Wednesday, May 25, 2011

Global Market Weekly Review, 25-05-2011

Most Federal Reserve officials prefer to raise rock-bottom interest rates before selling assets when the time comes to tighten policy, restoring their main tool for managing the economy, according to Apr meeting minutes. The minutes also showed worries about inflation rising among Fed officials last month before a big surge in oil prices subsided. During an extensive discussion of how the central bank might pull back its massive support for the world's largest economy, officials indicated unloading the mortgage debt the Fed piled on during the financial crisis would be a priority in eventually shrinking the Fed's US$2.7 trillion balance sheet.

Japan’s economy shrank more than estimated in 1Q11 after the March 11 earthquake and tsunami disrupted production and prompted consumers to cut back spending, sending the nation to its third recession in a decade. GDP contracted an annualized 3.7% in 1Q11, following a revised 3% decline in 4Q10. The median forecast was for a 1.9% drop.

China will impose punitive power prices on businesses that exceed consumption limits in Zhejiang province, a manufacturing hub bordering Shanghai, to curb demand during an expected electricity supply shortfall this summer. The provincial government has set power consumption limits on 44 industries including electricity generation, cement and dyeing businesses, according to a statement on its website.

Source: ING Funds Berhad

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