Friday, 1 April 2011

Taiwan tightens, eurozone inflation fastest in two years

Monetary policy tightening continues in Asia, the latest move coming from Taiwan on Thursday. AFP/CAN reports:

Taiwan's central bank raised its key interest rate on Thursday to curb inflation and battle sky-rocketing property prices.

The bank hiked the discount rate by 12.5 basis points to 1.75 per cent faced with inflationary pressure notably from rising commodity prices.

The euro area looks set to join the tightening camp after the latest inflation report on Thursday. From Bloomberg:

European inflation unexpectedly accelerated to the fastest in more than two years in March as European Central Bank policy makers prepared to raise interest rates to fight increasing price pressures.

Inflation in the 17-nation euro region quickened to 2.6 percent from 2.4 percent in February, the European Union’s statistics office in Luxembourg said today in an initial estimate. That’s the fastest since October 2008 and exceeds the ECB’s 2 percent limit for a fourth month. Economists forecast inflation to hold at 2.4 percent, the median of 32 estimates in a Bloomberg News survey showed.

However, tightening for the ECB does not extend to its credit rating threshold for debt used as collateral. From Bloomberg:

The European Central Bank said it will accept all debt instruments backed by the Irish government as collateral against ECB loans as the country attempts to shore up its banking industry.

The Frankfurt-based ECB said Ireland’s commitment to recapitalize its banks and comply with a consolidation program prescribed by the European Union and International Monetary Fund must be assessed “positively.” The suspension of the minimum credit-rating threshold is based on “this positive assessment of the program,” a capital increase for Ireland’s four banks and the decision to “deleverage and downsize the banking sector,” the ECB said.

Irish regulators today instructed four banks to raise 24 billion euros ($34 billion) in additional capital following stress tests on their businesses, and the government said it plans to merge two of the lenders. Allied Irish Banks Plc, the biggest lender during a decade-long economic boom, requires 13.3 billion euros, the central bank in Dublin said.

The news from the US on Thursday were somewhat more positive. Bloomberg reports:

Fewer Americans filed claims for jobless benefits last week and consumer confidence stabilized, a sign the world’s largest economy is weathering the jump in commodity prices heading into the second quarter.

The number of applications for unemployment insurance payments fell by 6,000 to 388,000 in the week ended March 26, a one-month low, Labor Department figures showed today in Washington. The Bloomberg Consumer Comfort Index rose to minus 46.9 last week from a seven-month low of minus 48.9...

The Institute for Supply Management-Chicago Inc. said today its business barometer fell to 70.6 this month from February’s 71.2 reading that was the highest since July 1988. The index exceeded the 69.9 median forecast of economists surveyed by Bloomberg. Figures greater than 50 signal expansion...

Bookings for manufacturers’ goods decreased 0.1 after a revised 3.3 percent gain in January that was larger than previously reported, according to figures from the Commerce Department. Excluding transportation equipment, demand rose, boosted by a pickup in non-durable goods.

No comments:

Post a Comment