China considers same tax rate for domestic, overseas firms (AFP)
AFP - Chinese lawmakers have mulled a draft law that would impose a 25 percent income tax on both domestic and foreign firms, eliminating the preferential rate for overseas companies, according to state media.
Bernanke says U.S. economy facing big threat (Reuters)
2008.10.1511 minutes ago
NEW YORK (Reuters) - The turmoil in credit markets poses a "significant threat" to an already slowing U.S. economy, Federal Reserve Chairman Ben Bernanke said on Wednesday, suggesting an openness to further interest-rate cuts.
In remarks to the Economic Club of New York, Bernanke said it will take some time to restore normal flows of credit. He pledged that the U.S. central bank would continue to act aggressively to fight the crisis.
"By restricting flows of credit to households, businesses, and state and local governments, the turmoil in financial markets and the funding pressures on financial firms pose a significant threat to economic growth," Bernanke said.
"We will continue to use all the tools at our disposal to improve market functioning and liquidity, to reduce pressures in key credit and funding markets and to complement the steps the (U.S.) Treasury and foreign governments will be taking to strengthen the financial system," he said.
The Fed, acting in concert with central banks around the globe, last week cut benchmark interbank lending rates by a half-percentage point to 1.5 percent in an emergency move. The rate cuts were called for by the intensification of the financial crisis, which raised risks to growth and diminished chances that inflation could spike higher, the U.S. central bank said.
In a bid to restore financial market stability, the U.S. government on Tuesday announced a dramatic plan to recapitalize banks, beginning with a $125 billion equity investment in nine major financial institutions.
Bernanke cited weakness in the housing sector, slowing consumer and business spending and a softening labor market as evidence that economic activity is shaky. He also said credit markets would take time to unfreeze. He pointed out that export sales, until recently a bright spot, were likely to slow as well.
Significantly, the Fed chairman said the central bank's concerns about inflation were diminishing.
While Bernanke noted that inflation had been high recently, he said expected inflation has held steady or eased, import prices were moderating and commodity prices had fallen. Those factors, along with the softness in the economy, "should lead to rates of inflation more consistent with price stability," he said.
(Reporting by Pedro Nicolaci da Costa; Writing by Mark Felsenthal and Tim Ahmann; Editing by Jan Paschal)
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