Economy

Treasury Debt-Purchase Plan May Be Smaller Than Anticipated at $20 Billion The U.S. Treasury Department may begin its program to spur purchases of mortgage-backed securities from banks with about $20 billion in public and private money, down from as much as $100 billion when it was announced in March, two people familiar with the matter said.

Trichet Sets Policy `Cruise Control' as ECB Urges Banks to Drive Recovery European Central Bank President Jean- Claude Trichet is urging the region’s banks to play their part in generating an economic recovery.

European Service Industry Contracts at Faster Pace as Unemployment Climbs Europe’s service industry contracted at a faster pace in June as rising unemployment damped consumer spending.

U.K. Services Expanded for Second Month in June in Sign Economy Recovering U.K. service industries from law firms to consultancies grew in June for a second month, suggesting Britain may be starting to emerge from recession.

China's Zeng Peiyan Urges More Supervision of Reserve-Currency Countries Former Chinese Vice Premier Zeng Peiyan highlighted the nation’s concern at the risks posed by a global financial system dominated by the dollar, urging more oversight of countries issuing reserve currencies.

Indonesia May Raise Interest Rates in 2010 After One Final Cut This Year Indonesia may cut interest rates once more to stoke growth before faster inflation next year prompts policy makers to raise borrowing costs, economists said.

Australia Facing `Full Brunt' of Global Recession as Exports, Lending Drop Australia’s economy, which has so far skirted the global recession, may stall after reports showed exports dropped to a 14-month low, bank lending fell and home- building approvals declined by the most since 2002.

China's Zhou Sees Problems Boosting Consumer Spending to Balance Economy China’s central bank governor Zhou Xiaochuan said boosting the nation’s consumer spending to redress global imbalances is “easier said than done.”

China Needs Domestic Consumption for Economic Recovery, Researcher Says China needs to promote domestic consumption to make up for weak global demand because its economic recovery isn’t firm, a government researcher said.

Mukherjee May Increase Spending on the Poor in Indian Government's Budget India’s Finance Minister Pranab Mukherjee may increase spending on power, roads and aid to the poor in next week’s budget to bolster growth in Asia’s third- largest economy.

China Implements `Grand Scheme' for Bigger Yuan Role, Ex-IMF Official Says China’s call for a new world reserve currency is part of a “grand scheme” to reduce the dollar’s dominance and increase the yuan’s role, said a former senior International Monetary Fund official.

Fed Watch

Fed's Assets Shrink by 1% to $2.01 Trillion as Lending to Banks Declines The size of the Federal Reserve’s balance sheet shrank for a second week, dropping 1 percent to $2.01 trillion, as lending to commercial banks and other corporations declined.

Yellen Says Benchmark U.S. Interest Rates May Remain Near Zero for Years Federal Reserve Bank of San Francisco President Janet Yellen said the prospect that policy makers will leave the benchmark U.S. interest rate near zero for the next several years is “not outside the realm of possibility.”

Fed's Evans Urges Rules for Increased Capital Reserves at Financial Firms Federal Reserve Bank of Chicago President Charles Evans voiced skepticism about proposals to shrink large financial firms, saying regulators should consider new rules such as higher capital reserves during “good times.”

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