Wednesday, April 21, 2010
IMF happy over global recovery
From The Hindu
Striking a note of optimism about the global recovery following after one of the most serious recessions since the 1930s, the International Monetary Fund today said that the recovery had “evolved better than expected.”
In its just-released World Economic Outlook the Fund said that economic activity was recovering at varying speeds across nations, however, at a “tepid” in many advanced economies but “solidly” in most emerging and developing economies.
Emphasising the particularly positive news coming out of developing countries the influential report said that “countries such as Brazil, China, India, and Indonesia are already sustaining a strong rebound, even in the face of weak recovery in the advanced economies, quickly re-attracting capital flows.”
The Fund attributed this rebound to the absence of both long-lasting shocks to the financial systems of developing countries and of large increases in unemployment rates. As a result many of these countries were able to “deploy sizable fiscal and monetary stimulus.”
Reflecting the new concern about inflation, which the Reserve Bank of India recently moved to quell through an interest rate hike, the report said, “In various Latin American, Middle Eastern, and CIS economies, inflation slowed but remained relatively high throughout the cycle, and in India it rose strongly.”
Amongst advanced economies the IMF said policy support had been essential to “jump-start” the recovery. In particular monetary policy was highly expansionary and supported by “unconventional liquidity provision,” while fiscal policy had provided a major stimulus in response to the deep downturn. The Fund noted that among advanced economies, the United States was “off to a better start” than Europe and Japan.
World economy poised for further growth
Expressing cautious optimism for the prognosis of global growth the Fund argued that world economy would continue to recover “but at varying speeds across and within regions.” It said that global growth was projected to reach 4.5 percent in 2010 and 2011.
Advanced economies were now expected to expand by 2.5 percent in 2010 and 2011, following a decline in output of more than 3 percent in 2009, the IMF said, adding that growth in emerging markets would however be “over 6.5 percent during 2010–11,” following a modest 2.5 percent growth in 2009.
Striking a note of optimism about the global recovery following after one of the most serious recessions since the 1930s, the International Monetary Fund today said that the recovery had “evolved better than expected.”
In its just-released World Economic Outlook the Fund said that economic activity was recovering at varying speeds across nations, however, at a “tepid” in many advanced economies but “solidly” in most emerging and developing economies.
Emphasising the particularly positive news coming out of developing countries the influential report said that “countries such as Brazil, China, India, and Indonesia are already sustaining a strong rebound, even in the face of weak recovery in the advanced economies, quickly re-attracting capital flows.”
The Fund attributed this rebound to the absence of both long-lasting shocks to the financial systems of developing countries and of large increases in unemployment rates. As a result many of these countries were able to “deploy sizable fiscal and monetary stimulus.”
Reflecting the new concern about inflation, which the Reserve Bank of India recently moved to quell through an interest rate hike, the report said, “In various Latin American, Middle Eastern, and CIS economies, inflation slowed but remained relatively high throughout the cycle, and in India it rose strongly.”
Amongst advanced economies the IMF said policy support had been essential to “jump-start” the recovery. In particular monetary policy was highly expansionary and supported by “unconventional liquidity provision,” while fiscal policy had provided a major stimulus in response to the deep downturn. The Fund noted that among advanced economies, the United States was “off to a better start” than Europe and Japan.
World economy poised for further growth
Expressing cautious optimism for the prognosis of global growth the Fund argued that world economy would continue to recover “but at varying speeds across and within regions.” It said that global growth was projected to reach 4.5 percent in 2010 and 2011.
Advanced economies were now expected to expand by 2.5 percent in 2010 and 2011, following a decline in output of more than 3 percent in 2009, the IMF said, adding that growth in emerging markets would however be “over 6.5 percent during 2010–11,” following a modest 2.5 percent growth in 2009.
Labels: economic recovery, economy, global recovery, growth, IMF
Tuesday, March 16, 2010
U.S. Fed to hold rates low as economy slowly improves
From The Hindu
Interest rates will be held in the range of 0-0.25 per cent for an extended period in anticipation of “low rates of resource utilization, subdued inflation trends, and stable inflation expectations”, the United States Federal Reserve’s said today.
Following the Fed’s announcement, equity markets closed at an 18-month high and US Treasury yields declined, according to reports.
The Fed’s Federal Open Market Committee, which last met in January, hinted at improving conditions in the U.S. economy, pointing out that business spending on equipment and software rose “significantly” and household spending expanded moderately. However the latter remained constrained by high unemployment, modest income growth, lower housing wealth, and tight credit, the FOMC cautioned.
The FOMC added a note of explanation on its efforts to bolster the mortgage finance market through credit securities purchases. “To provide support to mortgage lending and housing markets and to improve overall conditions in private credit markets, the Federal Reserve has been purchasing $1.25 trillion of agency mortgage-backed securities and about $175 billion of agency debt,” it said.
Commenting on the overall macroeconomic picture the FOMC said that economic activity continued to strengthen and that “the labor market is stabilizing”. However, it added that employers remain reluctant to add to payrolls. With substantial resource slack continuing to restrain cost pressures and longer-term inflation expectations stable, inflation is likely to be subdued for some time.
Nine out of ten members of the FOMC voted for the FOMC to hold rates low. The one dissent vote came from Thomas M. Hoenig, who held that “continuing to express the expectation of exceptionally low levels of the federal funds rate for an extended period was no longer warranted because it could lead to the build-up of financial imbalances and increase risks to longer-run macroeconomic and financial stability.”
Interest rates will be held in the range of 0-0.25 per cent for an extended period in anticipation of “low rates of resource utilization, subdued inflation trends, and stable inflation expectations”, the United States Federal Reserve’s said today.
Following the Fed’s announcement, equity markets closed at an 18-month high and US Treasury yields declined, according to reports.
The Fed’s Federal Open Market Committee, which last met in January, hinted at improving conditions in the U.S. economy, pointing out that business spending on equipment and software rose “significantly” and household spending expanded moderately. However the latter remained constrained by high unemployment, modest income growth, lower housing wealth, and tight credit, the FOMC cautioned.
The FOMC added a note of explanation on its efforts to bolster the mortgage finance market through credit securities purchases. “To provide support to mortgage lending and housing markets and to improve overall conditions in private credit markets, the Federal Reserve has been purchasing $1.25 trillion of agency mortgage-backed securities and about $175 billion of agency debt,” it said.
Commenting on the overall macroeconomic picture the FOMC said that economic activity continued to strengthen and that “the labor market is stabilizing”. However, it added that employers remain reluctant to add to payrolls. With substantial resource slack continuing to restrain cost pressures and longer-term inflation expectations stable, inflation is likely to be subdued for some time.
Nine out of ten members of the FOMC voted for the FOMC to hold rates low. The one dissent vote came from Thomas M. Hoenig, who held that “continuing to express the expectation of exceptionally low levels of the federal funds rate for an extended period was no longer warranted because it could lead to the build-up of financial imbalances and increase risks to longer-run macroeconomic and financial stability.”
Labels: FOMC, global economy, global recovery, interest rates, Narayan Lakshman, U.S. Federal Reserve
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