E.U: ECB officials signal April interest rate increase still likely. ECB officials indicated the economic uncertainty caused by Japan's earthquake may not deter them from raising interest rates next month. ECB Executive Board member Gertrude Tumpel-Gugerell and Governing Council member Yves Mersch both said that "strong vigilance" is necessary to keep a lid on inflation, a phrase the central bank uses to signal a rate increase is imminent. (Source: Bloomberg)
India: Money-market rates are climbing to their highest level in a year on speculation money supply will tighten after the central bank signaled Asia's most aggressive pace of interest-rate increases will continue. The overnight call-money rate advanced 58 basis points, or 0.58 percentage point, the biggest increase since November, to 7.58% last week, according to data compiled by Bloomberg. Banks borrowed INR1.3tr (USD29b) on average every day from the Reserve Bank of India last week, the most this year, to meet fund shortages. (Source: Bloomberg)
Thailand: Economy has momentum, according to Prime Minister
Thailand’s economy shows ample signs of growth and has fiscal room to counter uncertainties, Prime Minister Abhisit Vejjajiva said following Japan’s earthquake and a rise in global oil prices. He said that export and revenue collection data from January and February suggest there is plenty of momentum for future growth, and that low public debt means the government has “flexibility” to adopt fiscal measures if uncertainties arise. Abhisit has pledged to increase the minimum wage by 25% over two years and intends to boost civil service pay. (Bloomberg)
Indonesia: Central bank ‘isn’t worried’ about March to May inflation
Indonesia’s central bank said it isn’t concerned about inflation in March, April and May as pressure on prices eases, signaling it has the scope to extend a pause in raising interest rates. The central bank “isn’t worried” and prices in March may fall because of the harvest season, without further elaboration. Consumer-price growth in February slowed to 6.84% compared with 7.02% in January, allowing Bank Indonesia to avoid raising rates this month even as neighbours from Thailand to India tightened policy to fight inflation. (Bloomberg)
Japan: Quake rebuilding may take five years, according to World Bank
The World Bank says it may take five years for Japan to rebuild after this month’s 9.0-magnitude earthquake and tsunami, which killed at least 8,450 and destroyed thousands of buildings. Taking history as a guide, the World Bank says GDP growth will be negatively affected through mid-2011, after which growth should pick up in subsequent quarters as reconstruction efforts, which could last five years, accelerate. The World Bank cited private estimates for the damage wrought that range from USD122bn to USD235bn. (Bloomberg)
US: Sales of existing houses fall
Sales of previously owned US homes dropped more than forecast in February, sending prices to the lowest level since 2002 and indicating the market is struggling to recover. Purchases decreased 9.6% to a 4.88m annual rate, less than the 5.13m median forecast. The median price fell 5.2% y-o-y. Distressed properties accounted for 39% of sales, and the share of all cash transactions was 33%. Sales fell in all regions in February, led by a 12% drop in the Midwest and a 10% decrease in the South. The median price decreased to USD156,100 last month from USD164,600 in February 2010. The number of previously owned homes on the market rose 3.5% to 3.49m from January. (Bloomberg)
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