Tag: monetary policy
Fed chairman warns of high unemployment
Federal Reserve Chairman, Ben Bernanke, has warned that the world’s largest economy is facing a national crisis due to its high unemployment rate, which currently stands at 9.1%. Earlier this month, the US Labor Department revealed the economy added no new jobs last month, which was a surprise after markets had expected 70,000 new jobs. [...]
OECD lowers growth prospects for major economies
The Paris-based Organisation for Economic Cooperation and Development (OECD) has revised its growth forecasts for major economies. The US, which is the world’s largest economy, is expected to see growth in the third quarter of 1.1% and 0.4% in the fourth – this is far lower than the previous estimates of 2.9% and 3%. However, [...]
BIS warns of low interest rates
In its annual report, the Bank for International Settlements (BIS) has warned that global interest rates need to rise in order to tame inflation. The report also said low interest rates are a threat to world financial stability. In the aftermath of the financial crisis, central banks opted to slash interest rates in an effort [...]
OECD cuts UK growth estimates
Influential think tank, the Organisation for Economic Co-operation and Development (OECD), has cut its forecast for UK economic growth. The Organisation estimated growth this year of 1.5%, down from its November prediction of 1.7%. The reduction was attributed to Government spending cuts, which will hamper growth. However, the OECD described the cuts as “ambitious and [...]
Japan continues to battle with deflation
Official figures show Japanese core consumer prices fell 0.2% in January compared with a year ago – representing the 23rd consecutive monthly decline that the world’s third largest economy has been in deflation. A short period of deflation (where prices fall rather than increase) could be a serious threat to the economy because it deters [...]
BoJ Tankan survey reveals fall in business sentiment
The Bank of Japan’s (BoJ) closely watched quarterly Tankan survey has revealed business confidence has dipped – hit by a strong yen and slowing exports. The influential Tankan index revealed business confidence among major manufacturers fell for the first time in almost two years. The Tankan figures are closely monitored by the BoJ when deciding [...]
Government unveils harsh spending cuts
Chancellor George Osborne has today unveiled his Comprehensive Spending Review – in what has been described as the most savage spending cuts since the Second World War. Mr Osborne confirmed he would proceed with almost all of the cuts he detailed in his emergency budget in June. Firstly, defending the cuts, Mr Osborne told parliament: [...]
MPC member suggests monetary policy will remain on hold
Professor David Miles, who joined the Bank of England’s Monetary Policy Committee (MPC) in June 2009, has today hinted that monetary policy will remain on hold for the short-term. Speaking in Dublin today, Mr Miles warned that the Bank faces a dilemma as to whether to take more notice of inflation or the threat of [...]
US Fed expected to keep interest rates at record low today
As uncertainty surrounds the world’s largest economy, investors are awaiting the outcome of the Federal Reserve’s policy meeting today. The US Fed is set to announce its decision on interest rates and other stimulus measures. Interest rates in the world’s largest economy have stood at the low level of between 0% and 0.25% since December [...]
US Fed describes outlook as ‘uncertain’
US Federal Reserve chairman, Ben Bernanke, has said the outlook for the world’s largest economy remains “unusually uncertain”. The US housing market, in particular, has experienced a double-dip in activity after the expiration of a Government incentive. Furthermore, higher unemployment and a slowdown in manufacturing have sparked fears of a “double-dip” recession. However, Mr Bernanke [...]
MPC member addresses inflation concerns
Bank of England policymaker, Andrew Sentance, today said the Bank of England’s Monetary Policy Committee (MPC) faces some “interesting debates” in the latter half of 2010 as high inflation persists. The latest official data shows that British annual consumer price inflation (CPI) reached a 17-month high of 3.7% in April. The CPI inflation rate is [...]
euro zone debt crisis could hit global economy
There are fears that the debt crisis in the euro zone could hit the global economy but Australia believes its economy will be unaffected. According to the Reserve Bank of Australia (RBA) governor, Glenn Stevens, the country’s strong trade connections with East Asia means it will be relatively unaffected by the events in the euro [...]
China’s economic growth surges ahead
China’s economy, which is the world’s third largest, expanded at an annualised rate of 11.9% in the first three months of the year. The news comes just a day after the Trade and Industry Ministry announced that Singapore’s economy saw first quarter annualised growth of 32.1% – compared with a 2.8% fall in the previous [...]
Fed discount rate rise triggers sterling losses
The US Federal Reserve stunned markets by raising its discount rate (the interest rate it charges banks for emergency loans) by 25bps to 0.75%. The news sent the pound down to its lowest level against the US dollar in nine months, while Asian equity markets reacted cautiously as they digested the news. Furthermore, the euro [...]
BoE widely expected to leave interest rates at 0.5% today
The Bank of England’s Monetary Policy Committee (MPC) is today expected to keep UK interest rates on hold at the historically low level of 0.5% for the ninth month in a row. Last month, the Bank announced that it would pump another £25 billion into the economy under its quantitative easing programme. The amount was [...]
Base rate of 0% unlikely
The Bank of England suggested this week that it is unlikely to cut base rates to 0%, but instead will seek to stimulate the UK economy by increasing money supply. Base rates were cut by 0.5% this month to a new record low of 1%, but the Bank of England has now said that further [...]
Fed chief comments boost dollar
US Federal Reserve Chairman Ben Bernanke told a press conference at the Fed’s Washington headquarters yesterday that monetary policy will need to be tightened when the economy recovers in order “to prevent the emergence of an inflation problem down the road.” Following the press conference, many analysts said the Fed chairman is suggesting that the [...]