The international environment

• The US economy is showing signs of revival, although the recent increase in activity may moderate in coming months. In Japan, business confidence is at its lowest for four years. While activity in Germany is still on a weak trend, there are signs that activity in France and Italy may be beginning to expand.
• Underlying inflation is stable in most countries, although in Germany the wage round and the strength of monetary growth continue to give cause for concern.
• The Federal Reserve eased monetary policy in April in response to a slowing in the rate of money supply growth. The Bank of Japan lowered its official discount rate by 75 basis points, owing to the weakness of the economy. The Portuguese escudo joined the wide band of the ERM.

The international environment