INFLATION

The Federal Reserve cut its benchmark interest rate by a quarter point on Wednesday, hoping to forestall what policy makers see as further slowing of the economy in the near term due in part to the U.S. housing downturn. The Federal Open Market Committee cut the key federal funds rate to 4.5 percent on Tuesday in a bid to forestall damage to the broader economy from turmoil in financial markets.

The Federal Reserve is expected to lower benchmark borrowing costs modestly on Wednesday as an additional bulwark against the risk a housing slump and tighter credit drag down the rest of the economy.

Federal Reserve policy-makers are widely expected to cut interest rates on Wednesday, but if they make no move, investors will wonder what the Fed knows that they don't and question its commitment to transparency.

Consumer confidence weakened for a third month in October to its lowest since the aftermath of Hurricane Katrina as gasoline costs rose and the housing slump worsened. Indeed, a separate report showed home prices posted their biggest drop in 16 years during August, before a retrenchment in lending further darkened the outlook for housing.

Japan's jobless rate rose unexpectedly last month, reinforcing expectations the Bank of Japan will delay its next rate rise, although household spending jumped more than forecast.

A Federal Reserve interest rate cut this week is no sure thing and officials are not seriously considering a half-point reduction in overnight rates, the Wall Street Journal reported on Tuesday without citing sources.

Asian stocks and oil prices retreated from their peaks on Tuesday and the dollar halted its slide as investors held their fire ahead of a U.S. Federal Reserve policy meeting, where an interest rate cut is widely expected. European stocks also looked set for a weaker start,

The Fed is deciding between a quarter point interest rate reduction and no cut at all, with a half-point cut unlikely to be considered, according a report by the Wall Street Journal.

Gold rallied to its highest level in 28 years on Monday and targeted $800 an ounce as oil surged to a record peak and the dollar tumbled on speculation over a U.S. interest rate cut.

Expectations of a U.S. interest rate cut this week boosted world stocks for a third straight session on Monday and sent the dollar to record lows, while surging energy and gold prices buoyed emerging markets.

The Fed can now turn to pursuing a "risk management" interest rate policy that insures against a steep economic downturn.

Consumer sentiment fell further than expected in late October to its lowest in more than a year as concerns about the housing slump darkened the economic outlook, a survey released on Friday showed.

U.S. oil surged to a nominal all-time high of $92.22 a barrel on Friday, boosting the annual average price to $67.87.

Asian stocks rose to an all-time high on Friday thanks to upbeat earnings from blue-chip firms such as Sony and Honda Motor, while a rally in oil prices to a record high above $91 a barrel fuelled gains in energy shares.

U.S. Treasury prices rose Tuesday as bond traders ignored a rising stock market and gravitated towards bonds ahead of possibly weaker home sales report this week which may give the Federal Reserve a reason to jumpstart the economy with additional interest rate cuts.

Financial market turbulence should have only a limited impact on euro-zone growth, European Central Bank policymakers said at weekend meetings of global financial officials in Washington.

The U.S. factory sector and the job market showed surprising weakness in data released on Thursday, raising concerns the Federal Reserve may need to deliver more interest rate cuts to shore up the economy.

Asian governments from Indonesia to China to India are in no rush to eliminate domestic fuel subsidies by raising cheap local pump prices, officials said this week, even as crude oil rockets toward $100 a barrel.

A pickup in energy prices helped drive consumer prices ahead at the sharpest rate in four months during September, according to a government report on Wednesday that was likely to keep the Federal Reserve wary about inflation.

Central Europe has evolved from a collection of Soviet Communist satellite states into the most dynamic part of the capitalist European Union in less than a generation.

Asian stocks pared early gains on Monday, pausing after their recent rally, while the dollar held firm as strong U.S. retail sales data prompted investors to trim bets of further U.S. interest rate cut.