Interest rates to keep rising as global economic growth continues, says BIS
Basel, Switzerland: Central banks will need to continue raising interest rates to dampen inflation as global economic expansion continues, the Bank for International Settlements said. It also refers to the current global economic growth as a "golden age."

``Inflationary pressures might turn out to be more significant than anticipated,'' BIS general manager, Malcolm Knight, told a press conference in Basel yesterday. ``Authorities should continue gradually to normalize the level of policy interest rates'' as the global economy extends what ``may well go down in history as a `golden age.'''

The Bank for International Settlements (BIS) is an international organization, which fosters international monetary and financial cooperation and serves as a bank for central banks. The BIS holds currency reserves on behalf of its members, produces research and provides policy makers with a forum for discussion.

The International Monetary Fund forecasts global economic expansion of 4.9 per cent this year after 5.4 per cent growth in 2006. That will mark five consecutive years of growth above 4 per cent, the longest streak since the early 1970s.

The world's major central banks have raised borrowing costs over the past year to contain inflation, in what many had suspected was a synchronized tightening of monetary policy across regions.

Policy makers are trying to sustain the longest streak of global growth in 30 years, with appropriate monetary checks.

The European Central Bank, the Bank of Japan, the People's Bank of China and the Bank of England have all indicated that further rate increases may be in the pipeline this year, while economists at Merrill Lynch & Co and Goldman Sachs Group Inc now expect the US Federal Reserve to leave rates at a six-year high rather than cut them.
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New gas pipeline, South Stream, no threat to other pipelines: Gazprom
Zagreb: Gazprom denied on Sunday that its plan, along with that of Italian oil company Eni, to build a big pipeline under the Black Sea to Europe to deliver Russian gas, threatens other projects in the region.

Gazprom Deputy Chief Executive Alexander Medvedev said on Sunday the 30-billion cubic metre per year "South Stream" 50/50 joint venture announced on Saturday does not mean Gazprom and Eni have abandoned their plan to expand the Blue Stream pipeline to southern Europe through Turkey.

He said other companies may be able to join the South Stream pipeline project to lay the supply line from Russia and Central Asia to Europe, but did not give a figure for the project cost.

Medvedev also denied that the project was aimed at squeezing out a rival plan, Nabucco, meant to reduce Russia's grip on European gas supplies by bringing gas from Caspian and Central Asian countries to Europe, without going through Russia.

"Its not an alternative to Nabucco," he said. "It is a project that works with Russian gas, or rather gas in the Gazprom gas transport network -- that is Russian gas but also Central Asian gas -- so we already have diversified sources."

The 4.6 billion euro ($6.2 billion) Nabucco is supported by European leaders who are now concerned about over-reliance on Russia after it cut exports to the Ukraine two winters ago as the Kremlin underscores its powerful position as Europe's largest supplier.

The European Union gets about a quarter of its gas from Russia, and sees Nabucco as a crucial Russia bypass.

Russian Premier Vladimir Putin told the conference in Zagreb that Russia was a reliable supplier and that the South Stream project would further improve Europe's energy security.

After dipping beneath the Black Sea, South Stream would come ashore in Bulgaria and then branch to Austria and Slovenia in one spur and southern Italy in another, Eni CEO Paolo Scaroni said on Saturday.
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