Indonesia: Tightens rules on bank foreign exchange holdings
Indonesia said it will tighten rules on banks’ foreign-exchange holdings and overseas borrowing to cope with capital inflows that have pushed up inflation and strengthened the rupiah this year. Bank Indonesia will also reintroduce a 30% cap on lenders’ short-term overseas borrowing to minimize the risk of sudden capital outflows, it said. Banks must set aside 5% of their total foreign-exchange holdings as reserves as of March 2011, from 1% currently, Deputy Governor Budi Mulya said. The reserve requirement will rise to 8% effective June. (Bloomberg)
Taiwan: May increase interest rate to damp inflation
Taiwan will probably increase borrowing costs for the third time this year to curb gains in property prices and tackle accelerating inflation. Governor Perng Fai-nan will raise the benchmark interest rate by 0.125% point to 1.625%, according to all 14 economists in a Bloomberg News survey. Perng boosted the rate by the same amount in June and September from a record-low 1.25%. (Bloomberg)
EU: German inflation unexpectedly quickened in December
Inflation in Germany, Europe’s largest economy, unexpectedly accelerated in December as prices surged in the final month of the year. The inflation rate, calculated using a harmonized European method, increased to 1.9% from 1.6% in November, the Federal Statistics Office in Wiesbaden said. That’s the highest since Oct 2008. Economists expected an unchanged reading, according to the median of 13 estimates in a Bloomberg News survey. From November, consumer prices jumped 1.2%, the biggest monthly gain since December 2002. (Bloomberg)
UK: Faces ‘worse’ year for jobs on government cuts, CIPD says
UK unemployment will rise in 2011 in what will be a “worse” year for hiring as the government cuts public jobs as part of plans to reduce the budget deficit, the Chartered Institute of Personnel and Development said. Payrolls will drop by 200,000 next year, with public-sector employment falling by 120,000 and private-sector jobs by 80,000, the London-based group said. Unemployment may rise to 9%, it said. Consumers’ spending power will also be eroded, with the CIPD forecasting below-inflation pay increases of 2% in 2011. (Bloomberg)
US:Economy confidence falls on concern over jobs
Confidence among US consumers unexpectedly fell in December, restrained by concern that jobs will remain scarce in 2011. The Conference Board’s confidence index unexpectedly fell to 52.5, lower than the most pessimistic forecast of economists surveyed by Bloomberg News, figures from the New York-based research group showed. Another report showed home values dropped more than economists projected. The loss of confidence is at odds with a report from the University of Michigan that showed sentiment improved to a sixmonth high in December, and with data showing holiday spending posted the biggest gain in five years. Federal Reserve policy makers this month said “depressed” housing and high unemployment remained constraints on consumer spending, supporting their plans to expand record monetary stimulus. (Bloomberg)
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