The Reserve Bank of India retained its key interest rates and cash reserve ratio at its monetary policy meeting on Tuesday. At the same time, the central bank reduced its economic growth forecast for 2008-09, citing slowdown in industry and services.
The repo rate, the rate at which the central bank lends to commercial banks was left unchanged at 5.5% and the reverse repo rate, the rate at which the RBI borrows money from banks was held at 4%. The repo rate thus stands at the lowest level in more than 8 years. The central bank also maintained the bank rate at 6%, the Third Quarter Review of Monetary Policy 2008-09 showed. Most economists were expecting the central bank to maintain its key interest rates unchanged.
Earlier in January, the central bank had slashed its repo rate and the reverse repo rate by 100 basis points each to 5.5% and 4%, respectively. In December alone, the RBI reduced repo rate and reverse repo rate by 100 basis points, each. Read the rest of this entry »
Posted on January 26th, 2009 in RTT News | Comments Off
Will the change of guard at the White House make a difference to the near term economic outlook? Notwithstanding the wishful thinking that President Obama could weave his magic wand and instantaneously cure the economy of its ailments, there is no quick fix to the current crisis that has assumed gargantuan proportion, with the weakness spreading far and deep into all spheres of economic activity. That said, there are promising signs as well.
Democrats control both houses of Congress, which could make life easier for the new President. It is reported that the $825 billion second stimulus package is on track to be on the President`s desk by February 15th. Even if the fiscal stimulus package is enacted very quickly, it would take some time for the impact to be felt. Wachovia securities believes that the bulk of the infrastructure spending will not kick in until late this year or early 2010, although tax cuts and changes in withholding schedules may show up a little earlier. However, the latter is expected to have only a modest impact. Read the rest of this entry »
The government of Australia stands ready to provide additional economic stimulus of the recession continues, Treasurer Wayne Swan said.
In remarks to the New York investment community, Swan said the government would move swiftly to add to the already approved A$45 billion stimulus package announced in October.
Swan said the government of Prime Minister Kevin Rudd `will not hesitate to take whatever further actions are necessary to support growth and jobs.
The initial stimulus package involves aid for home buyers, pensioners, families the bond market and additional spending for schools and infrastructure.
Swan said the country retains a `strong balance sheet` and a positive net worth that provides what he said was `more room` than other countries to adjust to economic conditions.
Unemployment in Australia rose in December to a two-year high of 4.5 percent, pointing to the possibility that the nation would fall into recession for the first time since 1991.
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The plunge in housing starts will add to near-term weakness in the economy; the construction associated with a start is largely spread over the following six months, note the analysts at UBS in the firm`s daily economic comment. However, there is also a medium-term positive interpretation: The larger the decline in starts, the quicker home inventories are likely to be reduced, potentially limiting the ultimate drop in home prices (the main cause of the financial crisis). The December level for starts was probably a little more than one million units at an annual rate below the long-term trend based on household formation and replacement building. Starts are likely to stabilize soon.
So far, the plunge in starts has merely stopped the reported level of inventories of vacant homes from continuing to surge. However, completions lag starts: In December, at a 1.015M unit annual rate, completions were running at almost twice the pace of starts. We expect a clear downtrend in completions soon, reducing pressure on inventories of unsold homes. In level terms, inventories will likely remain high for a while, and we expect the national average Case Shiller home price index to ultimately fall by about 33 percent (versus 21 percent through Q308). Even so, we believe a declining trend in inventories of unsold homes would provide some basis for optimism in forward-looking financial markets, countering the extremely weak economy-wide data that appear likely for the next few months. (The next new data on housing vacancies will be reported on February 3.) Read the rest of this entry »
US stocks were poised for a lackluster open Thursday morning in New York amid lingering concerns that the recession may be deeper and more prolonged than most had initially feared.
As of 6 am ET, the NASDAQ Futures were up 5 points, the Dow Futures were down 20 points, and the S&P Futures were down 2 points.
Stocks showed a strong upward move over the course of the trading day on Wednesday, partly offsetting the steep losses that were posted in the previous session.
The Dow closed up 279.01 points or 3.5 percent at 8,228.10, the NASDAQ closed up 66.21 points or 4.6 percent at 1,507.07 and the S&P 500 closed up 35.03 points or 4.4 percent at 840.25. Read the rest of this entry »
US stocks will look to snap back from a dismal performance in the previous session on Wednesday, and early signals are mixed after IBM reported better-than-expected quarterly earnings, partially offsetting lingering concerns about the health of the financial sector.
As of 6:20 am ET, the S&P Futures were up 7 points the NASDAQ Futures were up 5 points, and the Dow Futures were up 55 points.
Tuesday was a brutal day for the financials after analysts offered a grim forecast for Citi and Wells Fargo (WFC). Meanwhile, State Street (STT) and Bank of New York Mellon (BK)reported that profits plummeted last quarter.
Royal Bank of Scotland (RBS) forecast a multi-billion loss for 2008 and the British government increased its stake in the financial giant. Read the rest of this entry »
Economic recession in the Eurozone is expected to continue until the first half of 2009, while inflation is expected to slow, official forecasts showed Monday.
In its interim forecasts for 2009-2010, the European Commission said the Eurozone economy is expected to contract 1.9% in 2009, down from its autumn forecast of 0.1% growth.
`The deteriorated outlook is the result of the impact on the real economy of the intensified financial crisis and the ensuing global downturn,` the Commission said in a statement.
Based on recent hard and soft data, the Commission estimates gross domestic product or GDP probably fell 1.5% quarter-on-quarter in the final three months of 2008. It also said the recession is expected to continue, with a further decline of GDP in the first two quarters of 2009. Eurozone entered its first recession since the adoption of Euro in 1999, contracting 0.2% each, in the third and the second quarters of 2008. Read the rest of this entry »
The stock markets in the Asia-Pacific region are trading higher on Monday following the modest gains on Wall Street Friday. Higher commodity prices and optimism about the incoming U.S. administration helped buoy stocks, although economic worries continued to linger. Crude oil eased in early Asian trades, but was trading at above $36 per barrel. The U.S. dollar was trading in the upper 90-yen range in early trades Tokyo.
U.S. stocks closed higher on Friday, helped by strength in the energy sector and amid nagging worries about the health of the financial sector. The Dow closed up 68.73 points, or 0.8%, at 8,281.22, the Nasdaq closed up 17.49 points, or 1.2%, at 1,529.33 and the S&P 500 closed up 6.38 points, or 0.8% at 850.12. The U.S. stock markets will be closed on Monday for the Martin Luther King Day holiday.
Crude oil eased to $36.25 in early Asian trades Monday, down $0.26 or 0.71% from Friday`s close. Crude oil closed higher on Friday as traders prepared for the close of the contract following the close of Tuesday`s session. Light sweet crude oil for February finished at $36.51 on the New York Mercantile Exchange, up $1.11 on the session. Read the rest of this entry »
The latest shock to have hit consumers is the rapid deterioration in the labor market, which saw a loss of 1.5 million jobs in the fourth quarter alone. Economists estimate nearly a million-job cut in the first quarter. Consumers, who were holding tight to their purse strings due to the turmoil in the real estate and the financial market, are now confronted with a debilitated labor market, which is facing the prospect of rapid job losses and falling income levels.
Belying hopes that heavy discounting would boost sales, real private consumption fell by 0.3%-0.4% month-over-month in December. Quite promptly, consumers have now become cautious, especially with respect to their outlays. Testifying to this fact, retail sales declined for the sixth straight month in December, with sales dropping 2.7% month-over-month.
A drop in gasoline sales was responsible for much of the weakness. That said, almost all major categories showed declines for the month. Core retail sales, excluding autos, building materials and gas fell 1.4%, marking the biggest decline since September 2001. To make matters worse, October and November sales were revised downwards. Read the rest of this entry »
The heady days of 2004-2007, when global GDP growth averaged about 5 percent per annum, seem like a distant memory now, say the analysts at Wachovia. Growth in most countries slowed in the first half of 2008 due in part to monetary tightening, the unprecedented rise in energy prices and dislocations in credit markets.
Although most countries have not yet reported real GDP data for the fourth quarter of 2008, it appears that global economic activity contracted sharply at the end of last year as credit markets froze up in the wake of Lehman Brothers` failure.
Looking forward, we project global GDP will be essentially flat in 2009, which would be the slowest year of global GDP growth in decades. Every G-7 economy is in recession at present and they likely will remain so over the next few quarters. Although not every developing country will experience outright recession, growth in the developing world will slow significantly this year. Read the rest of this entry »