Central banks around the world renewed efforts this week to reflate their economies as slowing prices emerge as a threat to global prosperity.
A day after the European Central Bank (ECB) unexpectedly halved its benchmark interest rate to a record-low 0.25 percent and Peru cut its main rate for the first time in four years, the Czech central bank yesterday intervened in currency markets.
The Reserve Bank of Australia (RBA) yesterday left open the chance of cheaper borrowing costs by forecasting below-trend economic growth.
“Central banks want to err on the side of keeping policy easier for longer as they don’t see an inflation danger out there,” said Kit Juckes, global strategist at Societe Generale SA in London. “There is a fear of deflation for some and nobody wants to increase the risk of it.”
The need to sustain or reinforce stimulus was demonstrated this week by new estimates from the Organization for Economic Cooperation and Development that showed average inflation across its 34 members slowed in September to an annual rate of 1.5 percent. That is close to the 1.3 percent recorded in May, which was the softest since the world was plagued by recession in 2009.
“It does look as though inflation is certainly not a concern on the upside anymore,” Stamford, Connecticut-based Pierpont Securities Holdings LLC global strategist Robert Sinche said in a radio interview on Bloomberg Surveillance on Tuesday. “Monetary policy around the world is probably going to stay accommodative for a good deal longer.”
Two months after the US Federal Reserve delayed pulling back its US$85 billion of monthly asset purchases, the ECB on Thursday joined the reflation push with a rate cut aimed at tackling what ECB president Mario Draghi called a “prolonged period of low inflation.”
The reduction was anticipated by just three of 70 economists surveyed by Bloomberg News and came after the eurozone’s inflation rate slid to 0.7 percent last month, the weakest in four years and less than half of the ECB’s target of just below 2 percent.
HORMUZ ISSUE: The US president said he expected crude prices to drop at the end of the war, which he called a ‘minor excursion’ that could continue ‘for a little while’ The United Arab Emirates (UAE) and Kuwait started reducing oil production, as the near-closure of the crucial Strait of Hormuz ripples through energy markets and affects global supply. Abu Dhabi National Oil Co (ADNOC) is “managing offshore production levels to address storage requirements,” the company said in a statement, without giving details. Kuwait Petroleum Corp said it was lowering production at its oil fields and refineries after “Iranian threats against safe passage of ships through the Strait of Hormuz.” The war in the Middle East has all but closed Hormuz, the narrow waterway linking the Persian Gulf to the open seas,
Apple Inc increased iPhone production in India by about 53 percent last year and now makes a quarter of its marquee devices there, reflecting the US company’s efforts to avoid tariffs on China. The company assembled about 55 million iPhones in India last year, up from 36 million a year earlier, people familiar with the matter said, asking not to be named because the numbers aren’t public. Apple makes about 220 million to 230 million iPhones a year globally, with India’s share of the total increasing rapidly. Apple has accelerated its expansion in the world’s most populous country in recent years, bolstered
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PROJECTION: TSMC said it expects strong growth this year, with revenue in US dollars projected to grow by about 30 percent, outperforming the industry Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday reported consolidated sales last month reached NT$317.66 billion (US$9.98 billion), the highest ever for the month of February, driven by robust demand for chips built using the company’s advanced 3-nanometer (3nm) process. Last month’s figure was up 22.2 percent from a year earlier, but fell 20.8 percent from January, the world’s largest contract chipmaker said in a statement. For the first two months of the year, TSMC posted cumulative sales of NT$718.91 billion, up 29.9 percent from a year earlier. Analysts attributed the growth to sustained global demand for artificial intelligence (AI) products
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