:00:00. > :00:00.for an intruder. Those are the latest headlines from
:00:00. > :00:00.BBC World News. Now for the latest financial news in
:00:00. > :00:21.World Business Report. Investors await the latest European
:00:22. > :00:28.Central Bank policy meeting. Will it cut rates? Or take measures to
:00:29. > :00:31.combat low inflation? In China, 3,000 delegates attend a
:00:32. > :00:34.second day of The National People's Congress, billed as China's 'supreme
:00:35. > :00:42.organ of state power. The Premier vows comprehensive reforms.
:00:43. > :00:49.Welcome to World Business Report. I'm Alice Baxter. In a minute we'll
:00:50. > :00:52.be looking ahead to the French economy ahead of some jobs figures
:00:53. > :00:55.later. But first, ECB President Mario Draghi holds his monthly news
:00:56. > :01:02.conference following the bank's board meeting in a few hours.
:01:03. > :01:05.Observers are undecided whether the ECB will hold, or whether interest
:01:06. > :01:15.rates could be cut further to historic 0%. And even if the bank
:01:16. > :01:20.doesn't cut rates, it may take other action. Much of this is down to how
:01:21. > :01:23.worried the ECB is about the risk of deflation and of Europe following
:01:24. > :01:34.Japan into a 20-year downward spiral. Here's ECB president Mario
:01:35. > :01:39.Draghi. Write-down we have a level of
:01:40. > :01:48.inflation way below 2%, on the low side. -- right now. We have had this
:01:49. > :01:54.for a protracted period of time. We know the longer it stays at this
:01:55. > :02:02.level, the higher it will be the risk that it won't return to 2% in
:02:03. > :02:07.any reasonable time. In other words, the risk will be inflation
:02:08. > :02:09.expectations could be worse and we don't want that.
:02:10. > :02:12.Well let's get more from Sarah Hewin who is the Regional Head of
:02:13. > :02:19.Research, Europe, Global Research, Standard Chartered Bank. Good to see
:02:20. > :02:24.you this morning. Ali cited will we be? Will the ECB vote to keep rates
:02:25. > :02:30.on hold or cut them to a further low of 0%? The markets have been excited
:02:31. > :02:35.about this meeting, anticipating measures taken. But over recent
:02:36. > :02:40.days, the expectations have dimmed and we think they will keep interest
:02:41. > :02:46.rates on hold. We had an inflation number which came out last week that
:02:47. > :02:49.was better than expected, higher than expected, suggesting inflation
:02:50. > :02:58.is no risk any time soon. Activity data suggest that the euro economy
:02:59. > :03:03.is gaining momentum. This suggests that the ECB doesn't need to take
:03:04. > :03:09.action just yet. Positive research coming out. If we do see them held
:03:10. > :03:14.at the current value, what other action will we see the ECB take Paz
:03:15. > :03:19.they have a range of options available. None of them are
:03:20. > :03:25.palatable. If they feel the need to cut rates, as you mentioned, they
:03:26. > :03:28.will take them to zero, but the deposit rate will go negative so
:03:29. > :03:33.banks will have to pay the ECB to keep money on deposit at the central
:03:34. > :03:40.bank. Wanted to give easing is another option. -- quantitative. It
:03:41. > :03:46.is much more problematic in Europe. Deciding which bonds to buy is
:03:47. > :03:51.difficult and there is opposition from Germany that fears higher
:03:52. > :03:57.inflation. How worried should the eurozone be about this prospect of a
:03:58. > :04:02.period of deflation following the route we have seen set by Japan's we
:04:03. > :04:10.have heard warning shots from Christine Lagard that such a future
:04:11. > :04:15.isn't totally unimaginable. Yesterday, the IMF warned the ECB
:04:16. > :04:22.that they should cut interest rates and embark on easing and inject
:04:23. > :04:26.liquidity into the system. The problem is that with inflation below
:04:27. > :04:32.1%, which is where it is at the moment, there is a risk that you
:04:33. > :04:36.think lower and go negative. Once you have negative inflation and have
:04:37. > :04:47.rice is falling, people postpone buying decisions, businesses decide
:04:48. > :04:51.to invest later. -- prices. That impacts economic activity overall
:04:52. > :04:55.and it is worrisome for central banks. The has a greater tolerance
:04:56. > :05:01.for low inflation than the Bank of England and the Fed. It is why they
:05:02. > :05:05.have not acted yet. We will have to see what comes out of the ECB
:05:06. > :05:14.meeting. Thank you for coming to talk to us.
:05:15. > :05:16.China's economy is a major story because its enormous size and rapid
:05:17. > :05:20.expansion helps spark growth around the world. Company profits or jobs
:05:21. > :05:23.may well depend on it. So the annual National People's Congress in
:05:24. > :05:26.Beijing is a major world event. On day one the country's Premier Li
:05:27. > :05:37.Keqiang has told the summit that the economy can maintain rapid growth,
:05:38. > :05:43.but that tough challenges lie ahead. Lets get more from our chief
:05:44. > :05:47.business correspondent. On the second day, attention turns to
:05:48. > :05:53.detail. The finance minister has spoken. One of the strong emphasis
:05:54. > :05:58.is that this comes through is that they need to ensure they regulate
:05:59. > :06:02.financial risk. There is a concern the buildup of debt in China, very
:06:03. > :06:05.rapid since the global crisis when they used credit to power growth,
:06:06. > :06:15.could be leading to potential problems. I interviewed a local
:06:16. > :06:19.official who had acquired the banking crisis and is at the
:06:20. > :06:24.forefront of an effort to reform shadow banking. -- shadow banking.
:06:25. > :06:30.He has insisted they will get on top of it at that shadow banks in --
:06:31. > :06:43.create a great risk for the economy. Wii TRANSLATION: Shadow
:06:44. > :06:47.banking has reached a high levels . There is zero supervision before,
:06:48. > :06:56.during and after the loans are made and the government only stepped in
:06:57. > :07:02.when it is so risky. -- when the crisis occurred. It is so risky.
:07:03. > :07:06.What is frightening is how many shadow loans could be brought out.
:07:07. > :07:12.On the first day where shadow banking is good declare their loans
:07:13. > :07:16.and be brought into the system, I was there and no one turned up. They
:07:17. > :07:22.have three months to do this but it shows why it is getting a -- why
:07:23. > :07:28.getting a hold of this will be a big problem. We will hear more about
:07:29. > :07:36.that through the National People's Congress until Thursday. Thank you.
:07:37. > :07:39.Let's get update on all the other Asia business stories with Rico
:07:40. > :07:46.Hizon, who is in Singapore. Good to see you. Let's begin with the Bank
:07:47. > :07:49.of Japan says it will adjust policy appropriately if risks to its
:07:50. > :07:54.economic outlook threaten the 2% inflation target.
:07:55. > :08:00.At this point, the central bank is trying to calm investor nerves that
:08:01. > :08:03.they will be ready to act if inflation goals aren't attained
:08:04. > :08:08.because of the rise in consumption tax next month. The deputy governor
:08:09. > :08:13.said the country's recovery will continue moderately despite the tax
:08:14. > :08:16.hikes to 8% from the current 5% which takes effect on the 1st of
:08:17. > :08:23.April. The economy is on a steady track, achieving its goal. Views
:08:24. > :08:29.have been mixed as to whether the tax increase will impact growth. It
:08:30. > :08:31.might add liquidity to the market to cushion this tax hike.
:08:32. > :08:38.Australia's better-than-expected trade and retail sales data for
:08:39. > :08:46.January. They have come out, haven't they? The positive numbers than the
:08:47. > :08:51.Australian dollar to a one-week high. The surplus rising by $1.3
:08:52. > :08:57.billion, highest in three years while retail sales gain a 1.2% for
:08:58. > :09:02.the ninth month in a row. This is the silver lining amongst the end of
:09:03. > :09:05.the mining boom and the reports follow fresh economic growth data
:09:06. > :09:10.showing better than expected numbers for the last quarter of last year.
:09:11. > :09:20.One economist said that combining all of these figures, it seems the
:09:21. > :09:26.economy is going from gloom to boom. A quick look at how markets are
:09:27. > :09:31.getting on this morning. While not morning in Asia where you are,
:09:32. > :09:34.apologies for that. Let us see how they are doing. Green
:09:35. > :09:39.across-the-board. Markets around the board of wait to see what decision
:09:40. > :09:43.the ECB will reach. Will it cut interest rates or keep them on hold?
:09:44. > :09:51.All eyes on them. From me and the team, I for this. I will look
:09:52. > :10:08.Thank you Alice for that. Care services for older people in
:10:09. > :10:11.England are in crisis with rising demand and falling resources
:10:12. > :10:14.according to a new analysis from Age UK. The charity claims that hundreds
:10:15. > :10:16.of millions of pounds has been cut from social care budgets over the
:10:17. > :10:17.last three years