Wednesday, 4 May 2011

India rates interest rates

Asian central bank tightening continued on Tuesday. From AFP/CNA:

India's central bank on Tuesday raised lending rates by a bigger-than-expected 50 basis points, its ninth hike in 15 months to curb inflation, and warned that the move could slow economic growth.

The Reserve Bank of India raised its repo - the rate at which it lends to commercial banks - to 7.25 per cent and increased its reverse repo - the rate it pays to banks for deposits - to 6.25 per cent.

There was no move from the Reserve Bank of Australia though, which left interest rates at 4.75 percent on Tuesday.

However, data from the euro area on Tuesday show that inflation is likely to remain a concern there. From Bloomberg:

European producer-price inflation unexpectedly accelerated to the fastest in 2 1/2 years in March, adding to concerns that surging energy costs will feed through to consumers and prompt the European Central Bank to raise interest rates further.

Factory-gate prices in the euro region jumped 6.7 percent from a year earlier, the fastest since September 2008, after a 6.6 percent gain in February, the European Union’s statistics office in Luxembourg said today. Economists had projected a March increase of 6.6 percent, according to the median of 13 estimates in a Bloomberg news survey. In the month, prices advanced 0.7 percent.

Meanwhile, in the US, there was confirmation on Tuesday that manufacturing growth remains robust. From Bloomberg:

Orders placed with U.S. factories rose more than forecast in March on increasing demand for machinery and computers that points to further gains in business spending.

Bookings for manufacturers’ goods climbed 3 percent, a fifth consecutive increase, after a 0.7 percent February advance, the Commerce Department said today in Washington. The report also revised up estimates for capital equipment bookings issued last week.

Data from the UK were mixed though. Reuters reports:

Manufacturing expanded at its slowest pace in 7 months in April and a slowdown in new orders dimmed hopes that the UK economy would pick up after a weak recovery at the start of the year.

The Markit/CIPS manufacturing PMI headline index fell to 54.6, well below even the most bearish analyst's forecast, suggesting the recent strong performance by manufacturers is starting to weaken as domestic demand wanes...

Separate figures from the CBI business lobby group showed retail sales recorded solid annual growth in April, although the outlook is gloomy.

The CBI distributive trades survey's April sales balance unexpectedly rose to a four-month high of +21, up from +15 in March and better than the +13 consensus forecast.

However, the expected sales balance for May sank to its lowest since June last year and retailers said they expect seasonally adjusted sales this month to be their worst since September 2009.

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