Rate cuts go down well at home and abroad

The Central Bank of Ireland bowed to the inevitable and cut rates last Friday to bring us within a whisper (relatively speaking) of the expected 3.30 per cent euro rate. The Governor Maurice O'Connell's plaintive cries that he would rather be raising rates, and that he would leave them as high as he could for as long as possible, were drowned in the chorus of approval from the money markets.

Traders in the interbank market were getting tired of trying to guess when rates would finally be cut - every setting of the repo rate became a major (disappointing) event, and every Friday at four had been equally disappointing.

I don't think the governor will have to worry about inflation getting out of control if the gloom and doom of Britain begins to permeate through. Last week I mentioned talk of recession - by the weekend commentators were falling over themselves to give in-depth analysis of how deep and how long the British recession was going to be. Brace yourselves to hear from anyone who forecast anything vaguely right about the last British recession.

They might not have predicted anything since then, but someone is bound to find a name lurking in the old financial reports and the gloom merchants will have their day again. I suppose the easiest prediction will be that there will be no early recovery. There never is. And that jobs will go. They always do. That is what happens in a recession.

Anyway a half a percentage point cut in British rates was well received by the City although, given the pessimistic growth forecasts that abound, we expect to see a few more of them.

Meanwhile, on mainland Europe, Oskar Lafontaine, the German Finance Minister, caused much consternation by attending one of the Bundesbank's regular meetings. Mr Lafontaine believes central banks should not merely be concerned with inflation (especially since, for the time being at least, there isn't a flicker of inflationary pressure anywhere in "core" Europe). He thinks the Bundesbank should also be concerned with jobs. I suppose it is, but mostly its members are concerned with their own jobs. After January 1999, the Bundesbank won't exist in the same universe as it did before and I imagine (like many of our own Central Bankers) the CVs continue to be dusted down and posted to the Human Resources Department of the European Central Bank. I believe there are quotas - it's a European thing so of course there are quotas - of jobs available for different nationalities. Presumably the Germans would have a fairly decent quota, as would the French.

Although possibly no application from one of France's greatest financial exports, Jacques Attali. Mr Attali, as you may recall, presided over the European Bank for Reconstruction and Development. He flung himself into the task of reconstructing the bank with marbled foyers and extravagant offices. Then he developed extravagant travel arrangements which included a private jet or two. Unfortunately, Mr Attali was supposed to be reconstructing Europe not his personal empire.

Anyway, according to reports, he has developed an Internet-based bank which is intended not for profit, but for the poor. The bank (to be known as PlaNet) will be providing loans for small projects undertaken in developing countries. This is known as microcredit. With the world economy on a downward spiral, I hope Mr Attali knows what he is doing. Just because he didn't before doesn't mean he hasn't learned a few things.

The Japanese, however, don't seem to have learned anything at all. Quick action by monetary authorities does help to stabilise markets and provide breathing space in times of trouble. The US markets have reacted well to rate cuts by the chairman of the Federal Reserve, Alan Greenspan.

However, in Japan they seem to be running around in circles when it comes to the economic stimulus packages that they are supposed to be putting in place. Tax cuts were scheduled for the middle of November when the package was to be presented to parliament. But the government is talking about delaying the cuts until January. Why? What on earth does it hope to gain by waiting? One of the proposals is for a type of gift voucher to be included as part of salaries in order to stimulate consumer spending. The idea is that you receive an allowance but you can't save it, you must spend it by a certain date. Sounds like a good (if desperate) idea.

Perhaps the happy voucher holders could take them along to Marks & Spencer (if there is one in Tokyo). M&S reported a truly awful fall in profits and has warned that earnings will deteriorate further. Actually, I'm not entirely surprised. My expenditure there has declined dramatically since it stopped selling a particular range of gorgeous chocolate. And although its undies department is a treat to wander around, it has become a complete nightmare of weird push-you-up, pull-you-in kind of garments which don't come cheap. It's too difficult to find something simple there anymore. If M&S wants to increase sales it should get the franchise for the new volleyball kit as recommended by the International Volleyball Federation (FIVB). I'm still not sure this entire saga isn't an early April Fool's joke. The federation has ruled that women should wear shorts that are "tight in waist and length" and cut in a revealing manner.

A number of women's teams were fined at the world championships for refusing to comply with this demand and I hope that they will continue to refuse. I was listening to the radio on the way home one day and heard the Italian marketing manager feebly explain that the women's shorts would be shorter because women had a shorter inside leg measurement. He also mentioned that in beach volleyball the girls wore bikinis and didn't complain. That's because it's on the beach for heaven's sake. The federation wants to change volleyball's image to show its power and speed. How exactly this will be done by kitting out women in tight shorts or the preferred alternative "one-piece, swimsuit-style" outfit is beyond me.

Maybe, however, the federation is trying to avert a recession altogether. Everyone knows that hemlines go up in a boom and down in a recession. By making women volleyball players prance around the court in very little at all, perhaps the federation is simply trying to instil a feeling of confidence in the world market.

Shiela O'Flanagan is a fixed-income specialist at NCB Stockbrokers.