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European Central Bank council member Axel Weber said the outlook for inflation has brightened and the recent fall in oil prices is “reassuring.''

“We're more confident now than a few weeks ago that the recent developments have contributed toward meeting our objective'' to ensure price stability, Weber said in a press briefing today after a meeting of European finance officials in Nice, France. Still, “I don't think we're in the situation that we can give the all-clear yet.''

Oil prices have receded from a record $147.27 a barrel in July, while they are still up more than 26 percent over the past year, crimping consumers' and companies' spending power. The ECB is concerned companies will raise prices to pass on higher raw- material costs and unions will push through bigger raises to compensate workers for the increased cost of living.

Euro-region inflation is currently at 3.8 percent after reaching a 16-year high of 4 percent in July, still almost double the ECB's limit of just below 2 percent.

The drop in oil and commodity prices “will help us to work toward our stability mandate,'' Weber said. “On the other hand, there are many pipeline effects,'' he added, referring to import and producer prices that may filter through into consumer-price inflation.

`Astonishingly High'

The ECB raised its inflation projections this month to around 3.5 percent for 2008 and 2.6 percent for 2009. At the same time, ECB staff lowered their growth forecasts for this year and next to about 1.4 percent and 1.2 percent, respectively free credit report .com.

Some of the recent wage demands are “astonishingly high'' and do not fully take into account the economic perspective and the price developments that the ECB foresees, Weber said. “We're seeing much stronger wage pressure than in the past.''

Europe's economy shrank 0.2 percent in the second quarter from the previous three months and may not recover in the current period as exports falter and consumer spending slumps. The contraction was the first since the introduction of the euro in 1999.

IG Metall, Germany's biggest labor union, representing 3.5 million workers, said Sept. 8 it will seek a pay increase of between 7 percent and 8 percent when wage negotiations start on Oct. 2. That would be the biggest pay increase in at least 16 years. Workers at Ireland's Electricity Supply Board are demanding an 11.25 percent raise.

“We will do what is needed'' to ensure price stability, Weber said. “We're not pre-committed at this stage.''

Weber's ECB colleague, Nout Wellink, said in an interview this week that interest rates are “adequate'' and there is no need to change them “at this very moment.'' He added that “it all depends on a very large extent on how wages are going to behave in the period ahead.''

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China's inflation weakened to the slowest pace since June 2007 and export growth cooled, stoking speculation the government will cut taxes and ease loan restrictions to spur the world's fourth-largest economy.

Consumer prices rose 4.9 percent in August from a year earlier, less than economists estimated, after gaining 6.3 percent in July, the National Bureau of Statistics said today. Exports rose 21.1 percent in August, down from July's 26.9 percent gain, the Customs Bureau said.

Stocks rose, erasing earlier losses, on expectations China may lower taxes, slow the yuan's gains and ease lending restrictions to protect jobs at exporters after four quarters of slowing economic growth. Cooling inflation also leaves room for the government to counter power shortages by raising energy prices, encouraging refiners and generators to boost output.

“The good news is that the price pressures that have been bothering China over the past 18 months have been decisively subdued,'' said Tao Dong, chief Asia economist at Credit Suisse Group AG in Hong Kong. “The bad news is that perhaps this reflects the economy has slowed more than the government bargained for.''

The CSI 300 Index of stocks closed 0.2 percent higher on speculation that company profits may benefit from measures to stimulate growth. Officials are working on a plan for as much as 400 billion yuan ($58 billion) of tax cuts and spending to prevent an economic slump, according to economists and reports in domestic news media.

Yuan Rises

The yuan rose to close at 6.8385 against the dollar in Shanghai from 6.8404 immediately before the report was released. The currency has climbed only 0.2 percent against the dollar this quarter after a 6.5 percent advance in the first half. Gains hurt exporters by making their products more expensive.

Inflation across Asia may peak in the fourth quarter and fall “sharply'' in 2009 as oil prices decline and economic growth slows, Rob Subbaraman, a Hong Kong-based economist at Lehman Brothers Holdings Inc. said last month. Crude oil has fallen 30 percent from a record on July 11.

Consumer prices in Japan rose 2.3 percent in July, the fastest pace in more than a decade, while Malaysia's inflation accelerated to 8.5 percent, the quickest in more than 26 years.

China's producer prices climbed 10.1 percent, the fastest pace since at least 1996, after rising 10 percent in July, today's data showed.

Energy-Price Increases

That may be a peak reflecting past commodity-price increases, said Ha Jiming, a Hong Kong-based chief economist at China International Capital Corp., adding that the government may have “more room for domestic energy-price adjustments.''

The government has already raised energy prices this year to improve refiners' and generators' margins and ease the nation's sixth year of power shortages faxless payday loan.

August's trade surplus climbed to a record $28.7 billion as import growth weakened to 23.1 percent from a year earlier, the slowest pace in almost a year, on falling commodity prices. Foreign direct investment pumped another $7 billion into the financial system last month, the commerce ministry said today.

“Priority will now return to solely focusing on supporting growth,'' said Glenn Maguire, chief Asia-Pacific economist at Societe Generale SA in Hong Kong.

Consumer-price inflation has slowed for four months, edging closer to the central bank's target of 4.8 percent for the year. February's 8.7 percent pace was the fastest in 12 years. Food prices rose 10.3 percent in August from a year earlier after gaining 14.4 percent in July. Non-food prices increased 2.1 percent, the same as in July.

Factory Investment

The expansion in factory and property spending, one of the key drivers of the economy, maintained its pace in the eight months through August. Urban fixed-asset investment rose 27.4 percent to 8.49 trillion yuan from a year earlier, the statistics bureau said today. That compared with a 27.3 percent gain for the first seven months.

China's economy expanded 10.1 percent in the second quarter. The pace of growth remains the fastest of the world's 20 biggest economies.

Weaker overseas demand, rising costs and a higher currency have put pressure on exporters of shoes, toys and clothes.

In July, the central bank eased restrictions on how much banks can lend by raising 2008 loan quotas for national banks by 5 percent and regional lenders by 10 percent, according to reports by Goldman Sachs Group Inc., BNP Paribas SA, and China Merchants Bank Co.

Lending Restrictions

The central bank may increase loan quotas by another 5 percent to 10 percent no later than November, according to Sun Mingchun, an economist at Lehman in Hong Kong. The government may cut income tax and, from early 2009, allow tax deductions connected with companies' capital expenditure, he said.

The People's Bank of China has kept interest rates unchanged at a decade high this year. It hasn't increased the reserve ratio for banks — the proportion of deposits that lenders are required to set aside — since pushing it to a record 17.5 percent in June.

The record trade surplus may force the central bank to make extra efforts to prevent excess cash in the financial system from stoking inflation. Its main tools for freezing or soaking up money have been bill sales and the bank reserve requirements.

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The world's leading central banks should keep interest rates at their current levels as they try to balance strong inflation with weak expansion, the Organization for Economic Cooperation and Development said.

The U.S. Federal Reserve's decision to leave its benchmark rate at 2 percent was vindicated by the credit squeeze and likelihood that the slowing economic growth will restrain inflation, the Paris-based group said today. The European Central Bank should keep its key rate at 4.25 percent to curb underlying price pressures, while the Bank of Japan is advised to maintain its main rate at 0.5 percent as a buffer against deflation.

The report, which did not seek to revise the OECD's June forecast of 1.8 percent global growth this year, projected “weak activity through the end of the year'' as financial- market turmoil, downturns in major housing markets and high commodity prices “continue to bear down on global growth.''

Projections for the major economies based on the organization's statistical model maintained June's forecast for growth of 1.4 percent in the Group of Seven. It suggested growth of 1.8 percent in the U.S. this year, stronger than the 1.2 percent forecast by the OECD in June, and 1.2 percent in the 15- nation euro area, down from 1.7 percent. The projection for Japan was trimmed to 1.3 percent from 1.7 percent, according to the model.

U.K. Recession

The OECD said tax cuts in the U.S. and ongoing financial turmoil meant it was difficult to predict the outlook for the world's largest economy, with growth in the final two quarters of this year balanced between expansion and contraction fast cash now.

The model's central projections suggested the U.K. economy is now in recession with growth expected to shrink in the current and subsequent quarters. It was less sure on the outlook for the euro-area, Japan and Canada. It projected each will avoid recession, although the range of forecasts given by the model suggests it remains a possibility for all three.

With banks having acknowledged most of their losses related to the collapse of the U.S. subprime mortgage market, financial markets are now at risk from “signs of weakness'' in economies, the OECD said. “The eventual depth and extent of financial disruption is still uncertain, however, with potential further losses on housing and construction finance being one source of concern,'' it said.

Housing Markets

The housing slump continues to play out in many economies with reduced credit supply adding to pressure on prices, the OECD said. U.S. home prices continue to fall, threatening another round of defaults and foreclosures that may hurt the market anew, while in Europe signs are emerging that housing troubles are spreading beyond economies such as Spain and the U.K., it said.

While the price of oil has fallen from a record, fuel supply remains tight and prices of other commodities such as food have “steadied at high levels,'' the report said. “If commodity prices are sustained at their recent, and in cases such as oil, lower levels, some moderation of both headline and underlying inflation is to be expected,'' it said.

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China's leaders are planning tax cuts and a public-works spending spree to make sure their economy's growth isn't doused along with the Olympic flame.

Ten of 11 Summer Olympics host nations analyzed by Morgan Stanley economist Stephen Jen saw growth and investment slump in the year following the games; the only exception in his study, which stretches back to 1956, was the U.S. in 1996. Government officials in China, whose expansion was already slowing before the Beijing games ended last month, are determined to avoid what Jen calls the “Olympic Curse.''

That would provide a welcome boost for some of China's Asian neighbors, including Korea and Taiwan, as well as for commodity producers from Australia to Brazil whose economies are threatened by faltering demand from the U.S., Japan and Europe.

“The Chinese authorities will do whatever they can to avoid a sharp slowdown,'' says Shane Oliver, Sydney-based head of investment strategy at AMP Capital Investors, which manages about $108 billion. “China's economy will be a key pillar of strength for Asia.''

China has already eased lending restrictions and halted an appreciation of the yuan that was starting to pinch exports. Now, after four straight quarters of decelerating gross domestic product growth, the government is considering a fiscal stimulus of as much as 400 billion yuan ($58 billion), according to economists and reports in domestic news media.

Tax Cuts and Spending

A plan awaiting approval from the State Council and the National People's Congress includes 220 billion yuan of spending and 150 billion yuan of tax cuts, the Beijing-based Economic Observer newspaper reported last week.

China has tripled railway spending this year to 300 billion yuan. The current five-year plan, which runs through 2010, calls for investing almost 4.8 trillion yuan on power stations, waterways, roads and other infrastructure projects — more than the combined output of Taiwan, Thailand and Vietnam. Reconstruction after May's Sichuan earthquake could cost another 1 trillion yuan, the government says.

“As the Chinese economy moderates, official priorities are tilting towards maintaining growth and employment,'' says Jing Ulrich, chairwoman of China equities at JPMorgan Chase & Co. in Hong Kong. “China's infrastructure spending could even accelerate after the games.''

China might go beyond fiscal stimulus. The People's Bank of China said Aug. 15 it would “fine-tune'' monetary policy to cushion the economy as overseas demand weakens. Frank Gong, head of China research at JPMorgan, expects the central bank to reduce the portion of deposits banks are required to hold as reserves by 2.5 percentage points, to 15 percent, by next year.

`Foot Off the Brake'

China's inflation rate “is coming down, so they have got potential to take their foot off the brake and ease up on monetary policy,'' AMP's Oliver says. The rate peaked at 8.7 percent in February and was 6.3 percent in July.

China's growth slowed to a 10.1 percent annual rate in the second quarter after a recent high of 12.6 percent in the second quarter of 2007. Some economists say China's expansion — still the fastest among the world's 20 biggest economies — remains strong enough to maintain its momentum without new spending or monetary easing. “But it's an uncertain world situation, so a month or two from now, those plans may look very smart,'' says David Dollar, the World Bank's director for China.

About 20,000 Hong Kong-owned businesses will close or relocate from China's nearby Guangdong province by the end of this year, in part because of slowing export demand, according to the Hong Kong Small and Medium Enterprises Association no fax payday loan.

Manufacturing Contracts

Manufacturing contracted for a second month in August, according to the Purchasing Managers' Index released today by the China Federation of Logistics and Purchasing.

In a country where the number of new job-seekers each year exceeds the number of jobs created by 20 million, a decline in economic growth to even 8 percent would be tantamount to a recession, says Tao Dong, chief Asia economist with Credit Suisse AG in Hong Kong. Anything “below 9 percent would make the authorities quite nervous,'' he says.

That figure is significant for China's neighbors as well. For every 1 percentage point that China increases its growth rate, the rest of Asia will be boosted by half that, says Huang Yiping, chief Asia economist at Citigroup Inc. in Hong Kong.

Among countries with the most at stake are Taiwan, which shipped almost 36 percent of its total exports to China last year; South Korea, which sent 25 percent; and Japan, which shipped 19 percent, according to UBS AG.

Replacing the U.S.

Japan, whose economy shrank at an annual rate of 2.4 percent last quarter, would be even worse off without strong demand from China, which replaced the U.S. as Japan's biggest customer in July. Komatsu Ltd., Japan's largest maker of earthmovers, reported in July that sales in China gained 37 percent in the quarter, while revenue from North and South America declined.

“With Europe and the U.S. starting to struggle, and Asia starting to buckle, you don't want all engines sputtering at the same time,'' says Rob Subbaraman, chief Asia economist at Lehman Brothers Holdings Inc. in Hong Kong. “It will be more and more helpful if China can keep its economy on an even keel.''

China's spending will also help demand for commodities — from iron ore mined in Australia to copper produced in Chile. China is the world's biggest consumer of coal, steel, aluminum, iron ore, nickel ore, copper and natural rubber.

“Raw-materials demand in China is going to be very strong for decades to come,'' Marius Kloppers, chief executive officer of BHP Billiton Ltd., said Aug. 18. China's appetite for steel will double by 2015, said Kloppers, whose Melbourne-based firm is the world's biggest mining company.

`Aggressive' Price Gains

Price gains for copper through 2010 will be “aggressive'' because of limited supplies and Chinese demand, Citigroup said in an Aug. 18 report.

As one of the last remaining engines of growth, China may help keep the global economy from slipping into its first recession since 2001-2002. Economists at the International Monetary Fund deem anything less than a 3 percent world growth rate as a global recession.

“Continued robust, albeit slowing, growth in China and the rest of the emerging markets is a major driver of our view that the world economy will grow by a healthy 3.6 percent next year after 3.9 percent in 2008,'' said Binit Patel, international economist with Goldman Sachs in London, in an Aug. 21 report.

China has ample funds to pay for pro-growth policies, with outstanding debt of only 15.7 percent of GDP, compared with 75 percent in India, a budget surplus and the world's largest currency reserves, at $1.8 trillion.

“This is one country that's been saving during the boom time,'' says the World Bank's Dollar. “If exports drop off sharply and consumers get cautious, they can come in very quickly with government spending or tax reductions.''

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Opus Northwest, which broke ground this spring on a 101-unit apartment project in Northwest Portland's Alphabet District, has a new plan for a six-story vacation project just a few blocks away, in the Pearl District.

The 94,106-square-foot building, described in city documents as a hotel and by The Oregonian as a time-share, would be constructed on the north side of Northwest Irving Street, between Northwest 14th and 15th streets.

The Portland Design Commission will hold a public hearing on Opus' design advice request at 1:30 p.m., Aug. 7, in Room 2500A at 1900 S.W. Fourth Ave.

Sera Architects designed the building, which would be U-shaped around a ground level courtyard, with a hotel lobby and related services at street level payday advance. The upper floors would contain 114 hotel units of varying sizes.