The Japanese economy grew faster than expected in the third quarter, but it wasn't enough to move the Bank of Japan to raise interest rates today. Bloomberg reports:
The world's second-largest economy expanded an annualized 2.6 percent in the three months ended Sept. 30 after a revised 1.6 percent contraction in the previous period, the Cabinet Office said in Tokyo today. The median estimate of 41 economists surveyed by Bloomberg News was for a 1.8 percent increase.
The Bank of Japan kept its benchmark interest rate at 0.5 percent today as the biggest drop in housing investment in a decade and slowing shipments overseas threaten the expansion. Bond yields fell to the lowest since January 2006 on speculation that a cooling global economy will reduce demand for exports, the main driver of growth.
Tightening is more obviously required in China after inflation reportedly accelerated in October. AFP/CNA reports:
China's inflation lingered at 10-year highs in October, the government said Tuesday, as major state newspapers carried a vow by Premier Wen Jiabao to stabilise prices.
The consumer price index was up 6.5 per cent last month from a year earlier, compared with 6.2 per cent in September and 6.5 per cent in August, according to the National Bureau of Statistics.
Michael Pettis at China financial markets thinks that this means that "China will be forced into a maxi-revaluation (or at least a significant speeding up of the daily appreciation)" of its currency.
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