Economic Measures Inflation

The U.S. economy seems to be slipping into recession and the Federal Reserve must cushion the pain and make it as brief as possible, two Fed policymakers said.

The dollar rallied Thursday after suffering steep losses in the last two sessions, rising on data showing the U.S. economy grew in the fourth quarter in line with market expectations.

French President Nicolas Sarkozy and British Prime Minister Gordon Brown called on Thursday for banks to declare the full extent of the damage to their operations caused by the credit crunch.

French President Nicolas Sarkozy will ask British Prime Minister Gordon Brown for help in getting Washington to prop up the ailing dollar, but Britain has usually shunned managing exchange rates.

The Bank of Japan still has its sights set on higher interest rates in the future, although it will pursue a flexible policy looking at developments in Japan's economy and global markets, two members of the central bank's policy board said on Thursday.

Unrealized losses on Japan's $1 trillion foreign currency reserves amount to about 18.5 trillion yen when the dollar is around 100 yen, Finance Minister Fukushiro Nukaga said on Thursday.

The dollar fell for a second straight session Wednesday after an unexpected drop in durable goods orders heightened worries about the health of the U.S. economy and backed expectations of further interest rate cuts.

Orders  for big-ticket manufactured goods fell for a second straight month in February, a worse-than-expected performance that provided more evidence of a slumping economy.

Top central bankers warned on Wednesday there was no end in sight yet to the global credit crunch as German banking giant Deutsche said the crisis threatened its profit target for this year.

Japan's exports rose a little more than expected in February from a year earlier as solid shipments of Japanese goods to Asia and Europe made up for a fall in exports to the United States.

The dollar retreated broadly Tuesday, posting its steepest loss against the euro in two weeks, hurt by concerns about the health of the U.S. economy and the global financial sector.

The dollar rallied across the board Monday on better-than-expected U.S. existing home sales data and J.P. Morgan's higher offer for Bear Stearns shares, which boosted Wall Street stocks.

British Prime Minister Gordon Brown and French President Nicolas Sarkozy will urge banks this week to make "full and immediate disclosure" of write-offs due to the global credit crisis, British officials said on Monday.