Global : IMF says risks to economy have risen 'significantly' and policy makers have limited room to provide support to growth. Most advanced economies are experiencing a "subdued" recovery, IMF Deputy Managing Director Naoyuki Shinohara said. "A key concern is that the room for continued policy support has become much more limited and has, in some cases, been exhausted?. Policy makers are diverging on prescriptions for sustaining the global recovery, with U.S. Treasury Secretary Timothy F. Geithner calling on Japan and European countries with trade surpluses to boost domestic demand, while Europe?s representatives have said reining in budget deficits was the top priority. (Source: Bloomberg)
New Zealand: Raises rate for first time in three years
New Zealand’s central bank raised its benchmark interest rate for the first time in three years, signaling that faster inflation is a bigger threat to growth than further gains in the nation’s currency. “Underlying inflationary pressures are expected to increase,” Reserve Bank Governor Alan Bollard said in a statement released in Wellington after increasing the official cash rate to 2.75% from a record-low 2.5%. (Bloomberg)
China: May consumer prices rise 3.1%
China’s inflation rate, export growth and bank loans exceeded economists’ forecasts in May, Reuters reported, spurring an rally in stocks by showing no evidence Europe’s debt crisis is impairing the Chinese expansion. Consumer prices rose 3.1% from a year earlier, exports jumped about 50% and new loans totaled RMB630bn (USD92.3bn), Reuters reported. (Bloomberg)
South Korea: Plans steps to cut capital-flow volatility soon
South Korea will introduce measures to reduce volatility in capital flows and won’t raise interest rates without evidence of a sustainable economic recovery, Vice Finance Minister Yim Jong Yong said. The government will announce the steps “soon” to rein in currency-market volatility, while respecting the principles of an open capital market, Yim said in an interview at his office in Gwacheon. (Bloomberg)
Japan : Machinery orders climb more-than-estimated 4% MoM in April, signaling companies are preparing to spend again as the economy recovers and earnings rebound. Orders, an indicator of business investment in three to six months climbed for a second straight month. (Source: Bloomberg)
EU: Strauss-Kahn sees EU crisis contained, strong growth
The European debt crisis has been contained and the International Monetary Fund still expects global growth of about 4.2% this year, the institution’s managing director said. “We do believe the recovery is strong,” Dominique Strauss-Kahn said in an interview with Bloomberg HT television in Istanbul. While rising debt levels are a risk to growth, mainly in Europe, authorities in the region “are now really committed to solve it” and “the problem has been contained,” he said. (Bloomberg)
EU: Eurozone crisis could hit Asia, says IMF’s Shinohara
Europe’s debt crisis could disrupt global trade, hurting demand for Asian exports and sending “hot money” into the region if policymakers fail to act swiftly and appropriately, a top International Monetary Fund (IMF) official said. Although Asia has limited financial links to eurozone economies, its stronger growth prospects could attract more capital flows to the region and lead to asset bubbles, said IMF deputy managing director Naoyuki Shinohara. (Financial Daily)
U.K : Trade deficit fails to narrow in April as exports fall. The goods-trade gap was GBP 7.3b (USD 10.6b), the same as in March. Imports fell 0.4% MoM, while exports dropped 0.6% MoM. (Source: Bloomberg)
Brazil: Raises rate to 10.25% to slow fastest growth in 15 years
Brazilian policy makers raised their benchmark interest rate for a second straight meeting in a bid to bring inflation back to target amid forecasts the economy will expand this year at the fastest pace in decades. The eight-member board led by President Henrique Meirelles increased the Selic by 75 basis points to 10.25% from 9.50%, as expected by 50 of 52 analysts surveyed by Bloomberg. (Bloomberg)
US: Bernanke says Fed prepared to counter effects of EU Crisis
Fed Chairman Ben S. Bernanke said the US recovery, while being sustained by private demand, isn’t as strong as he prefers and faces risks from Europe’s debt crisis that may require further Fed action. US growth is “not as fast as we would like,” Bernanke told the House Budget Committee in testimony just hours before the Fed’s regional business survey said the economy expanded in all 12 Federal Reserve districts for the first time in more than two years, with a “modest” pace in many regions. (Bloomberg)
