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Fed saw inflation above "desirable' level

Federal Reserve policymakers, in chairman Alan Greenspan's last interest-rate meeting, said more rate increases may be needed because inflation has been "somewhat higher" than acceptable, minutes of the session showed. "In the view of some members, the possibility of additional policy moves was reinforced by readings on core inflation and inflation expectations that were somewhat higher than was desirable over the long run," the Federal Open Market Committee said in documents released Tuesday. The Fed is nearing the end of the longest cycle of interest rate increases in a quarter century, and investors are looking for signs of when the Fed may stop.

U.S. consumer prices rise; core inflation in line

Energy and food costs drove U.S. consumer prices up by the most in four months in January, according to a government report that suggested the underlying inflation rate remains under control. The 0.7 percent increase in the Consumer Price Index followed a 0.1 percent decline in December, the Labor Department said Wednesday. Excluding food and energy, so-called core prices rose 0.2 percent after a 0.1 percent December gain. The report is likely to keep the Federal Reserve on course to raise interest rates in coming months as companies take advantage of improving demand to pass along persistently high raw-materials costs, economists said.

January durables orders fall on aircraft demand

A decline in commercial aircraft demand last month caused the biggest drop in U.S. durable goods orders since July 2000, even as factories reported stronger sales of business equipment. Orders for items made to last at least several years declined a larger-than-forecast 10.2 percent after a 2.5 percent rise in December, the Commerce Department said Friday. Excluding transportation equipment, orders rose 0.6 percent in January after a 1.9 percent increase.

Vice chairman Ferguson resigns, adds to turnover

Federal Reserve vice chairman Roger Ferguson, the last governor who wasn't placed on the board by President Bush, resigned less than a month after Ben Bernanke succeeded Alan Greenspan as chairman. In a letter Wednesday to Bush, Ferguson, 54, wrote that it was time for him to pursue other opportunities. His resignation from the Board of Governors will be effective April 28. Ferguson, who was close to Greenspan, leaves the Fed at a time of transition. Greenspan retired last month after more than 18 years atop the central bank and two governors are waiting to be sworn in.

Icahn, Lichtenstein make hostile bid for KT&G

U.S. investors Carl Icahn and Warren Lichtenstein made an unsolicited offer to buy KT&G Corp., South Korea's largest tobacco company, in a transaction valued at more than $10-billion. The New York hedge-fund managers bid 60,000 won ($61.91) a share, 17 percent more than KT&G's closing price Thursday. The investors, who are waging a proxy fight for three seats on KT&G's board, own 6.6 percent of the company, which had 162.4-million shares outstanding on Sept. 20.

Wal-Mart to expand health benefits, add clinics

Wal-Mart Stores Inc., responding to criticism that it has failed to provide adequate health benefits, said it will expand coverage for workers and build more than 50 health clinics in its stores. The world's largest retailer will allow more workers to become eligible for the lowest-cost health plan, cut the waiting period for part-timers and allow their children to be covered. Wal-Mart will more than quadruple the number of clinics this year after opening nine in Florida, Arkansas, Oklahoma and Indiana last year.

Odds and Ends

- Macquarie Bank Ltd., Australia's largest investment bank, abandoned its 1.5 billion-pound ($2.6 billion) hostile takeover offer for London Stock Exchange PLC after failing to woo investors in the British market

- Electrolux AB, the world's largest appliance maker, may make acquisitions as the industry consolidates, chief executive officer Hans Straaberg said.

- Medtronic Inc. said fiscal third-quarter profit rose 23 percent on sales of defibrillators as its biggest competitor struggled to shake off the effects of product recalls.

- Wal-Mart Stores Inc. said fourth-quarter profit rose 13 percent on holiday sales of clothing, electronics and gift cards.

- Viacom Inc., in its first report since splitting from CBS Corp., said fourth-quarter profit declined 67 percent following box-office losses at the Paramount Pictures film division.

- Gap Inc.'s fourth-quarter profit fell 11 percent on a slump in holiday sales and the retailer said it doesn't expect comparable sales to rise until the second half of the year.

- Kohl's Corp. said fourth-quarter profit rose 18 percent, helped by tighter inventory and strong sales of women's clothing and accessories.

- Ted Turner, Time Warner Inc.'s biggest individual shareholder, will leave the board of the world's biggest media company after a tenure marked by clashes with management and public criticism of the merger with America Online.

- Brazil's economy expanded less than analysts estimated in the fourth quarter as a stronger currency prompted some manufacturers to curb output and a drought in the south damaged rice and soybean crops.

- BLOOMBERG NEWS

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