20100322 1116 Global Economic News.

As US Congress considers limiting the Federal Reserve's regulatory authority to just the country's largest bank holding companies, Fed Chairman Ben Bernanke reiterated on Saturday that the US central bank should retain power over banks of all sizes. The talk echoed points Bernanke has made in several previous speeches, when he has argued that the supervision of small banks helps the Federal Reserve monitor the pulse of the "continent-spanning, highly varied" economy.

• That "breadth of vision" informs the Fed's decision-making process when setting monetary policy, Bernanke said Saturday. He added that the Fed is the only body with the expertise to keep close watch on big banks as well as regional community banks. (CNN Money)

US unemployment rates continue to rise, with the majority of US metropolitan areas showing an increase in January. There were 35 metropolitan areas with unemployment rates at or above 15% in January. California and Michigan remain the hardest hit, with 19 cities in California showing rates above 15%. (CNN Money)

International Monetary Fund (IMF) Managing Director Dominique Strauss-Kahn said European Union policy makers are not doing enough to introduce measures to manage and resolve future financial crises. Existing arrangements have been shown to be inadequate and the region should consider creating an authority with the power to deal with a bank failure that could impact numerous countries, Strauss-Kahn said. (Bloomberg)

Nobel Prize-winning economist Robert Mundell said the International Monetary Fund (IMF) should be an “extreme lender of last resort” for European nations debating how to help Greece end its budget crisis.” For Greece, the first resort is to the Europeans and to see what the Europeans could do, while making budget adjustments. Greece has to make a big contribution and then I think the other European countries will cough up funds,” Mundell said. (Bloomberg)

Greek Prime Minister George Papandreou is racing to secure an explicit pledge of European aid and cut his country’s borrowing costs as €20bn (US$27bn) of debt which comes due in the next two months. With investors still demanding Greece to pay 3% pt more than Germany on its 10-year debt, Papandreou says Greece can’t afford to hold out much longer at current market rates. His government still needs to raise another €10bn to repay bonds maturing on 20 Apr and 19 May. (Bloomberg)

Bank of England (BoE) policy maker Andrew Sentance said the recovery in the global economy, particularly in Asia, poses a risk of faster inflation. “There is a worry that growth in Asia and other emerging markets may prove too strong, fueling the growth of asset prices and putting upward pressure on global energy and commodity prices. If the momentum of the global recovery is sustained, there is a risk of further upward price pressure from this direction, with a knock-on impact on broader measures of inflation around the world,” he said. (Bloomberg)

National Strategy Minister Yoshito Sengoku said Japan has “extremely little” room for additional stimulus spending because of the country’s financial condition. “From a fiscal point of view, there’s extremely little room for such a thing. We need to carefully watch whether the situation would go to such lengths,” he said. (Bloomberg)

India’s central bank unexpectedly raised interest rates for the first time since Jul 08 after inflation accelerated to a 16-month high. Reserve Bank of India increased the benchmark reverse repurchase rate to 3.50% from a record low of 3.25% and the repurchase rate to 5.00% from 4.75%, saying containing inflation has become “imperative.” (Bloomberg)

Taiwan’s export orders rose 36.3% yoy in February (71.8% in Jan), marking the fifth consecutive month of increase as a resurgent global economy spurred demand for the island’s computers, mobile phones and television screens. Economists projected it would expand by 30.7%. (Bloomberg)

Thailand’s exports rose 23.2% yoy to US$14.4bn in February (30.8% in Jan), marking the fourth consecutive month expansion as orders for rice, electronics and automobiles climbed, supporting the nation’s economic recovery. Imports climbed 71.2% yoy in February (44.8% in Jan), the third consecutive month of gains after a year of contraction. The trade surplus narrowed to US$440m from US$516m in January. Economists projected the exports and imports would increase 18.8% and 55.8% respectively in February. (Bloomberg)

Thailand’s foreign-exchange reserves rose 0.6% to US$143.4bn in the week ended 12 Mar, from US$142.6bn a week earlier. The central bank’s holdings of forward contracts fell 2.4% to US$12.0bn in the same period, from US$12.3bn. (Bloomberg)

Indonesia plans to unlock more sectors to overseas investors including health, agriculture and creative, although it will not allow investment in telecommunication towers, Gita Wirjawan, the head of the country’s investment coordinating board said. A draft on investment in strategic areas, known as the negative list on foreign investment, had been finalised and should be approved soon, he added. (Financial Daily)

China warned its export-dependent economy is likely to experience a trade deficit in March – the first for a single month in six years. Commerce minister Chen Deming defended the nation’s exchange rate policy, arguing that a stronger yuan by itself could not resolve global trade imbalances. (BT)