Bloomberg reports the Reserve Bank of India's monetary policy decision today.
India’s central bank took the first step toward withdrawing its record monetary stimulus as inflation pressures build, ordering lenders to keep more cash in government bonds.
“It may be appropriate to sequence the ‘exit’ in a calibrated way,” Governor Duvvuri Subbarao said today after increasing the statutory liquidity ratio to 25 percent from 24 percent and raising the inflation forecast...
The central bank said “unconventional” steps taken during the global meltdown in the past year can now be reversed to damp price gains, adding that reversing the “conventional measures is not considered appropriate for now.”
Subbarao maintained the reverse repurchase rate at 3.25 percent, the repurchase rate at 4.75 percent and the cash reserve ratio at 5 percent, in line with the median forecast of 24 economists surveyed by Bloomberg News. He increased the inflation forecast for the year to March 31 to 6.5 percent from 5 percent...
India becomes the second country, after Australia, among Group of 20 nations to take steps to boost borrowing costs, underscoring a rising threat of accelerating consumer and asset prices...
Other Asian nations have avoided tightening monetary policy so far despite rising asset prices, but that does not mean they have been inactive. Again from Bloomberg:
Policy makers from South Korea to Singapore, confronted with rising real-estate values that threaten to mimic in Asia the U.S. mortgage bubble that roiled the global economy, are stepping up efforts to rein in prices.
Regulators in South Korea, Hong Kong and Singapore told banks in recent weeks they need to tighten lending standards. Central banks including India’s and South Korea’s have signaled a readiness to raise interest rates in the coming months...
In Hong Kong, where mortgage rates are the lowest in at least 19 years, home prices have climbed 26 percent this year, spurring authorities to tighten down-payment requirements for luxury homes. A one-bedroom, 816-square-foot apartment in the city’s Kowloon district last month sold for HK$24.5 million ($3.2 million).
Hong Kong’s index of finance stocks jumped 60 percent this year, and a measure for property shares is up 67 percent...
Singapore’s private-residential developers sold 10,000 units in the first seven months of 2009, more than the 4,300 sold the whole of last year. In South Korea, bank lending to households expanded for a seventh straight month in August as home prices rose.
Stocks are also surging in some markets. China’s Shanghai Composite Index is up 66 percent so far this year, compared with the 24 percent gain in the MSCI World Index, and benchmarks from Hong Kong, South Korea, Singapore and Taiwan are all up more than 45 percent. By comparison, the U.S. Standard & Poor’s 500 Index has advanced 18 percent...
In Singapore, the government barred interest-only loans for some housing projects last month. It also stopped allowing developers to absorb interest payments for apartments that are still being built.
Hong Kong authorities on Oct. 23 limited buyers of homes costing more than HK$20 million to borrowing 60 percent of the property’s value, down from 70 percent before. The Hong Kong Mortgage Corp., a government-backed home-loan insurer, suspended insurance for homes that aren’t owner-occupied.
South Korea’s financial regulator said Oct. 8 it plans to tighten regulations on non-banking finance companies’ lending to households, and authorities have cut loan-to-value ratios in mortgages to 50 percent from 60 percent in some Seoul areas. In the past month, China’s five largest banks were told to increase write-offs against bad loans and maintain their capital adequacy.
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