By Bloomberg Tues., Jan. 15, 2019 Central banks enter the new year under pressure from investors to rethink just how aggressive they can be hiking interest rates. A slowdown in the world economy, the trade war and skittish financial markets are forcing policy-makers including Federal Reserve Chairman Jerome Powell to express fresh caution about their scope for tightening monetary policy. The People’s Bank of China is also pledging support for its economy. That outlook marks a change from last year where a majority of central banks raised rates and the European Central Bank ceased buying assets. Of course, if economies weather the latest challenges, policy-makers may need to rethink anew. What Our Economists Say: “Heightened uncertainty about the trajectory for policy normalization and reduced divergence between the Fed and the rest are set to characterize the 2019 central bank outlook.” — Tom Orlik Here is Bloomberg Economics’ quarterly … [Read more...] about When it comes to rates, what are central banks going to do next?
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By Avantika Chilkoti The Wall Street Journal Fri., Nov. 30, 2018 Investors are frantically trying to predict the economic fallout from the U.K.’s exit from the European Union. One person they don’t seem to be listening to: Bank of England Gov. Mark Carney. The Canadian former Goldman Sachs Group Inc. executive has been a prominent voice in a chorus of warnings about the economic and financial dislocation that could result from Brexit. The Bank of England in a report this week suggested a disorderly break with the EU could leave the economy a 10th smaller in five years, potentially triggering the deepest recession since the Great Depression. “The direction of the effects of a reduction in openness is clear: lower supply capacity, weaker demand, a lower exchange rate and higher inflation,” Mr. Carney said. The U.K. Parliament is set to vote on a draft separation agreement on Dec. 11. If it is rejected, a deal could be approved via follow-up … [Read more...] about Looking for Brexit guidance? Investors pass over Bank of England’s Carney
By Huw Jones LONDON (Reuters) - British banks could face potential credit rating downgrades if there is a disorderly Brexit as this would be likely to trigger a domestic political crisis and economic contraction, credit rating agency Standard & Poor's said on Thursday. S&P said that UK banks' earnings and balance sheets would provide a solid cushion against a disorderly Brexit. But the agency also said: "Their current ratings and/or outlooks may not prove to be consistent with a disruptive Brexit accompanied by a severe economic shock." Britain and the European Union are aiming to reach agreement on a divorce settlement in time for an EU summit next week. S&P said that while it expects an orderly departure in March followed by a transition period to the end of 2020, some financial institutions have reached a point of no return and are setting up new hubs in the EU to avoid disruption. Even with an orderly Brexit, there would be pressure on banks to shift euro-denominated … [Read more...] about British banks risk ratings downgrades in disorderly Brexit
MANILA -- The World Bank said Thursday it lowered its growth forecast for the Philippines in 2018, citing the drag from weak exports and storm damage to agriculture, but the expansion remains "strong." Gross domestic product is poised to grow by 6.5 percent this year, from the initial 6.7-percent forecast, the World Bank said in a statement. It kept the 2019 and 2020 forecasts at 6.7 percent and 6.6 percent, respectively. Rising government spending on infrastructure will help growth "speed up" in the second half of 2018, it said. Moody's: Philippine growth unlikely to fall below 6 percent Economic growth slows on drag from Boracay closure, policy steps The World Bank flagged "considerable risks" to its growth forecast for the Philippines, including trade tensions between the US and China and rising interest rates in the US, which could further weaken the peso. "To manage these risks, maintaining strong macroeconomic fundamentals is key. At the same time, accelerating structural … [Read more...] about World Bank trims PH growth forecast for 2018
PHILIPPINE shares surged in morning trade on Friday following the central bank’s decision to raise interest rates, easing investors’ concerns on price pickup. As of 12:45 p.m, the Philippine Stock Exchange index (PSEi) advanced 2.34 percent or 177.33 points to close at 7, 748.33, while the broader all shares rose 1.69 or 78.19 points to 4, 708.10. Asked whether the ouster of Chief Justice Maria Lourdes Sereno has influenced the movement of the index, China Bank Securities Corp. research director Garie Ouano said the direct effect of the Supreme Court’s decision on the local market was “vague.” “The market also opened strongly even before the decision,” he added. “The rally is likely being spurred by the BSP’s (Bangko Sental ng Pilipinas) decision to hike its policy rates, which likely assuaged concerns on accelerating inflation,” Ouano said. Late on Thursday, the BSP decided to raise key interest rates … [Read more...] about Local market soars on BSP interest rate hike