Business Desk

ECONOMYFED HIKES TARGET RATE TO 3%, BUT OMITS 7 KEY WORDS FROM REPORTFederal Reserve policy-makers raised the benchmark U.S. interest rate a quarter-point to 3%, but caused turmoil when they mistakenly omitted seven words from their policy statement yesterday, leaving investors with the impression for almost two hours that central bankers were concerned inflation is getting out of hand. The missing sentence? “Longer-term inflation expectations remain well contained.”The Federal Open Market Committee restored the line at about 3:55 p.m. Washington time. The original statement missing those words came out at 2:16 p.m. During the interval, economists who specialize in parsing every utterance from the Fed said policy-makers had grown more preoccupied with inflation in the six weeks since its last meeting, even as the economy had slowed. Investors were angry. “This is probably the single most-read document in the largest economy in the world, and you’re telling me that you can’t get the thing right before it goes out?” said Barry Ritholtz, market strategist for Maxim Group in New York.In Tuesday morning trading in Asia, the dollar had its biggest decline against the euro in more than two weeks on speculation based on the added sentence that the Fed will slow the pace of interest-rate increases.– Bloomberg NewsAUTOMOTIVETOYOTA, NISSAN U.S. AUTO SALES RISE; GM, FORD FALLToyota Motor Corporation and Nissan Motor Company, Asia’s two biggest automakers, said American sales of cars and trucks increased more than 25% last month, while sales at General Motors Corporation and Ford Motor Company declined.Toyota sold 210,466 vehicles last month, up 26% from a year ago, while Nissan sold 91,621 cars and trucks, a 32% gain.GM, the world’s largest automaker, said sales of cars and trucks fell 3.9% to 385,939, and Ford’s sales dropped 1.5% to 281,292. DaimlerChrysler AG sold 225,351 vehicles, up 8.7%.Gains by Toyota and Nissan were projected to lift American April auto sales to an annual rate of 17 million cars and trucks from 16.6 million a year earlier, according to a Bloomberg survey of analysts and economists. GM and Ford continue to lose market share to the Asian automakers.Toyota’s gains were led by higher sales of hybrid Prius cars, which almost tripled to a record 11,345. The cars combine an electric motor with a gasoline engine.Nissan’s sales were lifted by its new Infiniti M luxury sedan, introduced two months ago, and higher sales of light trucks.– Bloomberg NewsEARNINGSMETLIFE FIRST-QUARTER PROFIT RISES 65%; 2005 FORECAST RAISEDMetLife, the largest American life insurer, said first-quarter profit rose 65% as it earned more from annuities and investments. The company increased its forecast for 2005 earnings.Net income climbed to $987 million, or $1.33 a share, from $598 million, or 79 cents, a year earlier, the New York-based company said yesterday. Profit excluding the change in value of investments was $1.11 a share. The company said it expected to earn $3.90 a share to $4.05 a share in 2005.MetLife is selling more retirement products such as annuities, which combine mutual funds with insurance guarantees, as it focuses on baby boomers preparing for retirement. It expects to complete a $11.5 billion acquisition of Citigroup’s life insurance business in July.– Bloomberg NewsQWEST HAS FIRST-QUARTER PROFIT OF $57 MILLION ON ASSET SALEQwest Communications International, which Monday scrapped a takeover bid for MCI, had a first-quarter profit of $57 million because of an asset-sale gain. Sales declined as subscribers canceled local lines.Net income at Denver-based Qwest, the no. 4 American local-phone company, was 3 cents a share, compared with a net loss of $310 million, or 17 cents, a year earlier. Sales fell 1% to $3.45 billion, Qwest said in a statement yesterday.The revenue decline, caused by the cancellation of 711,000 phone lines, follows three years of falling sales as customers transfer service to competitors such as cable-television providers. It shows why Qwest Chief Executive Officer Richard Notebaert pursued MCI for 10 months, and highlights the challenges Qwest faces as a stand-alone company. MCI yesterday backed a lower offer from Verizon.When asked on a conference call with analysts whether Qwest might pursue a hostile offer for MCI, Mr. Notebaert said he wouldn’t elaborate on the press release yesterday announcing the company’s withdrawal from “a process that seems to be permanently skewed against Qwest.” MCI rejected Qwest because of Verizon’s size and better financial stability.– Bloomberg NewsINTERNATIONALTRADE MINISTERS AT IMPASSE OVER AGRICULTURE TARIFFSTrade ministers from five nations said yesterday they were unable to agree on how to standardize tariffs on agricultural products worth $600 billion, a prerequisite for progress in World Trade Organization talks.Ministers from the European Union, America, India, Brazil, and Australia, some of the world’s biggest trading powers, met in Paris in an effort to settle on a formula for converting farm import duties into comparable percentages. After three months of talks, the E.U. remains the key holdout, arguing that the 25-nation bloc would suffer disproportionately large tariff cuts.“These negotiations were, at the beginning, very technical,” Agriculture Commissioner Mariann Fischer Boel said yesterday in a Paris interview. “Today, they have turned out to be very political as well. It’s wrong to say we’ve been sitting on our hands; we have red lines that we cannot cross.”The WTO’s 148 governments will only be able negotiate cuts in tariffs on agricultural goods such as tobacco, meat, and grain after a formula has been approved. The disagreement is holding up progress on a broader accord to open markets to industrial products and commercial services such as banking that the World Bank estimates would pump $500 billion into the global economy.– Bloomberg News

Business Desk

Business Desk

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