Bank of England to keep rates on hold

LONDON | Thu Aug 4, 2011
(Reuters) - A darkening economic backdrop and the threat of further market turmoil have raised the possibility that the Bank of England's next move might be to loosen monetary policy rather than tighten it.

The majority view is that the Bank will sit on its hands this month, but a surprise monetary easing from the Swiss National Bank on Wednesday suggests nothing can be ruled out.

All economists polled by Reuters expect the central bank to keep rates at 0.5 percent at 12 p.m., but around one in four believe a second wave of quantitative easing (QE) will be needed at some point.

August marks one of the four months when the Bank publishes updated growth and inflation forecasts in its quarterly inflation report, and these months have historically proven the trigger for changes in policy. Moreover, the run-up to the meeting has been dominated by a cluster of surprisingly weak data.

Britain's economy barely grew in the second quarter following six months of stagnation, and data from the United States and the euro zone suggest a global slowdown is becoming entrenched.

Former Bank rate-setter Sushil Wadhwani said on Tuesday that the main issue facing policymakers was whether to ease policy now or wait for another month.

"If I were on the committee, for the first time this year I would be voting for more QE," he told Fathom Consulting's Monetary Policy Forum.

WOULD MORE QE WORK?

Britain's coalition government, elected last year on a deficit-fighting mandate, has made clear that the ball is in the Bank of England's court should further economic stimulus be required.

But it is far from certain that another wave of gilt purchases -- which accounted for almost 99 percent of the Bank's first QE programme -- would have the desired effect.

Gilt yields have fallen to a series of record lows this week with 10-year bonds paying little more than 2.7 percent, a drop of more than 1 percentage point since mid-April.

"With gilt yields at such incredibly low levels, doing more QE in the form of gilt purchases just doesn't stack up," said David Owen, chief European financial economist at Jefferies.

"If they do decide to do more stimulus, they would probably do something more targeted, but I don't think it will be a decision taken this month," he added.

UK interest rates have stood at a record low 0.5 percent for more than two years -- already the longest period of inertia since World War Two. Money markets are not pricing in any realistic chance of a rate rise until the second half of 2012.

The Bank bought 200 billion pounds of assets, mainly government bonds, with newly created money between March 2009 and February 2010 in an attempt to reduce borrowing costs and boost the supply of credit.

For the past few months, the Bank's nine-member Monetary Policy Committee has been split three ways, with arch-dove Adam Posen voting for more stimulus and hawks Spencer Dale and Martin Weale voting for a 25 basis points rate rise.

There is a strong chance this month that Dale and Weale will join the pack voting for the status quo and at least one other member -- possibly Paul Fisher -- ally with Posen in voting for more quantitative easing.

Inflation, currently running at more than double the BoE's 2 percent target, appears to be close to a peak and forward-looking indicators suggest price pressures could ease sharply over the coming year.

How each member has voted will not be known until minutes to the policy meeting are published in two weeks' time.

($1 = 0.609 British Pounds)

Source : uk.reuters.com

Read more »

Governments, IOC and UN hit by massive cyber attack

IT security firm McAfee claims to have uncovered one of the largest ever series of cyber attacks.

It lists 72 different organisations that were targeted over five years, including the International Olympic Committee, the UN and security firms.

McAfee will not say who it thinks is responsible, but there is speculation that China may be behind the attacks.

Beijing has always denied any state involvement in cyber-attacks, calling such accusations "groundless".

Speaking to BBC News, McAfee's chief European technology officer, Raj Samani, said the attacks were still going on.

"This is a whole different level to the Night Dragon attacks that occurred earlier this year. Those were attacks on a specific sector. This one is very, very broad."

Dubbed Operation Shady RAT - after the remote access tool that security experts and hackers use to remotely access computer networks - the five-year investigation examined information from a number of different organisations which thought they may have been hit.

"From the logs we were able to see where the traffic flow was coming from," said Mr Samani.

"In some cases, we were permitted to delve a bit deeper and see what, if anything, had been taken, and in many cases we found evidence that intellectual property (IP) had been stolen.

"The United Nations, the Indian government, the International Olympic Committee, the steel industry, defence firms, even computer security companies were hit," he added.

China speculation

McAfee said it did not know what was happening to the stolen data, but it could be used to improve existing products or help beat a competitor, representing a major economic threat.

"This was what we call a spear-phish attack, as opposed to a trawl, where they were targeting specific individuals within an organisation," said Mr Samani.

"An email would be sent to an individual with the right level of access within the system; attached to the message was a piece of malware which would then execute and open a channel to a remote website giving them access.

"Once they had access to an organisation, they either did what we would call a 'smash-and-grab' operation, where they would try and grab as much information before they got caught, or they sometimes embedded themselves in the network and [tried to] spread across different systems within an organisation."

Mr Samani said his firm would "not make any guesses on where this has come from", but China is seen by many in the industry as a prime suspect.

Jim Lewis, a cyber expert with the Centre for Strategic and International Studies, was quoted by the Reuters news agency as saying it was "very likely China was behind the campaign because some of the targets had information that would be of particular interest to Beijing".

"Everything points to China. It could be the Russians, but there is more that points to China than Russia," Lewis said.

However, Graham Cluley - a computer-security expert with Sophos, is not so sure. He said: "Every time one of these reports come out, people always point the finger at China."

He told BBC News: "We cannot prove it's China. That doesn't mean we should be naive. Every country in the world is probably using the internet to spy.

"After all, it's easy and cost-effective - but there's many different countries and organisations it could be."

Mr Cluley said firms were often distracted by the very public actions of LulzSec and Anonymous, groups of online activists who have hacked a number of high-profile websites in recent months.

"Sometimes it's not about stealing your money or publicly leaking your data. It's about quietly stealing your information, which can have a very high political, military or financial value.

"In short, don't let your defences down," he added.

Source : www.bbc.co.uk

Read more »

20-million year-old ape skull found in Uganda

(Reuters) - Ugandan and French scientists have discovered a fossil of a skull of a tree-climbing ape from about 20 million years ago in Uganda's Karamoja region, the team said Tuesday.

The scientists discovered the remains on July 18 while looking for fossils in the remnants of an extinct volcano in Karamoja, a semi-arid region in Uganda's northeastern corner.

"This is the first time that the complete skull of an ape of this age has been found. It is a highly important fossil," Martin Pickford, a paleontologist from the College de France in Paris, told a news conference.

Pickford said preliminary studies of the fossil showed that the tree-climbing herbivore, roughly 10-years-old when it died, had a head the size of a chimpanzee's but a brain the size of a baboon's, a bigger ape.

Bridgette Senut, a professor at the Musee National d'Histoire Naturelle, said that the remains would be taken to Paris to be x-rayed and documented before being returned to Uganda.

"It will be cleaned in France, it will be prepared in France and then in about one year's time it will be returned to the country," Senut said.

Uganda's junior minister for tourism, wildlife and heritage said the skull was a remote cousin of the Hominidea Fossil Ape.

Source : uk.reuters.com

Read more »

Italy approves draft law to ban burqa

Law moves country closer to joining France, Belgium and parts of Spain in outlawing face-covering in public

Under the new Italian law wearing a niqab would be illegal. Photograph: Julien Warnand/EPA

An Italian parliamentary commission has approved a draft law banning women from wearing veils that cover their faces in public.

The draft, which was passed by the constitutional affairs commission on Tuesday, would prohibit women from wearing a burqa, naqib or any other garment that covers the face in such circumstances. It would expand a decades-old law that for security reasons prohibits people from wearing face-covering items such as masks in public places.

Women who violate the ban would face fines, while third parties who force women to cover their faces in public would be fined and face up to 12 months in jail.

Italy is the latest European country to act against the burqa. France and Belgium have banned the wearing of burqa-style Islamic dress in public, as has a city in Spain. The Belgium law cited security concerns.

The Italian law was sponsored by Souad Sbai, a Moroccan-born member of Silvio Berlusconi's conservative Freedom People party, who said she wanted to help Islamic women integrate more into Italian society.

"Five years ago, no one wore the burqa [in Italy]. Today, there is always more. We have to help women get out of this segregation ... to get out of this submission," Sbai said in a telephone interview. "I want to speak for those who don't have a voice, who don't have the strength to yell and say, 'I am not doing well.'"

The spokesman of an Islamic group said banning the Islamic veil "is unjust and touches individual liberty".

"This topic continues to be a sort of criminalisation and media dramatisation. In Italy, there aren't even 100 women who wear the niqab, and not even one who wears the burqa," Roberto Hamza Piccard, spokesman for the Union of Islamic Communities in Italy, was quoted by the news agency Ansa as saying. He said such a ban would isolate devout Muslim women, who would not be able to leave their homes.

Ansa said the main opposition party voted against the law. The draft will be forwarded after the summer recess to parliament, where Berlusconi's governing coalition has a narrow majority.

The preliminary approval was welcomed by lawmaker Barbara Saltamartini, vice-president of the Freedom People party caucus in the lower house.

"Final approval will put an end to the suffering of many women who are often forced to wear the burqa or niqab, which annihilates their dignity and gets in the way of integration," Saltamartini said.

Source : www.guardian.co.uk

Read more »