Questão 554493

Read the text below in order to answer questions 26 to 30:

Lower interest rates

Stockmarkets rose in expectation of the Federal Reserve’s half-point cut in interest rates on November 6th to 1.25%, the lowest rate for more than 40 years. The following day, the European Central Bank (ECB) and the Bank of England decided not to cut their rates, but they are still expected to ease next month. However, investors’exuberance is odd, for interest rates are coming down because the world economy is in worse shape than had been hoped.

America’s recovery is stalling, as consumers tighten their belts. In the euro area, consumer and business confidence are both on the wane. Although euro-area inflation is above the 2% ceiling set by the ECB, weak demand will push inflation down next year. The case for interest-rate cuts in both America and the euro area was strong, even though the ECB has not yet moved. But will rate cuts work?

The European Central Bank