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The weaker euro is having an effect.
FRANKFURT, Germany (AP) – Inflation jumped to a startling 3.0 percent in September in the 17 countries that use the euro, a surprise increase that makes it less likely the European Central Bank will cut interest rates next week to head off a possible recession.
The rate reported Friday from the European Union’s statistics agency was the highest since October 2008 and represented a big increase from August’s 2.5 percent. The scale of the rise was unexpected.
The ECB, the chief monetary authority for the euro countries, has come under pressure to cut interest rates soon to ward off mounting signs of recession in the eurozone economy. A waning global recovery and market turmoil from Europe’s debt crisis are starting to weigh on growth.
Leading economic indicators have been falling to the point where some predict a downturn is imminent, after a weak 0.2 percent growth figure for the second quarter.
Separate figures Friday from the statistics office showed unemployment in the eurozone stuck at 10 percent in August.
A few economists have predicted a cut next week when the ECB’s rate-setting council meets in Berlin. But the council’s 23 members may want to see evidence that inflation is not a threat before they cut. September’s rate, which is well above the ECB’s mandate to keep inflation just below 2 percent, could mean a cut that soon is less likely.
“The latest eurozone inflation and unemployment numbers would appear to reduce the chance of an imminent ECB rate cut,” said Ben May, European economist at Capital Economics.
HAVANA (AP) – Cuba legalized the sale and purchase of automobiles for all citizens on Wednesday, another major step in the communist run island’s economic transformation and one that the public has been clamoring for during decades.
The government announced the move in April, but sales have been on hold until the measure was published into law in the Official Gazette.
Under the law, which takes effect Oct. 1, buyers and sellers must each pay a 4 percent tax, and buyers must make a sworn declaration that the money used for the purchase was obtained legally.
Unrestricted sales had previously been limited to cars built before the 1959 revolution, one of the reasons Cuba’s streets are about the only place on the planet one routinely finds a multitude of finned American classics from the 1950s such as Chevrolets Bel Airs and Chrysler Imperials, all in various states of disrepair.
Doctors, athletes, artists and others sent abroad on official business were allowed to bring cars back or purchase a boxy, Russian-made Lada or Moscovich from the state. Some senior workers were given company cars, though gas usage is strictly monitored to make sure they are only driven for work reasons.
The new law will allow the sale of cars from all models and years, and it legalizes ownership of more than one car, although tax rates go up slightly.
“It is a very positive step,” said Rolando Perez, a Havana resident who was standing in line to get a license to go into business for himself. “They should have done it a long time ago.”
The purchase of new cars will be easier than in the past, but still extremely limited. Buyers will have to go to a small number of state-owned dealerships and demonstrate they made the money to buy the car through salary earned in an approved field, as opposed to from remittances sent from relatives abroad.
That would seem to limit such purchases to the same doctors, athletes and others who had been eligible to import cars following official travel abroad.
The 40-page Gazette also says that Cubans who leave the island for good can transfer ownership of their car to a relative or sell it outright. Previously, the state could seize the automobiles of those who emigrated.
While most car sales have been illegal without government permission since the early 1960s, used automobiles have been widely traded in a booming black market for years. Buyers would hand over large amounts of cash under what amounted to handshake agreements, with title not changing hands.
Many cars are generations removed from the original title holder, meaning ownership will have to be untangled once the new regulations take effect.
Because they could be legally traded among Cubans, old cars can fetch prices many times what their value would be off the island, often thousands more than modern cars. Several people involved in such trades told The Associated Press they did not expect prices to be greatly affected by the new law until the government starts to import new cars for wider distribution, and it was not clear when or if that will happen since few Cubans will be able to qualify.
Most islanders make just $20 a month, although doctors and others serving abroad can make much more. Most of it is saved for them in state-managed bank accounts they get access to once they complete their missions. A small number of successful new business owners may also be able to parlay their profits into a new set of wheels, though it was not clear whether they would qualify to purchase new cars.
Cuban President Raul Castro has instituted a series of free-market reforms designed to rescue the island from economic ruin. Cuba has legalized some private enterprise, and allowed citizens to rent out rooms and hire employees.
The government has also announced it plans to legalize the sale and purchase of real estate by the end of 2011.
According to the English-language paper based in Tehran, the announcement came from a top Iranian naval officer on Tuesday.
“As the global arrogance (forces of imperialism) have a (military) presence near our sea borders, we also plan to have a strong presence near the U.S. sea borders with the help of the soldiers who are loyal to the vali-e faqih (supreme jurisprudent),” said Rear Admiral Habibollah Sayyari, as quoted and paraphrased by the Tehran Times.
“We’ve been pushing freedom of the seas for years and the Iranian navy can go wherever it wants,” said Pentagon Spokesman Capt. John Kirby.
Iranians might face a challenge in refueling its fleet. Some in the Pentagon have speculated it could gas up in Venezuela, whose President, Hugo Chavez, is known to have a close relationship with Iranian president Mahmoud Ahmadinejad.
The Iranians gave no indication of when or what kind of vessels they might deploy, but the announced plan comes just months after Iran sent warships through the Suez following the fall of Egyptian President Hosni Mubarak. It was the first time Iran had moved ships into the Mediterranean and the move put Israel on high alert.
The naval unit plans to establish direct contact with the U.S. when it hits the Gulf of Mexico, a commander in the Iranian navy said. Officials in the Pentagon strongly denied any planned port visits by the Iranians.
One senior official echoed Capt. Kirby in saying that Iran has the pleasure of moving wherever it desires in international waters. But with known intent to approach U.S. maritime borders, he added, “they might have some company.”