India: Bond-purchase plan may ease path to January rate increase
The Reserve Bank of India’s plan to address the biggest cash crunch in a decade with bond purchases may revive liquidity enough for the central bank to resume raising interest rates next month. The RBI left its benchmark repurchase rate unchanged at 6.25% after six increases in 2010 and unveiled plans to buy back INR480bn (USD10.6bn) of government bonds to ease a cash squeeze caused by a record INR1.1trn of share sales this year. (Bloomberg)
EU: Irish aid approved by IMF seeing unparalleled crisis
The International Monetary Fund’s board approved a three-year, EUR22.5bn loan facility for Ireland, the Washington-based fund said in a statement. The IMF aid, which the fund says is equivalent to USD30.1bn, is part of a EUR85bn rescue package put together by the IMF and European authorities to contain the region’s fiscal crisis. (Bloomberg)
EU: To create post-2013 crisis tool, spars over near-term moves
European Union leaders agreed to amend the bloc’s treaties to create a permanent crisis-management mechanism in 2013, while divisions flared over steps to prevent concern over debts from engulfing Portugal and Spain. Germany, the biggest contributor to Europe’s bailouts of Greece and Ireland, pushed through an accord to set up a system that would allow financial aid “if indispensable to safeguard” the euro area and might force bondholders to bear some of the costs of future rescues. (Bloomberg)
UK: Retail sales increase for second month on food
UK retail sales rose in November after a bigger than estimated increase in October, led by demand for food, toys and jewelry in the run-up to Christmas. Sales increased 0.3% from October, when they gained a revised 0.7%, the Office for National Statistics said. That matched the median forecast of 24 economists in a Bloomberg News survey. From a year earlier, sales rose 1.1%. (Bloomberg)
US: Fewer firings point to job-market gains
Fewer workers than forecast filed claims for unemployment benefits last week, pointing to a drop in firings that signals the US job market is improving. Applications for jobless insurance payments fell by 3,000 to 420,000, sending the average over the past four weeks to the lowest level since August 2008, according to data from the Labor Department. Other reports showed work began on more houses last month and manufacturing picked up in the Federal Reserve Bank of Philadelphia region in December. (Bloomberg)
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