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Filed Under : debt out of by admin
Feb.17,2012European governments are considering cutting interest rates on emergency loans to Greece and using contributions from the European Central Bank to plug a new financing gap in the second bailout program for Athens, two people familiar with the discussions said.
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New York, NY, United States (AHN) – Gold prices rallied for a third straight day, spurred higher by a weak U.S. dollar and the Fed’s comments on interest rates made earlier in the week.
In mid-afternoon trading on Friday, the most actively traded gold contract, for February delivery, gained $10.50 to $1734.40 a troy ounce on the Comex division of the New York Mercantile Exchange.
Giving gold prices a boost were comments from Fed officials on Wednesday in which they said in a statement they expected short-term interest rates to remain near zero until late 2014, citing a slow recovery in the labor market, high unemployment, the ailing housing market and moderating inflation.
Over the past three days, gold futures have gained more than $70 a troy ounce. Gold bugs have embraced, and taken comfort in, the forecast from the Federal Reserve.
The record low, near zero rate outlook for U.S. interest rates cut the so-called “opportunity cost” of holding gold. Over the past several days, market participants have opted to hold gold over low-yielding U.S. Treasuries. The worry of missing out on paltry interest payments has been replaced by the anticipated gains in value from the yellow metal.
A weaker dollar also stoked demand for the precious metal among buyers who purchase gold in foreign currencies. Gold, priced in U.S. dollars, appears cheaper to foreign buyers who purchase the metal in their own home currency.
Silver, poor man’s gold, has been rising in concert. The gray metal was up 17 cents in afternoon trading Friday, last quoted at $33.82.
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Filed Under : debt elimination by admin Dec.8,2011Brussels, Belgium (AHN) – The European Central Bank cut its key interest rate to 1 percent from 1.25 percent on Thursday.
It was the second cut since November when the ECB changed tactics and began to ease its monetary policy.
The reduction comes as the economies of European nations continue to deteriorate because of the eurozone debt crisis. Indeed, at the last ECB policy meeting president Mario Draghi forecast a mild recession.
Announcing the rate cut came hours before European Union leaders were set to gather in Brussels for a summit to discuss strategies to save the troubled euro currency.
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Filed Under : debt out of by admin Nov.29,2011Asian central banks from Thailand to the Philippines may be preparing to cut interest rates in coming weeks as an escalating impact from Europe’s debt crisis prompts economists to scale back growth forecasts for the region.
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Tags : Asia, asian central banks, Cuts, debt, debt crisis, economists, Europe, From, growth forecasts, Hits, impact, Interest, interest rates, Loom, Philippines, Rate, Thailand
Filed Under : debt elimination by admin Sep.4,2011Sao Palo, Brazil (AHN) – Brazil’s central bank cited a “substantial deterioration” in its outlook for the economy and unexpectedly announced a cut in its key interest to 12 percent from 12.5 percent.
Rising prices have been a problem in Brazil, and the central bank had raised its key interest rate five times this year in an effort to contain inflation.
However, inflation is still running at a six-year high of 7.1 percent.
The continued high inflation rate couple with the unexpected cut coming a few days after several politicians had called for a rate cut. Observers say it calls into question the central bank’s independence.
Brazil, which is the biggest economy in South America, grew at the rate of 7 percent last year. This year Brazil’s economy is expected to grow at the rate of 5 percent.
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Filed Under : debt elimination by admin Jul.12,2011Washington, D.C., United States (AHN) – The U.S. Federal Reserve would likely keep the record-low interest rates, Treasury markets indicate.
According to a Federal Bank of Cleveland study, the U.S. economy is forecast to grow by only 1.1 percent in the 12 months ending June 2012. That rate is less than half of the central bank’s current forecast and would likely result in delaying any key lending rate increase.
The Fed has held benchmark interest rates from zero to 25 basis points since December 2008.
Given the slower growth of the American economy, analysts said that the Fed is not likely to hike interest rate until June next year. That would make it the longest period that the central bank has held on to a low key lending rate since the 1940s when the Fed was forced to buy Treasuries.
From 1937 through 1947, the Fed kept its rediscount rate at 1 percent. It was the last time the American central bank maintained a prolonged monetary support for the ailing U.S. economy.
Another restraint to the expansion of the U.S. economy would be spending cuts to be agreed by U.S. President Barack Obama and Congress before the Aug. 2 deadline to hike Washington’s debt limit of $14.3 trillion.
However, analyst said the biggest hindrance to raising the overnight lending rate from almost zero would be the U.S. economy’s failure to create more jobs. The recession and the global financial crisis led to the loss of 8.7 million jobs in the U.S. in 2008 and 2009. In 2010, only 1.7 million jobs were created, resulting to national unemployment rate rising to 9.2 percent in June from 8.8 percent in March.
Fed Chairman Ben Bernanke placed a condition of sustained period of strong job creation as a basis for declaring an economy recovery. That translates into a gross domestic product growth rate between 2.7 to 2.8 percent.
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Filed Under : debt elimination by admin May.1,2011Moscow, Russian Federation (AHN) – Strong inflationary pressure that threatened to derail Russia’s feeble economic recovery prompted the central bank to raise its key interest rate by 0.25 basis points to 8.25 percent.
The Russian Central Bank announced the increase in its refinancing rate on Friday and said it would take effect on Tuesday.
It marked the second time since February that the bank has raised its rate, before that the bank had not raised its main interest rate in two years.
Bank officials said their focus was to combat inflation. The inflation rate reached 9.6 percent on April 25.
In addition, the value of the ruble has risen against the dollar. The ruble is at its highest rate in currency trading against the dollar since December.
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Filed Under : debt elimination by admin Apr.7,2011Frankfurt, Germany (AHN) – The European Central Bank on Thursday raised its benchmark refinancing or “refi” interest rate to 1.25 percent from a record low of 1 percent where it had stood since May 2009.
It marked the first time the ECB had raised rates since July of 2008. The move came despite continuing economic uncertainty and an uneven recovery from the financial crisis and global recession of two years ago.
EU countries with strong economies will likely welcome the move while countries with struggling economies will not. But that is one of the problems with making one monetary policy for dozens of countries.
ECB officials said that the 1 percent interest rate was too low for countries with strong and growing economies such as Germany, France, Austria and the Netherlands.
However, the higher interest rate is higher than optimum for countries with high debt and unemployment and sluggish economies such as Portugal, Greece, Spain and the Republic of Ireland. In fact, Portugal has followed Greece and Ireland and says it plans to ask for a bailout to cope with the high costs of borrowing it has faced.
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Filed Under : business debt by admin Jan.24,2011Brasilia, Brazil (AHN) – Brazil’s central bank has raised its key interest rate by half a percentage point to 11.25 percent in an effort to contain inflation.
The central bank’s monetary policy committee unanimously agreed to the rate hike late Wednesday.
Inflation rose to 5.91 percent last year, which is above the government’s 4.5 percent target rate. Inflation is forecast to run above 5 percent for the remainder of the year.
Although raising the interest rate is expected to cool inflation, the move is not without problems.
Inflation has caused the value of the real to rise against the dollar.
The interest rate hike is expected to attract foreign investors, who are already moving their money from lower interest rate investments in developed nations. That movement of capital into the country is also expected to cause the already overvalued real to rise even further. In addition, the increase in value will make Brazilian products, including such things as coffee, orange juice, soya beans, beef and iron ore, more expensive on world markets, which is not popular with Brazilian companies that export products.
However, the hike in interest rates makes consumer credit more expensive. That will cool down the booming Brazilian economy that grew by more than 7 percent in 2010, fueled by consumer credit. Analysts still expect the economy to grow by a hefty 4.5 percent to 5 percent in 2011.
Brazil is the largest economy in South America.
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Ottawa, Ontario, Canada (AHN) – Analysts foresee an interest rate increase by the Bank of Canada soon. Last week, a group of economists from the private sector and educational institutions from the C.D. Howe monetary policy council recommended a key lending rate hike to Bank of Canada Governor Mark Carney.
They suggested a 25 basis points hike on Tuesday, when the Canadian central bank’s monetary committee meets and decides if it will keep the current rate of 1 percent or hike it to 1.25 percent. The group is even pushing to bring the key lending rate to 2.5 percent by the end of 2011.
New monetary committee member Sheryl King, chief economist of the Bank of America Merrill Lynch, is in favor of an interest rate increase because the benchmark rates are already considered too low for the amount of growth projected for the next 12 months.
King also blamed the very low interest rates for the record-high debts incurred by Canadian households, currently at 148 percent of disposable income.
Bank of Canada Deputy Governor Agathe Cote confirmed that because of the lower interest rates on secured loans, consumers use up to one-third of the loans to pay other debts. Another one-fourth in used to invest in financial assets and the balance used for current consumption and renovating or buying another property.
This, in turn, has caused home equity lines of credit and loans to surge at almost twice the pace of mortgages over the past 10 years, or 12 percent of overall household debt.
King and bank analysts, however, doubt that a key lending rate hike will take place on Tuesday,
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