Noun Compounds: F2

A prolonged convergence has marked the evolution of interest rates in the major industrialized nations in the past year. Europe's more conciliatory monetary policies have allowed a good part of the disparity between European and U.S. short-term rates to be eliminated; the exceptional relaxing of Japanese monetary policies has driven an important reduction on the level of short-term rates in that country.

This reconciliation in financial conditions was even more pronounced as far as long-term interest rates are concerned: the disparities between the larger European countries and the United States almost disappeared for most of 1993. The lack of fears regarding inflation, the weak level of activity and thus the need for financing, and the favorable trends in monetary policies are at the root of this phenomenon. The year 1994 could mark the end of this convergence. The economic disparities on both sides of the Atlantic are such that they should, in effect, implicate a clear differentiation of economic policies during upcoming trimesters. In the relatively short term, American monetary authorities will, in effect, tighten the conditions of credit in an attempt to prevent the risk of inflation that is inherent to this phase of the cycle. The long-term rates, which have been rising slightly for a few weeks, will be affected by this, while at the same time, the need for growth financing will multiply.

REGISTERS: FIGURES FOR JULY TO DECEMBER 1993 - THE THREE-MONTH SHORT-TERM RATES ON THE EUROCURRENCY MARKET (ST) AND THE RATES OF LONG-TERM GOVERNMENT LOANS

A prolonged convergence marked the movement of interest rates of the leading industrialized countries last year. The more conciliatory financial policies in Europe allowed the short-term European rates to fill in a large part of their gap with those of the United States; the exceptional relaxing of Japanese financial policy led to an important reduction of levels of short-term rates in this country.

This reconciliation of financial conditions is even more distinct with regard to long-term interest rates: the discrepancies between the large European countries and the United States nearly disappeared for a good part of the year 1993. The absence of relative concerns of inflation, the low level of activity, and therefore needs for financing, along with the favorable trends in financial policies, are at the root of this phenomenon. The year 1994 could mark the term of this convergence. The differences of economic environment on either side of the Atlantic, are such, in effect, that they are bound to implicate enough of a clear differentiation of economic policies in the course of coming trimesters. In the near future, the American monetary authorities will, in effect, conduct a tightening of credit conditions in order to prevent the risk of inflation that is inherent to this phase of the cycle. The long-term rates, already at a slight increase for some weeks, will feel the effects, while at the same time the need to finance the economic growth increases.

TABLEAUX:CHIFFRES DE JUILLET A DECEMBRE 1993- LES TAUX A COURT TERME, A TROIS MOIS, SUR LE MARCHE DES EURODEVISES (CT) ET LES TAUX D'EMPRUNT D'ETAT A LONG TERME (LT)

UNE convergence prolongée a marqué l'évolution des taux d'intérêt des principaux pays industrialisés l'année dernière. Les politiques monétaires plus conciliantes en Europe ont permis aux taux à court terme européens de combler une bonne partie de leur écart avec ceux des Etats-Unis; l'assouplissement exceptionnel de la politique monétaire japonaise a conduit à une importante réduction du niveau des taux à court terme dans ce pays.

Ce rapprochement des conditions financières fut encore plus net en ce qui concerne les taux d'intérêt à long terme: les écarts entre les grands pays d'Europe et les Etats-Unis ont quasiment disparu sur une bonne partie de l'année 1993. L'absence de craintes relatives à l'inflation, le faible niveau de l'activité, et donc des besoins de financement, et l'orientation favorable des politiques monétaires sont à l'origine de ce phénomène. L'année 1994 pourrait marquer le terme de cette convergence. Les écarts de conjoncture de part et d'autre de l'Atlantique sont tels, en effet, qu'ils devraient impliquer une assez nette différenciation des politiques économiques au cours des trimestres à venir. A plus ou moins brève échéance, les autorités monétaires américaines procéderont en effet à un resserrement des conditions de crédit afin de prévenir un risque inflationniste inhérent à cette phase du cycle. Les taux à long terme, déjà en légère hausse depuis quelques semaines, s'en ressentiront, alors que dans le même temps les besoins de financement de la croissance se multiplient.