JSE upbeat as global stocks gain ground Jul 22, 2009
And he pointed out that, in South Africa, effective real interest rates were negative, "with inflation at 8 percent and cash at 8.5 percent". However George Glynos, the managing director of market analysts ETM, was sceptical. (Business Report, South Africa)
Brazil Bonds Gain as Meirelles Says Rate Futures Overstate Inflation Risks Jul 15, 2009
Theres room for real interest rates to keep dropping. . (Bloomberg -- Latin America)
Fiscal defecit big challenge: Montek Jul 15, 2009
The central bank has cut its key lending rate by 425 basis points since October to boost growth, but analysts say the heavy government borrowing would not let the real interest rates in the economy come down in tandem with the aggressive monetary easing. Finance Minister Pranab Mukherjee has said India may take more steps to make cheaper and adequate funds available to the private sector, while ensuring the borrowing proceeds smoothly. (India Times)
Geithner to focus on investment, economic recovery Jul 13, 2009
"The dollar is 'the best of the worst' as a reserve currency and will, as a result, remain a reserve currency (and provide the U.S. with the privileges of that status -- lower real interest rates) for some time to come. Recent attacks on the dollar as a reserve currency by the Chinese are viewed as particularly empty, given the negative consequences that moving out of the dollar would mean for its economy," notes Swonk. In her July newsletter. (Fresno Bee -- Business)
Bugbears from Berlin Jul 12, 2009
We, too, have succeeded so far in limiting our monetary support (450 points of nominal interest rate easing, with apparently no intention of lowering real interest rates over the policy horizon). Expanding the fiscal budget deficit to some 6% of GDP is also impressive, but far from really aggressive worthy of a global crisis (other people on this score seen as carrying a far greater responsibility). (iAfrica.com)
Global Economy En Route to a Rocky Recovery: Special International Edition Jul 11, 2009
"The dollar is 'the best of the worst' as a reserve currency and will, as a result, remain a reserve currency (and provide the U.S. with the privileges of that status -- lower real interest rates) for some time to come. Recent attacks on the dollar as a reserve currency by the Chinese are viewed as particularly empty, given the negative consequences that moving out of the dollar would mean for its economy," notes Swonk. In her July newsletter, Swonk focuses on the economic outlook by region,... (PR Newswire)
No end in sight toUS jobless rise Jul 10, 2009
Hence, the world economy could be stacked at near zero interest rates and largely negative real interest rates for a long period to come ... Milton Friedman argued in 1968 that the central bank cannot control the unemployment rate nor can it control real interest rates. (Asia Times Online)
* Fed more worried about deflation than inflation Jul 5, 2009
The Fed is very worried about real interest rates being too high, she told the Global Think Tanks Summit. The monetary authority would be thrilled if right now the worry that it had was really inflation, and if it were really worried about seeing signs that the economy was about to be growing much faster than its potential growth rate. (Taipei Times, Taiwan -- Business)
Deflation May Derail Japan Recovery, Cabinet's Chief Economist Saito Says Jun 26, 2009
An increase in deflationary expectations will raise real interest rates and that will restrain business investment. . (Bloomberg -- Japan)
Negative inflation no cause for worry Jun 21, 2009
Experts believe the real interest rates (net of inflation rates) will reach a much higher level as the inflation rate has gone into negative territory. Also, the inflation rate is expected to remain in the negative zone for the next few weeks before it comes back into positive territory towards the last quarter of this calendar year. (India Times)
* The risks of a double-dip, W-shaped recession may be growing Jun 20, 2009
But some of this increase is driven by more worrisome factors: the effects of large budget deficits and debt on sovereign risk, and thus on real interest rates; and concerns that the incentive to monetize these large deficits will lead to high inflation after the global economy recovers from next year to 2011 and deflationary forces abate. The crowding out of private demand, owing to higher government-bond yields X and the ensuing increase in mortgage rates and other private yields X could in... (Taipei Times, Taiwan -- Business)
Brazil's $215 Billion Pension Funds May Get Approval to Exit Fixed Income Jun 19, 2009
Real-estate and infrastructure funds pay real interest rates of as much as 12 percent, while fixed-income funds and government bonds offer no more than 6 percent, Zakalski said. As pension funds and other investors seek higher yields, that return differential will narrow, he said. (Bloomberg -- Latin America)
Botswana: Scope for Another Rate Cut As Inflation Slows Jun 18, 2009
Although Botswana has always had relatively high interest rates in the region, the cut in the bank rate in recent months has seen the economy enjoy the lowest real interest rates in more than ten years. The bank rate currently stands at 13 percent. (allAfrica.com)
Unproductive misery Jun 16, 2009
Finally, there are the direct effects of recent changes in the US economy, which appear likely to involve higher real interest rates than we have been accustomed to in the past 15 years and will certainly involve a lower degree of leverage, in the household sector, the financial sector and the economy as a whole ... Higher real interest rates, which seem likely in order to ward off inflation, have a more mixed effect on productivity. (Asia Times Online)
Public Information Notice: IMF Executive Board Concludes 2004 Article IV Consultation with Kenya Jun 16, 2009
This has, however, contributed to the recent rise in inflation, and ex post real interest rates were negative over much of the past year ... Private savings were negatively affected by negative real interest rates, but also by the drought and the increase in oil prices. (IMF News)
Bankers perpetuate crisis Jun 5, 2009
Their policy of excessive monetary expansion and negative real interest rates aimed at boosting credit, real aggregate demand and employment, and depreciating exchange rates (tantamount to competitive devaluations that became a scourge during the Great Depression) has forced unprecedented flow of credit into the subprime market, the only market that can absorb, unproductively and without limit, such massive credit flows ... Negative real interest rates and never-ending liquidity growth ignited... (Asia Times Online)
Inflation dive opens way for RBA cuts Jun 1, 2009
Annette Beacher, a senior strategist at TD, argued the slowdown in inflation meant real interest rates were rising at a time when the economy was slipping into recession. "The low inflation outcome and now genuine threat of deflation should be a timely reminder for the RBA board that interest rates are too high and rate cuts should be delivered," said Beacher. (Sydney Morning Herald -- Business)
* Green shoots or yellow weeds May 31, 2009
Sixth, rising government debt ratios will eventually lead to increases in real interest rates that may crowd out private spending and even lead to sovereign refinancing risk. Seventh, monetization of fiscal deficits is not inflationary in the short run, whereas slack product and labor markets imply massive deflationary forces. (Taipei Times, Taiwan -- Business)
Inflation steady, rate cut expected May 29, 2009
With expectations that inflation rate may move into negative territory in a couple of weeks on account of high base effecthigher inflation numbers at an year ago periodwhich will make real interest rates higher, the Reserve Bank of India is expected to cut key policy rates by 50 basis points in early July. The markets are expecting a cut in policy rates in the range of 50 to 75 basis point, after which there will be a prolonged pause on policy front, said IDBI Gilts MD S Venkatesh. (India Times)
The "Other Chinas" May 20, 2009
Every time the Fed cuts real interest rates to zero -- as it did in 1992-1993, and again in 2003-2005 -- the Hong Kong stock market has doubled. The market is set to do the same this time around. (Human Events Online)
Republic of Kazakhstan -- 2009 Article IV Consultation, Preliminary Conclusions of the IMF Mission May 19, 2009
When inflation is established on a downward path, there may be scope for some further easing of policy, although it is important to keep real interest rates at positive levels to support domestic deposits and help banks move toward a sustainable funding base. 8. (IMF News)
Treasury Yield Jump Is Sign of Better Economic Outlook, Fed Officials Say May 14, 2009
The increase in Treasury yields, coupled with a drop in consumer prices, is increasing real interest rates for companies. Real investment-grade corporate borrowing costs climbed to 8. (Bloomberg)
Real Rate Shock Hits CEOs With Bond Borrowing Obstacles Impeding Recovery May 14, 2009
Customers of are reducing purchases of industrial gases such as nitrogen and acetylene because of rising real interest rates, said Chief Executive Officer ... The second way deflation hurts is by increasing real interest rates, making borrowing more expensive ... Real interest rates are going up, said McCausland of Radnor, Pennsylvania-based Airgas. (Bloomberg)
Press Release: IMF Sees European Recovery in 2010 Conditional on Further Policy Action, and Calls for Enhanced European Policy Coordination May 13, 2009
Chapter 2 of the 2009 Spring REO, entitled Fiscal Policy in Advanced Economies: Effectiveness, Coordination, and Solvency Issues, concludes that while it is important for countries to support their economies in the face of an unprecedented slowdown, a clear and credible commitment to long-run fiscal discipline is now more essential than ever before: any loss of market confidence may lead to increases in long-term real interest rates and debt-service costs, partly offsetting the stimulus effects... (IMF News)
Why Has Asia Been Hit So Hard By The Global Economic and Financial Crisis? Presentation by Mr. Takatoshi Kato, Deputy Managing Director, IMF, at the Eighteenth General Meeting of the Pacific Economic Cooperation Council May 13, 2009
However, the rate cuts have been largely offset by declining inflation expectations, so that real interest rates have remained relatively constant in a number of countries. Moreover, greater caution by banks and rising risk premium have weakened the traditional monetary transmission mechanism. (IMF News)
Deflation in America: The greater of two evils May 8, 2009
Deflation robs a central bank of its ability to stimulate spending using negative real interest rates. In the worst case, rising debts and defaults depress growth, poisoning the economy by deepening deflation and pressing real interest rates higher. (The Economist)
IMF sees 2010 Asian growth at 4.3% May 7, 2009
The impact of the aggressive cuts in interest rates so far has been largely offset by declining inflation expectations, so that real interest rates have remained relatively constant, or have increased, in a number of countries, it said. Overall financing conditions had in some countries actually tightened over the past year, threatening to put additional pressure on growth, the IMF said. (The Star Online, Malaysia -- Business)
SA banks sitting pretty amid crisis, says Nedbank's Brown May 6, 2009
"One of the key structural issues in our economy has been consistently positive real interest rates. "In contrast, in the US, you've had a number of years of negative real interest rates in a row. George Soros had an apt way of describing what happened: 'When money is free, a rational person will keep on borrowing until there is nothing left. (Business Report, South Africa)
To be knave or brave? The choice tortures Hannity Apr 30, 2009
A decomposition of excess returns reveals that the difference is due to real market returns being higher under Democrats by more than 5 percent, as well as to real interest rates being almost 4 percent lower under Democrats. The results are even more impressive for the equal-weighted portfolio, where the difference in excess returns between Republicans and Democrats reaches 16 percent. (Atlanta Journal-Constitution -- Opinion)
Recovery by H2: Mastercards Wong Apr 30, 2009
Real interest rates in India, as a result, are more consistent with market conditions. However, the impact of the global credit crisis on India has been felt through capital flows, which turned negative as early as February 2008 despite the countrys low dependency on exports. (India Times)
* Deflation raises questions about global recovery Apr 29, 2009
Higher real interest rates discourage credit-financed purchases by households and businesses. This weakens overall demand, leading to steeper declines in prices. (Taipei Times, Taiwan -- World Business)
Profits mask coming storm Apr 28, 2009
This camp sees the securitization model as fundamentally flawed, based as it is upon artificial inflation of assets, the shortsighted growth of serial asset bubbles created by an unholy de facto alliance of government, big Wall Street banks and credit-rating agencies whose credibility and integrity were profoundly compromised, and unsustainable negative real interest rates (the creation of a massive credit excess), without which the securitization model simply won't run. This camp sees no future... (Asia Times Online)
Central banks: Monetary maze Apr 28, 2009
Were deflation to deepen, real interest rates would rise, further hampering economic activity. Eric Rosengren, president of the Federal Reserve Bank of Boston, noted recently that the Fed has hit, or all but hit, the zero limit twice this decade. (The Economist)
Fighting Over Inflation Apr 20, 2009
Volcker, "who is famous for halting runaway inflation in the U.S. economy in the 1980s by raising interest rates sharply," questioned Kohn on "how the Fed can talk about price stability' in the same breath as a 2 percent inflation goal, arguing that the target should be lower. But Kohn said a 2 percent goal would give the Fed more flexibility at times of economic shock, because real interest rates start off higher as the economic cycle turns down. The parrying ended with Kohn saying to... (Slate)
Kohn says Fed can prevent inflation surge Apr 20, 2009
But Kohn said a 2 percent goal would give the Fed more flexibility at times of economic shock, because real interest rates start off higher as the economic cycle turns down. The parrying ended with Kohn saying to Volcker: "I'm not going to convince you, am I?". (Yahoo News -- Top Stories)
RBI may hold rates next week: Barclays Capital Apr 17, 2009
"We believe monetary conditions are already loose since real interest rates are already close to the trough seen in past few years and money market spreads are already showing signs of dropping," Sailesh Jha, economist at the bank, wrote in a note. The central bank has cut its main short-term lending rate by 400 basis points in five moves since October and a Reuters poll this week showed analysts are almost evenly split over whether the central bank would cut its key lending rates next week. (India Times)
Quo Vadis, Global Economy and Finan... Apr 13, 2009
How can commodity price, unemloyment, real interest rates, earnings and money supply indicate the directon of the global economy ... When the pendulum swings so far out as it has today, investigating key economic factors in past extreme situations, such as commodity prices, unemployment, real interest rates, earnings and money supply, could provide some indication where this current economy is headed ... And as for real interest rates, they are low because inflation is in suspended animation... (Suite101.com)
Brazilian Stocks Rise for Second Day on Rate-Cut Speculation; Bolsa Climbs Apr 2, 2009
While our short term is still cautious, it is hard to ignore the impact that single-digit rates can have in the local market, as the spread between earnings yields and real interest rates hits an all-time high, UBS strategists and wrote in a note to clients today. Banco do Brasil said BM&FBovespa SA, Latin Americas largest exchange, extended to June 2011 the deadline it has to adjust its free float to 25 percent of its issued shares. (Bloomberg -- Latin America)
M K Venu: MSME refinance window Apr 1, 2009
The RBI must seriously look at the real interest rates going forward ... If the prime lending rate of banks is taken as a benchmark, the real interest rates are going to be well over 8% going forward. (India Times)
Press Release: IMF Executive Board Completes First Review under Seychelles’ Stand-By Arrangement and Approves US$1.3 Million Disbursement Apr 1, 2009
The rise in real interest rates to positive levels has been a key component of the program s progress so far. Further coordinated efforts by the Central Bank of Seychelles and Ministry of Finance on liquidity and treasury management need to be pursued as planned. (IMF News)
Deflation returns to China Mar 10, 2009
If the cost of money is already close to zero, deflation also makes it impossible for central banks to set negative real interest rates. The government in Beijing, and some private economists, say China's circumstances are different. (India Times)
SA faces a new evil Mar 9, 2009
Because nominal interest rates in the US are at zero, and heading that way in the rest of the developed world, deflation - by leading to a rise in real interest rates would increase debt in real terms. Given the huge rise in borrowing by households before the recession, the onset of deflation would be disastrous. (iAfrica.com)
An economy at extremes? Feb 28, 2009
Real interest rates are key corporate triple-A bond rates less inflation (say, one-year change in the producer price index). The higher the RIR, the better, because it means the economy is hot while inflation is not. (Globe and Mail -- Business)
Gold lights up Obama errors Feb 25, 2009
The flight into gold took place in the context of negative real interest rates, widening fiscal and external deficits, and overly expansionary monetary policy ... Their rise was curtailed only when real interest rates became positive and inflationary expectations extricated ... Gold price increases preceded a two-digit commodity inflation at 35% per year during 2001 to 2008, when real interest rates became negative and the US fiscal and external deficits were widening and were not reversible in... (Asia Times Online)
Irving Fisher:Out of Keynes's shadow Feb 13, 2009
Perhaps more important, he explained how changing velocity and prices could cause real interest rates to deviate from nominal ones ... In 1933 in Econometrica, published by the Econometric Society, which he co-founded, he described debt deflation as a sequence of distress-selling, falling asset prices, rising real interest rates, more distress-selling, falling velocity, declining net worth, rising bankruptcies, bank runs, curtailment of credit, dumping of assets by banks, growing distrust and... (The Economist)
Republic of Kazakhstan-Concluding Statement of the IMF Mission Feb 9, 2009
We believe, however, that it is important that real interest rates are kept at positive levels to support domestic deposits and help move banks toward a more sustainable funding base. 7. (IMF News)
