Finance news. My opinion.

Appliance World stores in the Denver area have been closed in the wake of the chain’s parent company filing for bankruptcy protection three months ago.

"Effective immediately, Appliance World stores are permanently closed," a notice on the retailer’s website said Thursday.

The chain has five metro-area stores, in Denver, Arvada, Aurora, Littleton and Highlands Ranch, plus one in Colorado Springs, according to the website.

On Oct. 20, Denver-based GCF Holdings LLC, which owns Appliance World, filed for Chapter 11 bankruptcy protection in U.S. Bankruptcy Court in Tampa, Fla. The company listed between $1 million and $10 million in both assets and liabilities, and said it had between 100 and 199 creditors.

In addition to Appliance World, the company had subsidiaries in Florida and New Mexico, according to the filing and news reports.

Riverview Ventures Inc. of Bradenton, Fla., did business as DeSears Appliance & Home Entertainment. Four DeSears stores in Florida were closed Dec. 2, the Bradenton Herald newspaper reported.

Another GCF subsidiary, DCE New Mexico LLC, operated a pair of electronics and appliance stores under the Baillio’s name in Albuquerque and Santa Fe. The Baillio family, which had sold the stores to the Denver company, resumed ownership after the Chapter 11 filing, the Santa Fe New Mexican newspaper reported.

The Appliance World website notice said that customers who already have been notified their appliance order is in "may pick up on Tuesday February 2 at our Denver warehouse located at 320 S. Lipan."

It said others with existing orders should "please continue to visit our website for ongoing information on receiving your product or a refund."

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About 900 General Motors and Chrysler dealerships that got the ax as the Detroit giants went through bankruptcy have filed notice that they will appeal their shutdown, according to the American Arbitration Association.

The nearly 3,000 dealerships the auto manufacturers scrapped have until Monday to file with the AAA for an independent arbitration of their case. But applications from dealers are still rolling in, so it’s hard to tell what the final count will be, said India Johnson, senior vice president of AAA.

"We are still putting cases in every day. They come in the mail, they come by e-mail, they come by fax," Johnson said. "I think that some may be filing because they want to preserve their right to file, and then next week or the week after that they may not go forward."

Electing arbitration costs dealers and manufactuers each a $1,625 filing fee. But that is just the start: If the arbitration proceeds to a hearing, the costs mount. Dealer and manufactuers are required to split common fees, such as the filing fee, and pay their own attorney expenses.

An estimated 2,000 dealers from General Motors and 789 from Chrysler are eligible to appeal. The General Motors count includes 1,300 dealerships that were put on notice in May for closure as of October 2010. Another 700 dealers were slated for "partial wind-down," meaning that one of a dealer’s multiple franchises is scheduled to be shuttered guaranteed payday loans.

The dealers Chrysler targeted in May have already stopped operating as Chrysler franchises. The company gave them less than 30 days to close.

Dealerships that have already closed or will close due to the death of GM’s Saturn and Pontiac brands are being handled separately. The fate of Hummer franchises will remain in limbo until the brand’s sale to a Chinese company is complete. Saab dealers are also hanging by a thread.

Arbitrators have a list of seven factors to consider in evaluating dealers’ appeals. They will assess the dealer’s profitability over the past four years, the dealership’s current economic viability, the geographic and demographic characteristics of the dealership’s territory, and the length of time the dealership has been in business, among other factors.

The arbitrator must also consider each manufacturer’s overall business plan, and how well the contested dealership fits into it.

The proceedings will be held in the state where the dealership is located and must, by law, be completed by June 14. However, arbitrators will have the option of extending that deadline if they can show cause for the extension. 

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Delta Air Lines Inc. has received government permission to operate its namesake service and its Northwest Airlines subsidiary as a single carrier, a Delta executive said Thursday.

The single operating certificate from the Federal Aviation Administration allows Delta to put its code on Northwest flights and phase out the Northwest name. That process will be complete in the first quarter of this year. For now, travelers won’t notice anything different.

Delta, based in Atlanta, acquired Northwest for $2.8 billion in stock in October 2008 to become the world’s biggest airline.

Delta and Northwest are now one airline, meaning that for the first time pre-merger Northwest operations will be combined into Delta’s operations, Chief Operating Officer Stephen E. Gorman said in an internal memo.

Labor issues remain, however. While pilots and some smaller work groups from both carriers are operating under joint contracts and seniority lists, flight attendants and gate and reservation agents and ramp workers have not resolved representation issues. Pre-merger Northwest was heavily unionized, while pre-merger Delta was not — its pilots were its only major work group to be in a union.

Meanwhile, more than 80 percent of pre-merger Northwest aircraft have already been painted over with the Delta livery. Employees of both carriers are wearing the same uniforms, and the two carriers frequent-flier programs have already been combined under the Delta SkyMiles brand.

But operationally, the two carriers have been kept separate while Delta sought the FAA certificate.

Delta plans to operate Northwest-coded flights until all seats and fares are consolidated in Delta’s reservations system. Once that occurs, it will remove the distinction for passengers of purchasing on Delta or Northwest, and the Northwest website will be folded into Delta’s.

Still unresolved for Delta is its effort to lure Japan Airlines Corp. away from its alliance with American Airlines and into Delta’s SkyTeam alliance. There’s been no word on a decision by JAL, which is said to be teetering on the verge of bankruptcy.

Delta also is dealing with the aftermath of a failed terrorist attack on a Northwest flight from Amsterdam to Detroit on Christmas.

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NEW YORK–General Motors Co. said Friday it will shut down Saab after talks to sell the brand to a Dutch carmaker collapsed, marking the third time this year that a deal by GM to sell an unwanted brand has fallen through.

GM said it had a small window of time to complete the deal and issues arose during the sale talks with Spyker Cars that could not be resolved. GM vice-president John Smith said: "Like everybody, we would have preferred a different outcome, and we all worked very hard for that different outcome and we’ve come up short."

Saab employs about 3,400 people worldwide, most of whom work at its main plant in Trollhatten, Sweden. The brand has 1,100 dealers, that General Motors said will continue to honour warranties as the brand winds down.

Chris Budd, owner of Budds’ Saturn Saab in Oakville – one of three Saab dealers in the GTA – said he feels as if he’s "lost a friend."

"I’ve had the Saab franchise longer than I’ve been married," he said, having carried the brand since 1977.

He blames the recession – not GM – for its demise.

Martin Olivera, service adviser at Saturn Saab Hummer on the Queensway, however, puts the blame squarely at GM’s feet.

"Truthfully, GM destroyed Saab," he said. "They made it into an American car, not a European car."

To enthusiasts, Saab became appreciated for quirks like placing the ignition lock between the front seats. It was the first to offer heated seating in 1971 easy to get unsecured personal loans.

GM bought a 50 per cent stake and management control of Saab for $600 million (U.S.) after it split from Swedish truck maker Scania in 1989. It bought full ownership in 2000 for $125 million. But even after the GM takeover, Saab remained closely associated with Sweden and its history of making safe, reliable cars.

GM never made money on the acquisition and industry analysts complained that under GM, Saab lost its uniqueness in the crowded luxury segment.

GM first sought a buyer for Saab in January as part of its restructuring, which included plans to cut the number of its brands to four from eight. It was previously in talks to sell Saab to a consortium led by the Swedish sports carmaker Koenigsegg Group AB, but it turned to Spyker after Koenigsegg withdrew from the talks in November.

GM’s failure to sell Saab is the third deal to sell an unwanted brand that has failed this year.

In September, dealership chain owner Roger Penske scrapped plans to buy Saturn after an agreement to get cars from France’s Renault fell through. GM is now phasing out Saturn.

GM’s board last month ended a deal to sell the European Opel brand to a group led by Canadian auto parts maker Magna International Inc., fearing that Opel was too heavily integrated into GM’s global operations and that GM technology would fall into the hands of competitors.

With files from Brendan Kennedy

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All three working-age generations – Boomers, Generation X and Generation Y – agree that the youngest ones are more difficult to manage than other generations, a Conference Board of Canada analysis has revealed.

The two older generations, the board’s November study found, believed Gen Y workers "require more close supervision, are less likely to follow procedures and are less results-driven than other generations."

On the other hand, Gen-Y – people aged 18 to 29 – "may not understand why their Boomer or Gen-X colleagues fail to recognize how busy their lives can be," the report found.

The board did their own national workplace survey and analyzed other data about the consequences of a new wave of multigenerational angst sweeping Canadian workplaces.

Two factors were exacerbating the angst, the board said: an ever-aging workforce and a wrenching shift "away from hierarchical structures" that Boomers are comfortable with to "a more team-based approach" in workplaces that suits Gen-X and Gen-Y more.

"No longer are younger workers largely dependent on the older generations for information and knowledge," the board said. "Younger workers can now access information online and many are often the most expert person at a given skill or task."

Hence, the conflict is "arguably now even greater than before."

Statistics Canada data show that while 14.1 per cent of the Canadian workforce in 2001 was nearing retirement age, 16.9 per cent was by 2006 and more than 20 per cent will be by 2016.

Bosses have the delicate task of getting these three generations to cooperate at work and adapting the environment to get the best work out of each, the board said.

Standing in the way are ingrained myths and perceptions on all sides, which its study attempted to explode. The Conference Board warned against "managing by stereotype."

Boomers were defined as people age 45 to 64 and Gen-X as 30 to 44. For both, the world they grew up in shaped them, be it Sixties idealism or skepticism wrought by corporate downsizing and the political upheaval of 1989, the board said.

All three generations agreed Boomers are "less comfortable with technology, less open to change and less accepting of diversity." The difference was in the degree.

Among the Gen-Y myths the study exploded was their over-confidence. The results showed the youngest workers were more cautious than their older co-workers gave them credit for.

Gen-Y employees told the survey they "strive to have a life that will make them happy." They agreed they are "less willing to work hard and feel they are owed more." They admitted they "seem to have a negative effect on productivity but a positive effect on morale because they are younger, full of energy and complain less than other generations."

They know they’re "often unreliable, tend to do things their own way and do not always follow the rules," the study found. But there’s a good reason for that, Gen-Yers told the board: "One group strictly wants to follow processes while the other wants to get stuff done."

Another challenge for bosses, the study said, is to temper the perceptions each generation has of the other. Among them:

Gen-Y found Gen-X "annoying and aggressive."

Gen-X said Boomers are "have difficulty giving up control," while Gen-Y said Boomers "live to work rather than work to live."

Boomers described Gen-X as "loners" who "lack patience."

And Gen-X contended Gen-Y "think they know everything."

In particular, the study found, Gen-Y workers said they like someone to review their tasks, while Boomers absolutely don’t.

And while Boomers were uncomfortable with the other two generations’ reliance on emails to communicate, the study found the perception of younger generations as careless with spelling and grammar wasn’t true. While 88 per cent of boomers felt it was important to be careful with grammar and spelling, 83 per cent of Gen-Xers and 85 per cent of Gen-Yers agreed.

Similarly, 87 per cent of Boomers said they were careful with details, as did 81 per cent of Gen-X and 79 per cent of Gen-Y.

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The European Central Bank will lend banks less money than economists forecast in its second 12-month auction of unlimited funds, indicating banks’ need for cash has eased for now.

Banks bid for 75.2 billion euros ($110 billion) at the current benchmark interest rate of 1 percent, the Frankfurt- based ECB said today. It loaned a record 442 billion euros at the first auction in June and economists had forecast demand for 137.5 billion euros this month, according to the median of 16 estimates in a Bloomberg News survey.

“That it came that low is a bit of a surprise,” said Jan Misch, a money-market trader at Landesbank Baden-Wuerttemberg in Stuttgart. “However, even expectations for anything beyond 100 billion were exaggerated in the first place. There isn’t just any major need for liquidity.”

The ECB, which will offer banks 12-month loans for a third time on Dec. 15, is flooding the system with money in the hope it will be lent on to companies and households. Money-market rates have dropped as the economy shows signs of emerging from recession and banks become less wary of lending to each other.

ECB Governing Council member Marko Kranjec said the demand “shows the system is liquid enough and that banks don’t need funds so much.”

The euro extended its advance against the dollar after the announcement and was up 0.6 percent to 1.4668 as of 12:27 p.m. in London.

‘Encouraging’

The ECB filled all bids in the auction. It said the 589 banks that participated, which compares with 1,121 in June, will receive the funds tomorrow.

“Weaker demand for ECB loans probably reflects the fact that banks feel more able to borrow from each other, which is encouraging,” said Jennifer McKeown, an economist at Capital Economists Ltd. in London. Still with banks “still concerned about further losses to come, there is a good chance that they will hoard the funds rather than lending them to firms and consumers.”

The Eonia overnight rate, the rate European banks charge each other for overnight loans, has declined to 0.35 percent from 2.2 percent at the start of the year. The euro interbank offered rate, or Euribor, for three-month loans this week fell to a record low of 0.74 percent from 5.24 percent a year ago.

‘Underpin Recovery’

In October last year, the ECB began lending banks as much money as they wanted for up to six months, effectively assuming the role of the money market. In May this year, it announced it would extend the maximum maturity on its loans to 12 months.

While the ECB has retained the option of raising the rate it charges banks for the loans, President Jean-Claude Trichet said the September 12-month tender would be held at the benchmark rate. That should “promote the extension of credit to the euro-area economy and, therefore, further underpin its recovery,” he said on Sept. 3.

“The ECB’s commitment to keep the liquidity support in place is crucial for all players, because it reassures banks that long-term liquidity will remain readily available even in case of further unforeseen shocks,” said Marco Annunziata, Unicredit Group’s London-based chief economist.

The ECB expects the euro-area economy to grow 0.2 percent in 2010 after contracting 4.1 percent this year. The region probably emerged from recession this quarter, according to the European Commission.

ECB policy makers remain cautious.

“There is no need to rush to exit from monetary stimulus” and “no reason to change the monetary policy stance” at the moment, ECB council member Erkki Liikanen said yesterday.

European consumer prices fell more than economists forecast in September, declining 0.3 percent from a year earlier, a report today showed. Bank lending to euro-area households grew at the slowest annual rate on record in August, the ECB said Sept. 25.

On Sept. 28, Trichet urged banks to step up lending to the real economy. “Our message to banks is clear: do your job,” he said.

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Australian government stimulus spending will need to be eased and interest rates raised as the nation’s economy expands, central bank Governor Glenn Stevens said.

“In due course, both fiscal and monetary support will need to be unwound as private demand increases,” Stevens said in Sydney today. “The bank has already signaled that interest rates can be expected, at some point, to move off their current unusually low levels.”

Without A$42 billion ($36 billion) in government stimulus, almost half of which has been distributed to households as cash, and a benchmark interest rate at a 49-year low of 3 percent, Australia’s economy would have slipped into a recession, Stevens said. Gross domestic product rose 1 percent in the first half of this year, boosted by consumer and government spending.

“This has been a good episode for Australia,” Stevens said in testimony to the Senate economics references committee. “We’re in recovery” and “it’s important these measures be wound back, and we’re on track” for that to happen.

The Australian dollar traded at 86.30 U.S. cents at 11:12 a.m. in Sydney from 86.63 cents before Stevens spoke. The two- year government bond yield rose 8 basis points to 4.19 percent. A basis point is 0.01 percentage point.

Price Bubbles

“There is no sense of urgency in the governor’s message today which would betray a predilection to hike rates at the October board meeting,” said Rob Henderson, chief economist at National Australia Bank Ltd. in Sydney. “But he is resolute that the current ‘emergency’ settings will be unwound at the appropriate time. He is determined to prevent price bubbles.”

Stevens, who faced questions from opposition Liberal party lawmakers and Greens Senator Bob Brown about whether stimulus spending should be withdrawn, said the government’s planned schedule of spending isn’t “terribly worrying.”

“I would hazard a guess that in five years’ time we’ll find the debt buildup isn’t as large as forecast,” Stevens said.

The government expects to post record budget deficits until 2016 as it boosts spending on roads, railways, schools and hospitals. Treasurer Wayne Swan said on May 12 that the shortfall will be A$32.1 billion in the year ending June 30, which is equivalent to 4.9 percent of GDP. Australia’s net debt will peak at 13.8 percent of GDP in fiscal 2014, Swan said.

Economy’s Performance

“My expectation is that the economy is performing a bit stronger” than forecast by the central bank and government earlier this year, the governor said. That will “help the budget through the natural growth in revenue.”

“People are realizing that, though things have been tough, the worst has not occurred and the future is looking brighter,” Stevens said.

Stevens, who slashed the overnight cash rate target by a record 4.25 percentage points between September last year and April, also said policy makers intend to raise borrowing costs to prevent a surge in inflation as the economy expands.

“Interest rates are unusually low, so that means we have some work to do at some point to head back to normal before we get the build up of problems we’ll get if we keep them too low for too long,” Stevens said.

Still, he said the benchmark rate won’t be raised rapidly to last year’s peak level of 7.25 percent. “In the near-term I don’t think that’s a likely prospect,” Stevens said.

Unemployment won’t reach the levels forecast by the government in May, Stevens said today. Treasurer Swan said at the time that the jobless rate, which was 5.8 percent last month, will peak at 8.5 percent by June 2011.

“If it peaks at 6 point something” that would be a “pretty low peak,” Stevens said. “We should be pretty glad if that occurs.”

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More Americans than anticipated filed jobless-benefit claims last week, indicating companies remain focused on cutting expenses as the economy emerges from its worst recession since the 1930s.

Applications fell by 4,000 to 570,000 in the week ended Aug. 29, exceeding the 564,000 median forecast of economists surveyed by Bloomberg News, figures from the Labor Department showed today in Washington. The total number of people collecting unemployment insurance climbed.

The firings are one reason economists project consumer spending, which accounts for 70 percent of the economy, will be slow to strengthen. Analysts surveyed by Bloomberg forecast a Labor Department report tomorrow will show August payrolls fell by 230,000, the smallest decrease in a year.

“We’re not making much progress in terms of the layoff picture,” said Jonathan Basile, an economist at Credit Suisse Holdings USA Inc., which correctly forecast the first-time filings figure. “These levels of initial claims are still consistent with declines in payrolls.”

Service industries, which account for almost 90 percent of the economy, shrank at a slower pace in August, the Tempe, Arizona-based Institute for Supply Management also reported today. The group’s index of non-manufacturing businesses rose to 48.4, exceeding forecasts and the highest level in 11 months, from 46.4 in July.

Markets

Stocks trimmed gains following the services data as optimism dimmed over the pace of the economic recovery. The Standard & Poor’s 500 Index was little changed at 994.76 at 10:33 a.m. in New York. Stock futures were boosted earlier in the day by the biggest rally in Chinese shares in six months. Treasuries trimmed losses, with benchmark 10-year notes yielding 3.33 percent, up from 3.31 percent late yesterday.

The median claims forecast reflected estimates from 40 economists surveyed. Projections ranged from 550,000 to 580,000. The Labor Department revised the prior week’s applications level up to 574,000 from a previous estimate of 570,000.

The jobless claims report showed the four-week moving average of initial applications, a less volatile measure, climbed to 571,250 last week, the highest level in more than a month, from 567,250.

Continuing Claims

Continuing claims jumped by 92,000 in the week ended Aug. 22 to 6.23 million. The unemployment rate among people eligible for benefits, which tends to track the jobless rate, rose to 4.7 percent in the week ended Aug. 22 from 4.6 percent the prior week.

Thirty-two states and territories reported a decrease in claims, while 21 showed an increase. These data are reported with a one-week lag.

Initial jobless claims reflect weekly firings and tend to rise as job growth — measured by the monthly non-farm payrolls report — slows.

The economy has lost 6.7 million jobs since the recession started in December 2007, the most of any downturn since the Great Depression. Even so, the 247,000 drop in payrolls reported for July was lower than economists projected.

Manufacturers are still cutting staff. Whirlpool Corp., the world’s largest appliance maker, will close its Evansville, Indiana, manufacturing plant, resulting in the elimination of 1,100 jobs as the housing slowdown hurts demand.

Job Cuts

The job cuts, which represent about 1.6 percent of Whirlpool’s workforce, will occur in 2010, the Benton Harbor, Michigan-based company said Aug. 28 in a statement.

Lockheed Martin Corp., the world’s largest defense company, plans to cut about 800 jobs at its Space Systems unit by yearend, the company said in a statement on Aug. 17.

Carmakers are among companies boosting production after a jump in sales following the government’s incentive program helped clear out inventories.

General Motors Co. called back 1,350 union workers, its biggest one-time increase in jobs since 2006, partly in response to demand from the government’s “cash for clunkers” program.

“We are adding production to almost all of our operations in the United States,” Tim Lee, GM group vice president overseeing global manufacturing and labor, said during a conference call on Aug. 18.

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President Barack Obama said it will take “many more months” for the U.S. to fully recover from the recession as employers continue to eliminate jobs.

The president said in his weekly address on the radio and the Internet that yesterday’s government report on the gross domestic product showed the recession was “even deeper than anyone thought” when he took office in January. The stimulus legislation passed by Congress in February and measures to stem home foreclosures have helped stem the slide, he said.

“Important steps that we have taken over the last six months have helped put the brakes on this recession,” Obama said. “But history shows that you need to have economic growth before you have job growth.”

Obama is putting the economy back at the forefront of his remarks to the public as polls show it remains the top concern of Americans. Next week he’s heading to Elkhart, Indiana, for an event focused on his economic policies. Obama said earlier this week that the U.S. “may be seeing the beginning of the end of the recession.”

The Commerce Department reported yesterday that the gross domestic product shrank at a 1 percent annual pace in the second quarter, less than forecast, after a 6.4 percent drop in the first three months of the year. The economy has lost 6.5 million jobs since the recession began in December 2007, and economists surveyed by Bloomberg this month forecast the jobless rate will exceed 10 percent by early 2010. The Labor Department is scheduled to release the July unemployment rate Aug. 7. The June rate was 9.5 percent.

Jobs and Recovery

“As far as I’m concerned, we will not have a recovery as long as we keep losing jobs,” Obama said. “And I won’t rest until every American who wants a job can find one.”

The GDP report is a “an important sign that we’re headed in the right direction” as business investment stabilizes, which may lead to more hiring.

“That’s when it will really feel like a recovery to the American people,” he said cash advance lenders.

The revised government data showed that GDP has tumbled 3.9 percent since the second quarter of last year — the biggest drop since quarterly records began in 1947. GDP has fallen four straight quarters, the longest ever.

“I know that there are countless families and businesses struggling to just hang on until this storm passes,” Obama said. “But I also know that if we do the things we know we must, this storm will pass. And it will yield to a brighter day.”

In a July 24-28 poll by the New York Times and CBS News, 36 percent of Americans said the economy was the most important problem facing the country. Twelve percent cited health care.

Republican Address

In the Republican address, South Dakota Senator John Thune said the party is committed to an overhaul of the U.S. health- care system while criticizing Democratic proposals for being “government-run” and too expensive.

“The Democrats who control Congress have been spending money and racking up debt at an unprecedented pace,” Thune said. “Their plan for government-run health care would only make things worse.”

Thune said the proposals being considered in the House and Senate would cost more than $2 trillion. The Congressional Budget Offices has estimated the Congressional proposals will cost around $1 trillion.

The Republican alternative, Thune said, would let small businesses join together to buy health insurance plans for their employees, protect hospitals and doctors from lawsuits and extend tax benefits to people who don’t get insurance through their jobs.

“These and other commonsense solutions would provide real reform for our health-care system rather than the dangerous and costly experiment that Democrats are proposing,” he said.

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Russia’s central bank cut its main interest rates for the fourth time in less than three months after the economy contracted 10.2 percent through May and government spending failed to reverse the decline.

Bank Rossii cut the refinancing rate to 11 percent from 11.5 percent and the repurchase rate charged on central bank loans to 10 percent from 10.5 percent effective July 13. The bank cut rates for the first time since 2007 on April 24 and again on May 13 and June 5.

“Despite the ongoing rate cuts conducted by Bank Rossii in April to June 2009, interest rates remain high,” the bank said in a statement. The latest reductions will lower borrowing costs and lead to the “restoration of lending activity of the banking sector.” The average rate in May for one-year loans for non- financial companies was 15.9 percent, the statement said.

The key interest rates of the world’s biggest energy exporter are among the highest in emerging markets, while its economic contraction is one of the steepest. Policy makers aim to spur lending and help pull the country out of its first recession since 1998.

Industrial production slumped a record 17.1 percent in May and capital investment shrank the most since December 1998, dropping an annual 23.1 percent. Inflation last month slowed to an 18-month low of 11.9 percent from 12.3 percent in May.

‘Small Step’

Previous cuts failed to revive lending, First Deputy Chairman Alexei Ulyukayev said in an interview last month. Lenders aren’t passing on the lower rates to companies on concern slumps in manufacturing and consumer demand may trigger a second wave of problems as companies fail to repay loans.

Lending to companies fell 1.5 percent in May compared with the previous month, while retail loans dropped 1.9 percent, the central bank said this week. Overdue bank loans reached 4.6 percent of the total in May, versus 4.2 percent a month earlier.

“It’s a small step toward reanimating lending,” said Stanislav Ponomarenko, a fixed-income analyst at ING Groep NV in Moscow. Rates need to be cut by as much as 4 percentage points to have an effect on lending, he said.

The central bank will watch the inflation rate as well as lending patterns and financial and currency markets as it sets its policy on rates in the future, the statement said.

‘Momentous Shift’

Consumer-price growth is slowing “intensively” and the inflation rate will be significantly less than the government’s original forecast, allowing the bank to continue cutting rates, Chairman Sergey Ignatiev told Russia’s parliament on June 24 business