Thursday, December 13, 2012

20121213 1010 Global Economy Related News.

India: Output rebounds as higher prices reduce rate-cut case
India’s industrial production grew at the fastest pace in more than a year in October and consumer-price inflation accelerated last month, reinforcing the case for the central bank to hold off on an interest-rate cut next week. Output at factories, utilities and mines climbed 8.2% y-o-y after a revised 0.7% decline in September. Consumer prices gained 9.9% in November y-o-y. Prime Minister Manmohan Singh has opened the nation to more foreign investment in the past three months and stepped up efforts to pare a budget deficit to reinvigorate an economy beset by faltering domestic spending and exports. (Bloomberg)

Sri Lanka: Unexpectedly cuts rates for first time since 2011
Sri Lanka unexpectedly lowered its policy interest rates for the first time since 2011 to spur economic growth as a global slowdown has hurt exports. The Central Bank of Sri Lanka cut the reverse repurchase rate to 9.5% from 9.75% and the repurchase rate to 7.5% from 7.75%. Sri Lanka joins nations from Pakistan to the Philippines in cutting borrowing costs to shield expansion from a global slowdown. (Bloomberg)

UK: Unemployment falls as labour market stays resilient
UK jobless claims unexpectedly fell in November and a wider measure of unemployment dropped the most in 11 years, underlining the resilience of the labor market in the face of a weak recovery. Unemployment-benefit claims declined by 3,000 from October to 1.58m. Unemployment measured by International Labour Organization methods dropped 82,000 to 2.51m in the three months through October, the biggest drop since 2001. The jobless rate held at 7.8%. (Bloomberg)

US : Fed links rates to joblessness, prices as bond buying expanded
The Federal Reserve for the first time linked the outlook for its main interest rate to unemployment and inflation and said it will expand its asset purchase program by buying USD45bn a month of Treasury securities starting in January to spur the economy. Rates will stay low “at least as long” as unemployment remains above 6.5% and if inflation is projected to be no more than 2.5%. “The conditions now prevailing in the job market represent an enormous waste of human and economic potential,” Fed Chairman Ben S. Bernanke said. The Fed plans to “maintain accommodation as long as needed to promote a stronger economic recovery in the context of price stability.” (Bloomberg)

US: Fed officials forecast main rate to stay near zero until 2015
A majority of Federal Reserve officials don’t expect to raise the main interest rate until 2015, when they forecast the jobless rate will fall to between 6% and 6.6%. Federal Open Market Committee participants forecast that GDP will expand 2.3% to 3% next year, compared with 2.5% to 3% in September. Estimates for 2014 are from 3% to 3.5%, versus 3% to 3.8% in the previous projection. (Bloomberg)

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