Tuesday, April 12, 2011

Global Market Weekly Review, 12-04-2011

U.S. Federal Reserve Chairman Ben Bernanke said policy makers must watch inflation “extremely closely” for evidence that rising commodity costs are having more than a temporary impact on consumer prices. According to Bernanke, so long as inflation expectations remain stable and well anchored and the rise in commodity prices slows as he’s forecasting, then the increase in inflation will be transitory.

U.S. Congress leaders and President Barack Obama agreed to cut about US$38 billion from federal spending this year while jettisoning Republican proposals to defund Planned Parenthood and block environmental rules, pulling the government back from the brink of a shutdown.

Ireland’s credit rating was cut one level by Standard & Poor’s and put on watch for a possible downgrade by Fitch Ratings after the cost of rescuing Irish banks reached as much as EUR100 billion (US$141.5 billion). S&P lowered the rating to BBB+ from A-, putting the country on the same level as Thailand and the Bahamas. However, S&P commented that the outlook remains stable. On the other hand, Fitch placed its long-term foreign and local-currency issuer default ratings of BBB+ on negative, "indicating a heightened probability of a downgrade in the near term.

Asian economies can afford to remove fiscal and monetary stimulus at a “stronger and faster” rate as growth in the region outpaces the rest of the world, the World Bank said. Capital inflows are still a “danger” and policy makers can adopt targeted and temporary controls if needed, Sri Mulyani Indrawati, a World Bank managing director, said.

Source: ING Funds Berhad

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