Indonesia: Keeps interest rate unchanged as inflation slows
Indonesia left interest rates unchanged for a second consecutive month after inflation slowed, saying the rupiah’s gains will help contain price pressures. Bank Indonesia kept its benchmark reference rate at 6.75%. The central bank raised borrowing costs in February, its only increase since 2008. Policy makers have maintained fuel subsidies to damp inflation and let the Rupiah rise to its strongest since 2004 to counter import costs. (Bloomberg)
Canada: Keeps key rate 1%, citing faster growth, dollar
The Bank of Canada said the economy is expanding faster than it previously forecast, while cautioning a strengthening Canadian dollar could dampen future inflation, which may delay increases in interest rates. The central bank today kept its benchmark target rate for overnight loans between commercial banks at 1% where it has been since September. The bank raised its 2011 growth forecast to 2.9% from 2.4%, saying the economy will reach full output in the middle of 2012. (Bloomberg)
UK: Inflation unexpectedly slows as stores cut food prices
UK inflation unexpectedly slowed in March for the first time in eight months as discounting at supermarkets prompted food prices to plunge. Consumer prices rose 4% from a year earlier after a 4.4% increase in February, the Office for National Statistics said. The cost of food fell the most in almost four years. The pound dropped after the report. The data may provide some relief to the Bank of England after it held off raising its key interest rate this month to aid the economy during the government’s fiscal squeeze. While inflation is still twice the central bank’s target, the National Institute of Economic and Social Research said the recovery remains “uncertain.” (Bloomberg)
UK: Retail sales plunged most on record in march, brc says
UK retail sales dropped by a record in March as accelerating inflation squeezed households’ finances and concerns about employment prompted consumers to cut back, the British Retail Consortium said. Sales at stores measured by value fell 1.9% from a year earlier, partly due to the timing of Easter in 2010, the Londonbased BRC said. That’s the biggest drop since the series began in 1995 and compares with a 1.1% gain in February. On a like-for-like basis, which excludes new store openings, sales fell 3.5%, the most since 2005. (Bloomberg)
German: Inflation unexpectedly accelerated in March on oil
German inflation unexpectedly accelerated to the fastest pace in two and a half years in March after energy prices jumped. The inflation rate, calculated using a harmonized European Union method, increased to 2.3 percent from 2.2% in February, the Federal Statistics Office in Wiesbaden said, revising up its March 29 estimate of 2.2%. That’s the highest since October 2008. From January, consumer prices rose 0.6%, more than the initial 0.5% reading. Surging energy costs are fueling inflation just as booming exports and falling unemployment boost growth in Germany, Europe’s largest economy. (Bloomberg)
Spain: Underlying inflation slows for first time in a year
Spain’s underlying inflation rate slowed in March for the first time in almost a year. Core consumer prices, which exclude energy and fresh food, gained 1.7% from a year earlier, after a 1.8% increase the previous month, the National Statistics Institute in Madrid said. That was the first decline since April last year. The headline rate, based on European Union calculations, was 3.3%, in line with an initial estimate published on 30 March. (Bloomberg)
US: Trade deficit narrows less than forecast
The U.S. trade deficit narrowed less than forecast in February, indicating soaring commodity prices hurt the world’s largest economy at the start of the year. The gap shrank 2.6% to USD45.8 bn from a larger- thanpreviously- estimated USD47bn in January, according to figures from the Commerce Department today in Washington. Another report showed the cost of imported goods jumped in March by the most in almost two years. Economists at Morgan Stanley and Barclays Capital Inc. were among those cutting estimates for firstquarter growth after the data showed exports dropped along with imports, failing to make up for a slowing in consumer spending. The earthquake and tsunami in Japan may further reduce trade in coming months after parts shortages caused some factories to close. (Bloomberg)
U.S: Deficit to rise to largest among major economies, IMF says and should narrow it now rather than face tough adjustments in the next two years. The U.S. shortfall will reach 10.8% of its gross domestic product this year, ahead of Japan and the U.K., the Washington-based IMF said in a report released. It estimates that President Barack Obama will need to cut the deficit by 5 percentage points of GDP in the next two fiscal years, the largest adjustment in at least half a century, to meet his pledge of halving it by the end of his four-year term. (Source: Bloomberg)
U.S: Small-business index fell to five-month low in March, damped by a deteriorating outlook for sales, profits and the economy, a private survey found. The National Federation of Independent Businesss optimism index decreased to 91.9, the Washington-based group said. Februarys reading of 94.5 was the highest since the recession began in December 2007. (Source: Bloomberg)
Germany: Investor confidence fell more than forecast in April after the European Central Bank raised interest rates to curb inflation. The ZEW Center for European Economic Research in Mannheim said its index of investor and analyst expectations, which aims to predict developments six months in advance, declined to 7.6 from 14.1 in March. (Source: Bloomberg)
China: Yuan credit rating may be cut by Fitch on rising debt. Chinas credit rating for local lenders at Fitch Ratings may be cut on concern that increasing corporate and household debt is a risk to government finances. The outlook for Chinas long-term local currency issuer rating was lowered to negative from stable, Fitch said in a statement. The rating is currently AA-, it said. China, the worlds fastest-growing major economy with about USD 2.8tr in foreign-exchange reserves, has raised interest rates four times since October to fight inflation. Premier Wen Jiabao said last month that exorbitant home-price increases are a key concern as China seeks to rely more on domestic than foreign demand to power economic growth. (Source: Bloomberg)
Japan: Sees greater hit to economy as nuclear crisis deepens. Japans Economic and Fiscal Policy Minister Kaoru Yosano said the March 11 earthquake may result in a larger hit to the economy than previously seen, indicating a greater appetite for stimulus one month after the disaster. The damage to the economy may be bigger than we initially expected, Yosano told reporters in Tokyo. In addition to disruptions in the supply chain, we have the added seriousness of the situation with the nuclear power plant, he said, referring to the Fukushima Dai-Ichi crisis that official said has a severity rating matching Chernobyl in 1986. (Source: Bloomberg)
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