credits their account at the bank, in effect creating new money.

Boosting the money supply is done during serious downturns in hopes it will get credit flowing to businesses so they can operate and expand. It has to be withdrawn as growth returns to avoid causing inflation. 

◆Goldman Reaps Benefits as Trading Boom Returns: FT

Goldman Sachs traders recorded only one daily loss in the third quarter, highlighting the trading bonanza that is sweeping Wall Street as central banks continue to pump billions of dollars into the financial system, according to Financial Times.

The performance, which was revealed yesterday in a regulatory filing, compares with two losing trading days in the previous quarter and confirms that the authorities' drive to revive markets after the crisis is yielding huge windfalls for some banks. Before the crisis, banks regularly recorded trading losses on several days in a quarter.

Goldman made more than $100m in profits on 36 of the 65 days in the three months to September and recorded over $50m in profit on more than eight out of 10 trading days, the filing shows.

These figures were down from the second quarter, when it reported record trading revenues and had 46 days with $100m-plus in profits. The smaller number of days with $100m-plus profits in the third-quarter partly reflects the bank's decision to rein in risk-taking in areas such as interest rates and equities.

Goldman's ability to reap large profits - its trading operations had net income of $6bn during the third quarter - without ramping up risk underlines the changing nature of trading on Wall Street.

After taking large bets with their own capital prior to the crisis, several banks have taken advantage of reduced competition, higher margins and government-provided liquidity to make money in less risky activities. Goldman doubled its trading profits in credit from $1bn in the second quarter to $2bn in third quarter and also increased profits in equities by about 25 per cent to $3.4bn, according to the filing. 
 

◆Eurozone Industrial Producer Prices Fall in September

Industrial producer prices in the euro zone fell 0.4 percent in September from the previous month, the European Union (EU)'s statistics bureau Eurostat said Wednesday.

Compared with September 2008, industrial producer prices in the16-nation bloc that uses the euro dropped by 7.7 percent.

In September, compared with the previous month, prices in total industry, excluding the energy sector, remained stable in both the euro area and the whole EU region, while prices in the energy sector fell 1.9 percent and 2.6 percent respectively.

Prices in intermediate goods increased 0.2 percent and while the prices of durable consumer goods and non-durable consumer goods decreased 0.1 percent.

In the 27-nation EU, industrial producer prices dropped 0.7 percent month on month in September and fell 7.3 percent year on year.

Among member states for which data was available, the largest falls in the total index were recorded in the Netherlands, down by13.4 percent. The only increase -- 0.7 percent -- was recorded in Malta.

The index of producer prices shows changes in the ex-works sale prices of all products sold on the domestic markets of the various countries, excluding imports.

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