pollies all far t ar sing around to keep themselves in clover. inflation figures a fraud everywhere it seems. then we get this outa the g20 ....... well we knew it before so why keep reminding us ? oh, i get it, the penny asint dropped yet. you can't keep a good forty down. those rates MUST go up more still or the resulting event will be .. no don't remind me. it will be horrific. it's a bit like not braking early enough to avoid a smash because you think the other silly bu gger will get outa the way. he doesn't. ouch. if you get my meaning of course folks.
if the raisings falter from here in us and uk then the euro will 'have a nice day' for a while.
oz and nz seem to be the only reserve banks with the cojones to tighten properly.
if i keep getting it wrong i'll change mi nic to
hopeful harry or maybe stupidoldforty. mmm that sounds good ! hey, i didn't say stupidoldfart did i eh ?
well, the g20 may just have said enough to cause a few downward ripples next week. i can remember when the g7, g10/11 etc used to actually move the markets. not now tho. oh well. stupidoldforty, here we come ......
jolly gloomberg ....
Interest Rates Need to Rise to Curb Prices, G-20 Says (Update4)
By Matthew Brockett
Nov. 19 (Bloomberg) -- Central banks ``will need'' to raise interest rates further to contain inflation even as global growth cools, policy makers from the world's 20 largest economies said.
``Faced with potential inflationary pressures, the normalization of monetary policy underway in many G-20 countries will need to continue,'' the Group of 20 central bankers and finance ministers said in a statement in Melbourne. ``Global economic growth is expected to slow slightly from the rapid pace of the past few years.''
The fastest period of global growth in three decades is stretching production, encouraging companies to raise prices and workers to demand higher wages. The G-20 also called for more flexible currencies and a revival of the Doha trade talks to ensure growth is more evenly spread around the world.
``All central banks are on inflation alert,'' said Rory Robertson, interest rate strategist at Macquarie Bank Ltd. in Sydney. ``They are being vigilant because economies are moving toward high utilization rates and lower unemployment.''
The U.S. Federal Reserve raised its key rate 17 times before pausing in August at 5.25 percent amid signs growth was slowing. The European Central Bank is poised to deliver its sixth increase in a year next month, taking its benchmark rate to 3.5 percent. Central banks in Japan, China, Australia and the U.K. may also raise rates.
`Time to Get Wary'
``There are many engines of growth going on in the world economy at the moment, and that is why global inflation is ticking up,'' Australian Treasurer Peter Costello, who hosted the G-20 summit, told a news conference. ``When global inflation is ticking up, that's the time to start to get wary.''
The global economy may expand 4.9 percent in 2007 after growing 5.1 percent this year, 4.9 percent in 2005 and 5.3 percent in 2004, according to the International Monetary Fund. The world has not enjoyed a sustained period of growth faster than 4 percent since the early 1970s.
Higher borrowing costs may curb global growth just as the U.S. economy slows. The slumping U.S. housing market and a widening trade deficit slowed the pace of U.S. economic growth to an annualized 1.6 percent in the third quarter, the lowest since the first quarter of 2003.
Housing starts in the U.S. tumbled 14.6 percent in October to the lowest level in more than six years, the Commerce Department said Nov. 17.
`More Than Slight'
``A further correction in the housing market could lead to an even sharper slowdown in the U.S. economy and have spill-over effects abroad,'' IMF Managing Director Rodrigo de Rato said yesterday.
The global slowdown ``will be more than `slight' as the G-20 suggests,'' said Shane Oliver, chief economist and head of investment strategy at AMP Capital Investors in Sydney. ``The inflation threat is starting to recede. I don't think there needs to be big rate rises.''
The G-20 said rising protectionism is another threat to global prosperity and called for an early resumption of the World Trade Organization's Doha round. Flexible exchange rates would help in ``maintaining strong world growth,'' it said.
Europe and the U.S. are concerned their exports are being eroded by weak Asian currencies, and are pushing Japan and China in particular to allow the yen and the yuan to appreciate.
Inflation Risks
Still, the G-20 said the growth outlook ``remains positive'' and ``we need to take advantage of the present strength in the global economy to get policy settings right.'' Years of above- average growth in the global economy ``has seen spare capacity decline which, combined with buoyant energy and mineral prices, has increased the risks to inflation.''
In the U.S., the world's largest economy, consumer prices will rise 2.4 percent next year, little changed from this year's expected 2.5 percent increase and well above the Fed's 1 percent to 2 percent ``comfort zone,'' a Bloomberg survey of 85 economists this month showed. Fed officials described inflation as ``uncomfortably high'' at their Oct. 24-25 meeting, according to minutes released last week.
Bank of Japan Governor Fukui said Nov. 7 he'll raise interest rates ``in advance, moderately'' to preempt the risk that the lowest borrowing costs among major economies will spur asset bubbles and undermine economic growth.
G-10 Meeting
The ECB is trying to tame inflation amid the euro-region's fastest economic expansion since 2000. While inflation dropped below the ECB's 2 percent ceiling in September and October, the bank forecasts consumer prices will rise about 2.4 percent on average this year and next.
The G-20 brings together the G-7 plus developing nations such as India and China and accounts for about 85 percent of the global economy.
Policy makers including Federal Reserve Chairman Ben S. Bernanke, European Central Bank President Jean-Claude Trichet and Bank of Japan Governor Toshihiko Fukui attended the meeting. They gather again tomorrow for a meeting of G-10 central bankers in Sydney.
To contact the reporter on this story: Matthew Brockett in Melbourne at [email protected] .
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