New Overnight Developments Abroad - Daily Update
Focus on China and Bernanke
November 19, 2010
The People’s Bank of China raised reserve requirements for the fifth time in 2010. The requirement for big banks will climb another 50 basis points to 18.5% effective November 29. The backdrop for this tightening was evidence of a greater-than-forecast acceleration of CPI inflation to 4.4%. A move like this can be viewed as substituting […] More
Central Bank Watch
A 50-Basis Point Central Bank Rate Cut in South Africa
November 18, 2010
While central banks in other commodity-sensitive economies like Australia, Canada and News Zealand have begun to tighten monetary policy, the South African Reserve Bank remains in easing mode. Cuts in the repo rate have been administered in two waves, a total of 500 basis points in six steps from 12% at the start of December […] More
Central Bank Watch
Filipino Monetary Policy Unchanged As Expected
November 18, 2010
Policymakers at Bangko Sentral ng Pilipinas once more left their key lending and borrowing rates at 6% and 4%, respectively, where such have been since a cut of 25 basis points announce July 9, 2009. The Philippines has a good combination of robust domestic demand-led growth and manageable inflation as attested in a statement from […] More
New Overnight Developments Abroad - Daily Update
Stocks, Bond Yields and Commodities Higher, Dollar Lower
November 18, 2010
The dollar lost 1.0% against the euro and Australian dollar, 0.9% against the kiwi, 0.7% versus the Canadian dollar, 0.6% relative to the Swiss franc and 0.5% versus sterling. The dollar is steady against the yuan and yen. The Japanese Nikkei advanced 2.1% and closed above 10,000 for the first time since June 22. Equities […] More
Central Bank Watch
Higher Turkish Reserve Requirements
November 17, 2010
On November 12, the Central Bank of the Republic of Turkey increased reserve requirements on local-currency denominated assets to 6.0% from 5.5%. That action followed a 400 basis point cut of the overnight borrowing rate unveiled the day before and reviewed here. The increase of reserve requirements should remove close to $1.5 billion equivalent from […] More
Central Bank Watch
A Sixth Consecutive Chilean Rate Hike
November 17, 2010
The Central Bank of Chile had slashed its policy interest rate during the first seven months of 2009 by 775 basis points from 8.25% to 0.5%, but about a third of that stimulus from last year has now been reversed following Tuesday’s announced increase of 25 basis points to 3.0%. Starting in June, the benchmark […] More
Deeper Analysis
U.S. Deflation Risk: Fact or Fancy?
November 17, 2010
The Fed is engaging in a second round of quantitative easing to ensure that the United States doesn’t slip into deflation. Deflation can be like a stroke in that full functionality sometimes never returns. Excessive inflation, in contrast, can always be conquered if monetary authorities have enough political backbone, which is why they tend to […] More
New Overnight Developments Abroad - Daily Update
EU Officials Scrambling to Defuse Irish Financial Strains
November 17, 2010
In a second day of meetings, Ecofin, EU finance ministers, seemed to be making progress on aid for Ireland. Irish talks with the EU, IMF, and ECB start tomorrow. Overnight movements of the dollar were minuscule. The euro is unchanged but remains softer than $1.35. The greenback is also unchanged on balance against the Canadian, […] More
Central Bank Watch
Bank of Korea Tightens for a Second Time
November 16, 2010
Korea’s seven-day repo rate has been raised from 2.25% to 2.5%, a move that analysts predicted. An initial tightening on July 9 had also been by 25 basis points, but the ensuing policy meetings in August, September and October had left the key interest rate steady partly because of concern about a rising won. A […] More
New Overnight Developments Abroad - Daily Update
Relentless Concern about Advanced Economies
November 16, 2010
The take-no-prisoners angered folk of the U.S. Republican Party have turned their sights on the Bernanke-led Federal Reserve. QE2 has been associated with rising long-term interest rates, not the decline it was intended to promote. Stocks got pummeled overnight. In Europe, Britain announced a further and unexpected rise in CPI inflation, and Bank of England […] More
