Bernanke: Crisis taught lesson for central banks
Federal Reserve Chairman Ben S. Bernanke says a key lesson learned from the 2008 financial crisis is that central banks must have a dual goal of controlling inflation while supporting the banking system.
Mr. Bernanke said Tuesday during a speech in Boston that the steps the Fed took during the crisis proved to be successful. The Fed lowered short-term interest rates to record lows and expanded its portfolio of Treasury and mortgage-backed securities to push long-term rates lower.
The Fed has been criticized by those who say keeping rates too low for too long could fuel inflation later.
In September, the Fed voted to shift $400 billion of its investments to try to lower long-term interest rates. That followed the Fed's announcement in August that it planned to keep short-term rates at record lows until at least mid-2013, assuming the economy remains weak.
Both steps were approved on 7-3 votes. That represented the highest level of dissent at the Fed in nearly 20 years.
Inflation reaches highest rate in 3 years
LONDON — Britain's inflation rate jumped to a three-year high of 5.2 percent in September, a more than expected increase driven by rising costs for electricity and gas, data showed Tuesday.
Bank of England Governor Mervyn King said he believed inflation was at or near its peak after 22 months of overshooting the official target of 2 percent.
The consumer price inflation rate announced by the Office for National Statistics was a big jump from the 4.5 percent reported a month earlier and beat the market consensus of 4.9 percent.
Order for Boeing 787s canceled due to delays
Boeing lost a major customer for its new 787 on Tuesday, with China Eastern Airlines canceling its order for 24 of the long-delayed planes after saying it has waited long enough.
The Shanghai-based airline swapped the 787 order for 45 of Boeing's smaller 737s instead. It also placed a new order with Boeing competitor Airbus for 15 new A330s, which are in roughly the same size class as the 787.
Last month, Boeing delivered the first 787 to a customer, three years late. The delays have forced airlines to revise their fleet plans and have cost Boeing good will with its airline customers. China Eastern said in a filing that the 787 cancellation was "due to Boeing Company's delay in delivery."
24 Italian banks downgraded by S&P
Standard & Poor's on Tuesday downgraded its ratings of 24 Italian banks, including major lenders BMPS and UBI Banca, citing the deteriorating economic condition in the country.
The ratings agency said funding costs for Italian banks will increase noticeably because of higher yields on Italian sovereign debt, resulting in tighter credit conditions and weaker economic activity in the short-to-medium term.
Last month, S&P cut the credit ratings of seven of Italy's large banks but left the rating of Unicredit, Italy's biggest bank, unchanged while putting it on watch for a possible downgrade.
BlackBerry maker shows new phone, tablet software
SAN FRANCISCO — BlackBerry maker Research in Motion Ltd. unveiled a new operating system Tuesday in hopes of grabbing some attention away from the iPhone and Android phones.
The new BBX system combines existing BlackBerry elements with RIM's previously announced QNX operating system for phones and tablet computers.
RIM said BBX will incorporate the reliability and security features of QNX, which RIM snagged in 2010 by purchasing QNX Software Systems. It will also enable software developers to create more advanced, dynamic apps for the devices.
The Canadian company gave few details about the software and did not say when devices using it would be available. The company previously said it would offer phones running QNX software in 2012.
• From wire dispatches and staff reports