20121011 0933 Local & Global Economy Related News.

Malaysia: Short-term rates stable on Bank Negara intervention
Short-term rates remained stable on Bank Negara’s intervention to absorb excess liquidity from the financial market. The liquidity surplus in conventional operations was reduced to RM10.2bn from the RM18.3bnl estimated yesterday morning, while the surplus in the Islamic system eased to RM2.2bn from RM5.0bn. The central bank conducted seven tenders comprising a range maturity auction, one repo, four Al-Wadiah and one commodity murabahah programme. The bank also issued a RM10.2bn late conventional tender and a RM2.2bn Al-Wadiah tender, both for one-day money. Overnight rate stood at 2.96%. (Bernama)

Japan: Noda says Japan prepared to act on JPY as strength hurts
Japanese Prime Minister Yoshihiko Noda said his government will act against any disorderly gains for the JPY, and urged policy makers around the world to follow through on pledges to rebalance global demand. “We have to observe the market closely to see whether there are excessive or disorderly moves in the currency market”, Noda, 55, said in an interview today. The world’s third-largest economy will shrink in the last two quarters of the year, according to forecasts from Morgan Stanley and BNP Paribas in Tokyo, hampered by weakening export demand in China and Europe and strength in the JPY. (Bloomberg)

EU: S&P downgrades Spain to one level above junk on growing risks
Spain’s debt rating was cut to one level above junk by Standard & Poor’s, which cited mounting economic and political risks as the government considers a second bailout. The country was lowered two levels to BBB- from BBB+, New York-based S&P said in a statement yesterday. S&P assigned a negative outlook to the nation’s long-term rating and lowered the short-term sovereign level to A-3 from A-2. The downgrade comes after Spain announced a fifth austerity package in less than a year and published details of stress tests of its banks. (Bloomberg)

Brazil: Cuts rate to record low amid focus on fueling growth
Brazil reduced its benchmark interest rate for the 10th straight time as government officials increase stimulus to spur economic growth in the world’s second-largest emerging market. Policy makers led by central bank President Alexandre Tombini cut the Selic rate by a quarter-percentage point today from its previous record low to 7.25%, as forecast by 35 of 73 economists surveyed by Bloomberg. Thirty-eight analysts forecasted no change. The bank board voted five to three, to cut the rate. (Bloomberg)

US: Fed says economy grows ‘modestly’ as housing, autos improve
The Federal Reserve said today that the US economy was expanding “modestly” last month, supported by improvements in housing and auto sales, even as the labor market showed little change. “Consumer spending was generally reported to be flat to up slightly since the last report,” the Fed said in its Beige Book business survey, which is based on accounts from the 12 district Fed banks. A Labor Department report last week showed that while the unemployment rate unexpectedly declined in September, payroll growth slowed.. (Bloomberg)