MercoPress. South Atlantic News Agency

Bush: Federal Reserve propping US dollar.

United States president George Bush said it was up to the markets to establish the value relation between the US dollar and the Euro, adding that the recent rise in interests by the Federal Reserve was an indication that “the US is concerned with the weak dollar” and “this administration supports a strong dollar”.

"We believe that it is the markets that have to decide the relation between the US dollar and Euro", said President Bush.

The recent 0,25% rise in interest rates by the Federal Reserve is "a clear signal to world markets that Mr. Greenspan is also closely following the exchange rates between the dollar and the Euro".

President Bush reiterated his willingness to work with Congress to cut the ballooning US federal budget and reforming social security, which "will undoubtedly send a strong signal to world markets that this administration really supports a strong dollar".

Last week the US Department of Commerce published the trade deficit figure for the third quarter, 164,7 billion US dollars, which was lower than predicted (between 168 and 170 billion US dollars).

However the current account deficit increased for the third month running (July, August, September), and was above the 164 billion US dollars of the second quarter.

Last week also the White House Council of Economic Advisors forecasted that the US economy in 2005 would expand 3,5%, below this year's 3,9%.

"The economy is in a very solid shape", said Gregory Mankiw who presides the Advisors Council who added that inflation is expected to drop from 3,4% in 2004 to 2% next year, mainly because of a decrease in energy prices.

Regarding employment Mr. Mankiw said the US economy in 2005 will generate 175,000 new jobs per month; in June 2003 when the last big cut in taxes President Bush promised 305,000 new jobs per month but the actual number was 125,000.

Economists estimate that to keep up with demography the US economy needs 150,000 new jobs per month.