This document provides an overview of government economic policy tools used by central banks and finance ministries. It discusses fiscal policy tools like taxation and government spending and how they can be used to stimulate or contract the economy. It also explains monetary policy tools controlled by central banks, including interest rates, required reserve ratios, and open market operations to influence money supply and achieve goals of steady growth and low inflation. Specific policy examples from the US, UK, Japan, and Europe are also mentioned.
In this issue of Economy Matters, we analyse the recent Fed rate hike and Euro Zone economic prospects, in the section on Global Trends. We have covered data trends in GDP, IIP, Inflation, Monetary Policy and Trade in the Domestic Trends section. Find out the results of 2QFY16 In Corporate Performance section. Taxation section covers the views of Sumit Dutt Mazumder, former Chairman of CBEC on GST. The Sectoral Spotlight for this issue is on Financial Conditions Index for 3QFY16. Read Focus of the Month, to know about ‘Skilling India’, wherein experts from diverse areas present their views.
The SVB Asset Management Economic Report, Q2 2017, is a review of and outlook on economic factors that impact global markets and business health.
In this edition, the team discusses the U.K.’s Article 50 notice and the FOMC’s current path towards normalization. The report also examines the Trump Administration’s first 100 days in office and current business sentiment.
In the current issue of Economy Matters, we discuss China’s GDP release for Q2:2016, policy stance of Bank of England and IMF’s latest global growth forecast in the section on Global Trends. In Domestic Trends, we present analysis of the trends emanating out of the recent releases on Monsoon progress, IIP, Inflation, Trade and CII’s Business Outlook Survey Results for Q1FY17. In Policy Focus, we present the highlights of the key policy documents released during June-July 2016. In Focus of the Month,the topic ‘Transforming Healthcare in India' has been covered.
In this issue of Economy Matters, we analyse the recent Fed rate hike and Euro Zone economic prospects, in the section on Global Trends. We have covered data trends in GDP, IIP, Inflation, Monetary Policy and Trade in the Domestic Trends section. Find out the results of 2QFY16 In Corporate Performance section. Taxation section covers the views of Sumit Dutt Mazumder, former Chairman of CBEC on GST. The Sectoral Spotlight for this issue is on Financial Conditions Index for 3QFY16. Read Focus of the Month, to know about ‘Skilling India’, wherein experts from diverse areas present their views.
The SVB Asset Management Economic Report, Q2 2017, is a review of and outlook on economic factors that impact global markets and business health.
In this edition, the team discusses the U.K.’s Article 50 notice and the FOMC’s current path towards normalization. The report also examines the Trump Administration’s first 100 days in office and current business sentiment.
In the current issue of Economy Matters, we discuss China’s GDP release for Q2:2016, policy stance of Bank of England and IMF’s latest global growth forecast in the section on Global Trends. In Domestic Trends, we present analysis of the trends emanating out of the recent releases on Monsoon progress, IIP, Inflation, Trade and CII’s Business Outlook Survey Results for Q1FY17. In Policy Focus, we present the highlights of the key policy documents released during June-July 2016. In Focus of the Month,the topic ‘Transforming Healthcare in India' has been covered.
In the current issue of Economy Matters, we analyse the economic prospects of US economy and the India-Mauritius tax pact in the section on Global Trends. In Domestic Trends, we analyse the trends emanating out of the recent releases on IIP, Inflation, Trade and Currency. Sector in Focus section discusses the prospects of e-commerce industry in India. In Focus of the Month, we discuss the impact of monsoons on the Indian economy. Special Feature carries an article on growth and job creation by Ms. A. Srija, Director, NITI Aayog.
US GDP growth slowed down once again in first quarter of 2016 amid signs of a global economic slowdown. Both consumers and businesses cut back on spending and US exports were hurt by economic weakness in overseas markets. Continued economic weakness, subpar inflation and global pressures are likely to cause the Federal Reserve to slow its pace of rate hikes this year from what had been expected. Closer home, in a significant move, India and Mauritius signed a landmark tax pact, aimed at tackling black money. The government expects the Protocol to tackle treaty abuse and round tripping of funds, curb revenue loss, prevent double non-taxation, streamline the flow of investment and stimulate the flow of exchange of information between India and Mauritius.
The Fed kept rates on hold yesterday – pretty much a done deal – and its statement yesterday following its two-day policy meeting was very short on new insights.
But it was in line with my expectation that while the Fed would present a marginally less dovish assessment of the global economy, it would paint a still cloudy picture of the US and nurse the recently faltering rally in global risk appetite. US equities closed up 0.3% yesterday and 2, 5 and 10yr US treasury yields are down 6-10bps since Tuesday.
The Fed faces seven rocky weeks ahead of its 15th June meeting. It will likely want to keep the door ajar for a hike and will therefore not want to see US yields break out of range. But the market’s violent reaction today to the BoJ’s unchanged monetary policy is also a stark reminder that an overly-hawkish Fed could derail global risk appetite and in turn delay any Fed hikes.
With this in mind, my core scenario of a June is likely to be tested in coming weeks and the risk remains that flat-lining emerging market currencies will come under pressure.
Ivo Pezzuto - "FED BITES THE BULLET - Implements First Rate Hike in Nearly a ...Dr. Ivo Pezzuto
The US Federal Reserve finally bites the bullet, increasing the
FFR – a key short-term interest rate – by quarter of a per cent.
With this, the regulator has clearly signaled that it might take
similar actions in future, if need arises, to take the economy
towards full recovery.
"Highlights":
Wage growth continues
Private consumption behind GDP growth
Situation in lending is improving
"In Focus":
The right moment to put the budget in order. Press conference of the Governor of Latvijas Banka (summary) – Ilmārs Rimšēvičs
UK retail sales in Q1 likely contracted from Q4 2016, despite their rebound in February.
Falling real wages and slowing household borrowing are likely to further dampen retail sales and consumption growth going forward.
The still large pool of available workers is seemingly limiting their wage-bargaining power, with nominal wage growth falling behind rising inflation.
Moreover, investment growth is still only making a negligible contribution to GDP growth ahead of the British government’s decision to trigger Article 50 on 29th March.
Much of the rise in inflation in recent months is attributable to imported inflation driven by Sterling’s depreciation since November 2015 with little evidence of demand-led inflation.
This situation is reminiscent of 2007-2008 when Sterling’s collapse fuelled imported and in turn headline inflation.
Should Sterling remain broadly unchanged going forward, its year-on-year pace of depreciation, currently around 9%, would slow from June onwards and hit zero towards end-year according to my estimates, in turn dampening imported inflation.
I would expect retailers to stabilise prices to maintain market share in the face of tepid demand and for wage-inflation expectations to remain modest. This was certainly the case in the 12 months to September 2009 with CPI-inflation falling from 5.2% yoy to 1.1% yoy.
The question is whether the BoE is willing to look beyond a potentially temporary rise in UK inflation – as Governor Mark Carney suggested – or whether it tries to short-circuit any self-reinforcing rise in prices.
My base-line scenario is that the BoE will look beyond the current rise in UK inflation, unless at least one of three conditions materialise:
(1) Nominal wage growth accelerates, comfortably outstripping headline inflation and driving consumption growth;
(2) Commercial bank lending picks up significantly; and
(3) Sterling depreciates materially from current levels, exacerbating imported and in turn headline inflation.
I expect that neither (1) or (2) will materialise any time soon and that while risks to Sterling are probably to the downside, Sterling is unlikely to weaken sufficiently to push the BoE into hiking. I would however expect it to keep a possible rate hike firmly on the table.
We expect the Bank of Canada to keep its overnight
rate unchanged at 0.50% next week.
The Bank is likely to echo its recent statements that the downside risks to inflation have increased, leading to an overall dovish tone to the statement and accompanying Monetary Policy Report. We expect the Bank to remain on the sidelines until 2019.
Recent fiscal and macroprudential policies have helped ease some of the pressure off the Bank of Canada, with last week’s new housing sector measures removing some of the downside risks from household imbalances.
The SVB Asset Management Economic Report, Q1 2017, is a review of and outlook on economic and market factors that impact global markets and business health.
In this edition, the team discusses the Fed's recent activity and its intentions to raise benchmark interest rates three times in 2017. The report also focuses on how the new U.S. administration will impact domestic and global economies.
Dear Investors,
September saw a spillover of the previous month’s equity
market correction. The main reason for this was the continuing
bleak global events, which also negated domestic macro greenshoots to a large extent. In the West, the possibility of a US Fed
rate hike lingers, keeping investors globally on their toes.
Amidst this global weakness, uncertainties of global markets
with respect to the Euro have reduced after Alexis Tsipras’
Syriza party returned to power once again in Greece, this time
with a majority. The Chinese government is also taking
initiatives like tightening trading rules on forex and stock
market to stabilize their economy. The slowdown in China in a
way has been India’s gain, which has led to India emerging as
the top destination for FDI investments, attracting $30 billion
by the end of June 2015.
Closer home, better looking green-shoots portray a recovering
economy. Industrial growth has been above 4% for the past 2
months, whereas retail inflation continues to remain lower.
Although there has been a double digit deficit in the rainfall
this year, RBI is not too much worried about the pressure on
the food prices given the comfort it has derived from the
actions by the government to manage supply. An addition to
these positives was RBI increasing the foreign investment limit
in central government securities. This will help create a new
pool of money to compensate for the lowering SLR imposed on
banks.
Markets rejoiced at the bonnes nouvelles (good news) of the
50 basis points rate cut by RBI at the fourth bi-monthly
meeting. The main objective behind this was to enhance
growth in the economy. Mr. Raghuram Rajan hopes that
investment should respond more strongly after some certainty
about the extent of monetary stimulus in pipeline, even if the
transmission is low. With this transmission, investments in the
real economy would increase. This announcement was then
followed by a highly ‘dovish’ stance, with the RBI repeating
that it would remain in an ‘accommodative mode’. The rate cut
has increased the cumulative rate cut this year to 125 bps. It is
hearting that banks like SBI has cut its base rate by 40 bps.
All in all, the month saw events that were unexpected, events
that created a yin-yang sentiment among investors and events
that made India shining more convincing. RBI has taken the
first bold step on its part. The question now is what the
government will do on its part to grow our economy!
December 2011 - The Brazilian economy in an adverse international environmentFGV Brazil
The Brazilian Economy is one of the oldest publications for expert economic analysis of both the Brazilian and international economies. Through this publication, FGV’s Brazilian Institute of Economics and Finance (FGV/IBRE) compares different periods of the economy, assessing both macroeconomic considerations and scenarios related to finance, administration, marketing, management, insurance, statistics, and price indices.
For more information, and Brazilian economic index results, visit: http://bit.ly/1EA1Loz
Taller 100% práctico realizado para el Congreso SEO Profesional 2013, donde se explica cómo realizar un proyecto SEO para pequeñas empresas (PYMES) y nuevos proyectos, donde es necesario ajustar costes.
1. Viabilidad de un proyecto SEO para Pymes.
2. Estudio de competencia.
3. Inicio del proyecto SEO: dominio y hosting, herramientas Google.
4. Fases del proyecto SEO.
5. Plataforma tecnológica.
6. Estudio de palabras clave.
7. Arquitectura Web.
8. Optimización onSite.
9. Indexación.
10. Generación de contenido low cost.
11. Linkbuilding.
12. Orientación geográfica.
13. Informes de seguimiento.
14. Precio y tiempo.
15. Curiosidades.
Taller incluido dentro de los talleres prácticos del Congreso SEO Profesional 2013 #seopro. Realizado por Sergio Simarro Villalba durante 4 horas, el 5 de julio de 2013 en Madrid, con una asistencia de 15 alumnos.
In the current issue of Economy Matters, we analyse the economic prospects of US economy and the India-Mauritius tax pact in the section on Global Trends. In Domestic Trends, we analyse the trends emanating out of the recent releases on IIP, Inflation, Trade and Currency. Sector in Focus section discusses the prospects of e-commerce industry in India. In Focus of the Month, we discuss the impact of monsoons on the Indian economy. Special Feature carries an article on growth and job creation by Ms. A. Srija, Director, NITI Aayog.
US GDP growth slowed down once again in first quarter of 2016 amid signs of a global economic slowdown. Both consumers and businesses cut back on spending and US exports were hurt by economic weakness in overseas markets. Continued economic weakness, subpar inflation and global pressures are likely to cause the Federal Reserve to slow its pace of rate hikes this year from what had been expected. Closer home, in a significant move, India and Mauritius signed a landmark tax pact, aimed at tackling black money. The government expects the Protocol to tackle treaty abuse and round tripping of funds, curb revenue loss, prevent double non-taxation, streamline the flow of investment and stimulate the flow of exchange of information between India and Mauritius.
The Fed kept rates on hold yesterday – pretty much a done deal – and its statement yesterday following its two-day policy meeting was very short on new insights.
But it was in line with my expectation that while the Fed would present a marginally less dovish assessment of the global economy, it would paint a still cloudy picture of the US and nurse the recently faltering rally in global risk appetite. US equities closed up 0.3% yesterday and 2, 5 and 10yr US treasury yields are down 6-10bps since Tuesday.
The Fed faces seven rocky weeks ahead of its 15th June meeting. It will likely want to keep the door ajar for a hike and will therefore not want to see US yields break out of range. But the market’s violent reaction today to the BoJ’s unchanged monetary policy is also a stark reminder that an overly-hawkish Fed could derail global risk appetite and in turn delay any Fed hikes.
With this in mind, my core scenario of a June is likely to be tested in coming weeks and the risk remains that flat-lining emerging market currencies will come under pressure.
Ivo Pezzuto - "FED BITES THE BULLET - Implements First Rate Hike in Nearly a ...Dr. Ivo Pezzuto
The US Federal Reserve finally bites the bullet, increasing the
FFR – a key short-term interest rate – by quarter of a per cent.
With this, the regulator has clearly signaled that it might take
similar actions in future, if need arises, to take the economy
towards full recovery.
"Highlights":
Wage growth continues
Private consumption behind GDP growth
Situation in lending is improving
"In Focus":
The right moment to put the budget in order. Press conference of the Governor of Latvijas Banka (summary) – Ilmārs Rimšēvičs
UK retail sales in Q1 likely contracted from Q4 2016, despite their rebound in February.
Falling real wages and slowing household borrowing are likely to further dampen retail sales and consumption growth going forward.
The still large pool of available workers is seemingly limiting their wage-bargaining power, with nominal wage growth falling behind rising inflation.
Moreover, investment growth is still only making a negligible contribution to GDP growth ahead of the British government’s decision to trigger Article 50 on 29th March.
Much of the rise in inflation in recent months is attributable to imported inflation driven by Sterling’s depreciation since November 2015 with little evidence of demand-led inflation.
This situation is reminiscent of 2007-2008 when Sterling’s collapse fuelled imported and in turn headline inflation.
Should Sterling remain broadly unchanged going forward, its year-on-year pace of depreciation, currently around 9%, would slow from June onwards and hit zero towards end-year according to my estimates, in turn dampening imported inflation.
I would expect retailers to stabilise prices to maintain market share in the face of tepid demand and for wage-inflation expectations to remain modest. This was certainly the case in the 12 months to September 2009 with CPI-inflation falling from 5.2% yoy to 1.1% yoy.
The question is whether the BoE is willing to look beyond a potentially temporary rise in UK inflation – as Governor Mark Carney suggested – or whether it tries to short-circuit any self-reinforcing rise in prices.
My base-line scenario is that the BoE will look beyond the current rise in UK inflation, unless at least one of three conditions materialise:
(1) Nominal wage growth accelerates, comfortably outstripping headline inflation and driving consumption growth;
(2) Commercial bank lending picks up significantly; and
(3) Sterling depreciates materially from current levels, exacerbating imported and in turn headline inflation.
I expect that neither (1) or (2) will materialise any time soon and that while risks to Sterling are probably to the downside, Sterling is unlikely to weaken sufficiently to push the BoE into hiking. I would however expect it to keep a possible rate hike firmly on the table.
We expect the Bank of Canada to keep its overnight
rate unchanged at 0.50% next week.
The Bank is likely to echo its recent statements that the downside risks to inflation have increased, leading to an overall dovish tone to the statement and accompanying Monetary Policy Report. We expect the Bank to remain on the sidelines until 2019.
Recent fiscal and macroprudential policies have helped ease some of the pressure off the Bank of Canada, with last week’s new housing sector measures removing some of the downside risks from household imbalances.
The SVB Asset Management Economic Report, Q1 2017, is a review of and outlook on economic and market factors that impact global markets and business health.
In this edition, the team discusses the Fed's recent activity and its intentions to raise benchmark interest rates three times in 2017. The report also focuses on how the new U.S. administration will impact domestic and global economies.
Dear Investors,
September saw a spillover of the previous month’s equity
market correction. The main reason for this was the continuing
bleak global events, which also negated domestic macro greenshoots to a large extent. In the West, the possibility of a US Fed
rate hike lingers, keeping investors globally on their toes.
Amidst this global weakness, uncertainties of global markets
with respect to the Euro have reduced after Alexis Tsipras’
Syriza party returned to power once again in Greece, this time
with a majority. The Chinese government is also taking
initiatives like tightening trading rules on forex and stock
market to stabilize their economy. The slowdown in China in a
way has been India’s gain, which has led to India emerging as
the top destination for FDI investments, attracting $30 billion
by the end of June 2015.
Closer home, better looking green-shoots portray a recovering
economy. Industrial growth has been above 4% for the past 2
months, whereas retail inflation continues to remain lower.
Although there has been a double digit deficit in the rainfall
this year, RBI is not too much worried about the pressure on
the food prices given the comfort it has derived from the
actions by the government to manage supply. An addition to
these positives was RBI increasing the foreign investment limit
in central government securities. This will help create a new
pool of money to compensate for the lowering SLR imposed on
banks.
Markets rejoiced at the bonnes nouvelles (good news) of the
50 basis points rate cut by RBI at the fourth bi-monthly
meeting. The main objective behind this was to enhance
growth in the economy. Mr. Raghuram Rajan hopes that
investment should respond more strongly after some certainty
about the extent of monetary stimulus in pipeline, even if the
transmission is low. With this transmission, investments in the
real economy would increase. This announcement was then
followed by a highly ‘dovish’ stance, with the RBI repeating
that it would remain in an ‘accommodative mode’. The rate cut
has increased the cumulative rate cut this year to 125 bps. It is
hearting that banks like SBI has cut its base rate by 40 bps.
All in all, the month saw events that were unexpected, events
that created a yin-yang sentiment among investors and events
that made India shining more convincing. RBI has taken the
first bold step on its part. The question now is what the
government will do on its part to grow our economy!
December 2011 - The Brazilian economy in an adverse international environmentFGV Brazil
The Brazilian Economy is one of the oldest publications for expert economic analysis of both the Brazilian and international economies. Through this publication, FGV’s Brazilian Institute of Economics and Finance (FGV/IBRE) compares different periods of the economy, assessing both macroeconomic considerations and scenarios related to finance, administration, marketing, management, insurance, statistics, and price indices.
For more information, and Brazilian economic index results, visit: http://bit.ly/1EA1Loz
Taller 100% práctico realizado para el Congreso SEO Profesional 2013, donde se explica cómo realizar un proyecto SEO para pequeñas empresas (PYMES) y nuevos proyectos, donde es necesario ajustar costes.
1. Viabilidad de un proyecto SEO para Pymes.
2. Estudio de competencia.
3. Inicio del proyecto SEO: dominio y hosting, herramientas Google.
4. Fases del proyecto SEO.
5. Plataforma tecnológica.
6. Estudio de palabras clave.
7. Arquitectura Web.
8. Optimización onSite.
9. Indexación.
10. Generación de contenido low cost.
11. Linkbuilding.
12. Orientación geográfica.
13. Informes de seguimiento.
14. Precio y tiempo.
15. Curiosidades.
Taller incluido dentro de los talleres prácticos del Congreso SEO Profesional 2013 #seopro. Realizado por Sergio Simarro Villalba durante 4 horas, el 5 de julio de 2013 en Madrid, con una asistencia de 15 alumnos.
Buy salwar kameez neck designs, latest salwar suits, churidar suits, designer salwar kameez and dress materials for women at best price. To buy online visit https://www.variation.in/collections/salwar-kameez
En un entorno donde la experiencia de usuario es el camino para llegar a la excelencia SEO, vamos a conocer algunas señales que ayudarán al algoritmo a mejorar la percepción que tiene de tu comercio electrónico. Sentido común aplicado al Online.
Estrategia SEO avanzada para Ecommerce analizando las tiendas online de diferentes marcas de joyería de lujo: Aristocrazy, Pandora, Unode50 y Folli Follie.
Ponencia impartida dentro del Congreso SEO organizado por SEO School en Gandía el 12 de septiembre de 2015.
Popshort's Insights Into the Social Video Landscape By Peyton DoughertyMarketing Land
From the SocialPro Conference in Seattle, Washington, June 20-21, 2016. SESSION: Streaming Success With Social Video . PRESENTATION: Popshort's Insights Into the Social Video Landscape - Given by Peyton Dougherty, @peytondocs - PopShorts, COO. #SocialPro #13A
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Market growth has come despite trade wars between the United States and other trade partners, particularly China. Stocks propelled forward in July due to favorable economic indicators and encouraging corporate earnings reports.
CII’s flagship monthly publication Economy Watch has been now revamped and rechristened as ‘Economy Matters’. Apart from encompassing all the key features of the old version, the new issue also carries a new section on Corporate Profitability to keep readers abreast about the latest trends in corporate performance. The ‘Economy Matters’ brought out by CII Research seeks to provide an in-depth update on current trends in the domestic and international economy and helps in tracking policy developments and understanding industry dynamics.
Will the Momentum coming out of 2013 Carry Our Growth Through 2014?Lawrence R. Levin
The Newsletter discusses why the current political bickering may keep us out of recession for the next 3 quarters. The Wise Old Owl talks about how to use the current calm to be ready for the coming changes.
MTBiz is for you if you are looking for contemporary information on business, economy and especially on banking industry of Bangladesh. You would also find periodical information on Global Economy and Commodity Markets.
Signature content of MTBiz is its Article of the Month (AoM), as depicted on Cover Page of each issue, with featured focus on different issues that fall into the wide definition of Market, Business, Organization and Leadership. The AoM also covers areas on Innovation, Central Banking, Monetary Policy, National Budget, Economic Depression or Growth and Capital Market. Scale of coverage of the AoM both, global and local subject to each issue.
MTBiz is a monthly Market Review produced and distributed by Group R&D, MTB since 2009.
3. Economic goals of governments
✤ Full employment
✤ or at least as full as possible...
✤ Steady annual growth in output
✤ without overheating
✤ Stable prices (low but steady rise in inflation)
Monday, 18 March, 13
4. Writing about GDP
✤ Usually, it’s best to use seasonally adjusted quarter-on-quarter growth
in GDP in percentage terms
✤ This shows the current momentum of an economy, without
seasonal peaks & troughs
✤ Compare with the same figure in the previous quarter
✤ Be wary of revisions of earlier figures!
✤ Will the government be issuing a forward-looking forecast?
Monday, 18 March, 13
5. Japan grows but stays fragile
By Mure Dickie in Tokyo and Robin Kwong in Taipei
21 May 2010
Change
Japan's economy grew a relatively robust 1.2 per cent in the first quarter but full
recovery from the worst postwar slump depends on demand from foreign export Future
markets and a rebound in private consumption that may be faltering.
Preliminary gross domestic product data released yesterday were equivalent to an
annualised growth rate of 4.9 per cent - below economists' forecasts but still an
refutation of fears last year that the economy might stall in early 2010 or suffer a Expectations
"double dip".
Naoto Kan, the finance minister, said the data reflected a "solid economic recovery"
but made clear it was too soon to relax. "We need to watch very closely to see if this
is an autonomous recovery," he said.
It can be dangerous to read too much into Japan's preliminary estimate of GDP, a
statistic often revised heavily.
In the third quarter of last year, for example, the economy was initially thought to
have expanded 1.2 per cent but was later judged to have contracted and is now
Context
recorded as having expanded 0.1 per cent.
However, yesterday's first-quarter estimate left no doubt of Japan's continuing
reliance on external demand for growth, with net exports of goods and services
accounting for 0.7 percentage points of the 1.2 per cent quarter-on-quarter Cause
expansion.
The Japanese data offered some signs that Japan's recovery was broadening, with
growth in all categories of public demand, including residential investment, which
declined sharply throughout 2009.
"Rising exports and production have spilled over to domestic demand," wrote Kiichi
Murashima, economist at Citigroup Global Markets, in a research note. Comment
But the pace of quarter-on-quarter growth in private consumption softened
considerably, falling to 0.3 per cent - its weakest performance since the first three
months of last year - suggesting a waning effect of government stimulus efforts.
Much could now depend on the impact on consumption of a monthly Y13,000 ($145,
€118, £102) child allowance introduced by the Democratic party-led government.
Some analysts say many parents are likely to save rather than spend the windfall. Future
Monday, 18 March, 13
6. Writing about CPI
✤ Focus on the percentage change, rather than the nominal index level
✤ Use CPI as a proxy for the inflation rate
✤ Using core on non-core depends on your audience
✤ Core inflation is used to determine economic policy responses
✤ Non-core is better to show effects of inflation on consumers
Monday, 18 March, 13
7. Japan Consumer Prices Fall 1%
By Tomoyuki Tachikawa
1 October 2010
TOKYO -- Japan's consumer prices fell in August for the 18th consecutive month, Change
government data showed Friday, suggesting no end in sight for a deflationary trend
that has been undermining the broader economy, and providing further impetus for
the Bank of Japan to take additional monetary easing measures soon.
The country's core consumer price index, which excludes volatile fresh food prices,
Cause
fell 1.0% from the same month a year earlier, the Ministry of Internal Affairs and
Communications said. The result was in line with the median forecast in a poll of
private economists. Expectations
The latest data show that the pace of decline in the core CPI is easing up, with the
figure having fallen 1.1% in July and 1.0% in June compared with a recent low of
1.5% in April. This suggests that a mild recovery in the economy is propping up Context
domestic demand and preventing prices from falling further.
But analysts warn that deflation may accelerate as the yen stays strong with the
outlook for the U.S. and European economies uncertain, dragging on Japan's export- Future
reliant economy and reducing the prices of oil, food, metals and other commodities
the country buys from overseas.
Persistent price declines usually eat into corporate profits, which could prompt firms
to scale down operations and cut payrolls, increasing the risk that worsening income
and employment conditions will make consumers reluctant to spend. That in turn
should raise the possibility of Japan's economy entering a lull in the near future.
"As long as deflation continues and the yen rises, falling corporate profits could keep
putting downward pressure on the economy," said Takeshi Minami, chief economist at Comment
Norinchukin Research Institute. "It's very likely for the Japanese economy to stall
down the road."
Tokyo policymakers have also become more concerned over the future course of
Japan's economy. Future
Monday, 18 March, 13
8. Unemployment Rate
✤ Tracks the number of people in the labor force who don’t have jobs
✤ How do you define “labor force”?
✤ Usually expressed in percentage terms rather than an absolute
number
✤ Full employment is a bad thing!
Monday, 18 March, 13
9. Problems with unemployment
data
✤ Based on a household survey
✤ Doesn’t include people who have given up looking for work
✤ Definitions of “unemployment” vary among countries
✤ Japan’s definition is more restrictive than the U.S.’s
Monday, 18 March, 13
10. Grim Milestone as Jobless Rate Tops 10%
By Sudeep Reddy
9 November 2009
The unemployment rate last month soared above 10% for the first time since the early 1980s, a milestone likely to weigh on
consumer confidence and stir new efforts in Washington to spur job creation.
Some 558,000 people joined the ranks of the jobless in October, sending the rate to 10.2% and the tally of officially
unemployed Americans to 15.7 million, the Labor Department said. The 10% figure could overshadow last week's news that
the economy began growing again this summer after a long contraction.
"Ten percent is a terribly important number," Democratic pollster Peter Hart said. "It is not only the 10.2% of the people who
are unemployed, it is the number of people who are reliant on that 10%. It's probably the other 20% who say, 'I'm worried,
I'm uncertain, I'm afraid about this, I worry about my job.'"
The report intensified pressure on the government to provide more unemployment relief and spur hiring. President Barack
Obama on Friday signed an extension of jobless benefits for up to 20 weeks. He said his administration was considering new
investment in infrastructure, as well as tax cuts for businesses, to stimulate employment.
"History tells us that job growth always lags behind economic growth," Mr. Obama said, "which is why we have to continue to
pursue measures that will create new jobs."
The unemployment news initially sent stocks lower. But the market ended up modestly on hopes that job growth would return
by early next year.
The payroll figures weren't entirely bleak. The survey of employers showed fewer jobs lost in October than in previous months;
figures for August and September were revised up. The temporary employment sector, seen as an indicator of future
employment, gained 34,000 jobs to mark the third straight month of increases. The rest of the business and professional-
services sector grew, as did education and health jobs. Factory overtime hours increased.
Still, October marked only the second time since recordkeeping began in 1948 that the jobless rate topped 10%. It stayed that
high for 10 months in the early 1980s, peaking at 10.8% in November and December of 1982. Economists expect the
unemployment rate to continue rising at least until spring, even as gross domestic product resumes growing.
The 10.2% rate "reinforces a view on Main Street that recovery is spelled j-o-b-s and not G-D-P," said Stuart Hoffman, chief
economist at PNC. "We're in a sort of economic purgatory where we see growth in productivity and growth in output, and even
some growth in consumer spending. But it hasn't been sustained long enough for businesses to create jobs."
Sectors slammed hardest in the recession continued to suffer. Manufacturing lost 61,000 jobs, more than in the prior three
months. Construction employment fell by 61,000, near the pace of prior months. Retail declined by 40,000 jobs. A measure of
unemployment that includes people who have stopped actively searching for work, or are working part-time because they can't
find full-time work, hit 17.5% in October -- up half a percentage point from September.
Tom O'Pray, 36 years old, of Rockville, Md., lost his job as a hotel waiter a year ago and spent six months looking for a full-
time position. Mr. O'Pray applied to as many as four openings a week as an executive assistant -- a prior occupation of his --
but stopped looking in April. "There are so many overqualified applicants that I never made it to the top of the stack to ever
get an interview," Mr. O'Pray said.
He went to the movies with a friend and -- "on a lark," he said -- asked the theater manager if he had jobs. There was a part-
time position, paying $7.85 an hour, that included concession sales and cleaning restrooms.
"I'd prefer another office job," he said. "I'm working harder, for less money, than I ever have in my whole life."
The economy's course in coming months will depend on how well it can transition from growth backed by government support
-- such as the $787 billion stimulus package -- to an expansion built on the private sector.
Monday, 18 March, 13
11. Consumer/Business Confidence
Index
✤ A leading indicator of short-term consumer spending or investment
by businesses
✤ Often presented as a diffusion index
✤ How many respondents are confident minus how many are
pessimistic
✤ A reading of above 50 indicates optimism
✤ Compare to previous month/quarter for changes in sentiment
Monday, 18 March, 13
12. Problems with confidence indices
✤ Can have relatively large margin of error
✤ How big is the survey?
✤ Can mask dramatic changes in consumer or business sub-groups
✤ In the case of the tankan, check the sub-index for smaller businesses
Monday, 18 March, 13
13. Some other indicators
✤ Consumer Confidence
✤ Balance of Payments, including Trade Balance
✤ Industrial Production
✤ Retail Sales
✤ Tourist Arrivals
✤ Home Sales/Land Sales
Monday, 18 March, 13
15. Two types of policy
✤ Fiscal policy ✤ Monetary policy
✤ Taxation ✤ Discount rate
✤ Government spending ✤ Required reserve ratio
✤ Open-market operations
✤ Quantitative easing
Finance Ministry/
Central Bank
Treasury Dept.
Monday, 18 March, 13
16. Taxation
✤ Changes to tax policy can alter economic incentives
✤ Broad-based tax cuts can incentivize spending
✤ Targeted tax cuts/exemptions/credits can affect investment
decisions
✤ Mortgage tax exemption
✤ Capital gains taxes
Monday, 18 March, 13
17. Government spending
✤ To expand the economy, government spending must use borrowed
money (deficit spending)
✤ The impact of government spending is multiplied, depending on how
much people spend and how much they save
✤ As the economy begins to grow, businesses and consumers tend to
invest and consume more
Monday, 18 March, 13
19. Spending multiplier
+100 +100
Step 1:
GDP = C + I + G + (E - I)
+80 +80
20% saved
Step 2:
GDP = C + I + G + (E - I)
+64 +64
20% saved
Step 3:
GDP = C + I + G + (E - I)
Total Increase in GDP: 100 + 80 + 64 + ...
Monday, 18 March, 13
20. Evolution of monetary policy
✤ Until the 20th Century, most currencies were tied to gold or silver at a
fixed rate
✤ So governments fixed the price of their currency
✤ Now, most major currencies are allowed to float freely in value
against other currencies
✤ And, now, central banks fix the quantity of their currency
✤ In other words, the supply of money
Monday, 18 March, 13
21. Monetary policy today
✤ Now, typically the domain of central banks, independent from
government control
✤ Modern monetary policy focuses primarily on the supply of money
✤ Central banks influence interest rates businesses & individuals pay by
changing the supply of money
✤ Interest rates are the “price” of borrowing money
✤ Central banks are increasingly using new methods like quantitative
easing to manage money supply
Monday, 18 March, 13
22. Evolution of central banks
✤ The U.S. Federal Reserve was founded only in 1913
✤ It became fully independent only in 1951
✤ The Bank of England was created in the 17th Century
✤ It only became operationally independent in 1997
Monday, 18 March, 13
23. Roles of central banks
✤ Lender of last resort to domestic banks (via “discount window”)
✤ Regulator of domestic banking system
✤ Sets benchmark (i.e. very short term) interest rate via open-market
purchases of bonds
✤ Interest rates set to achieve steady economic growth with low
inflation (price stability)
Monday, 18 March, 13
24. Discount rate
✤ Central banks can lend directly to commercial banks, in their role as
“lender of last resort”
✤ The central bank’s discount rate is the interest rate it charges
commercial banks on overnight loans made through its discount
window
✤ The discount rate is explicitly set by the central bank
Monday, 18 March, 13
25. Examples of discount rates
✤ U.S. Fed discount rate (0.75%)
✤ HKMA base rate (0.5% or a half-percentage point above Fed Funds)
✤ Bank of Japan basic discount rate (0.3%)
✤ European Central Bank marginal lending facility rate (1.50%)
Monday, 18 March, 13
26. Required reserve ratio
✤ Central banks are also typically responsible for overseeing the
country’s banking system
✤ Central banks tell commercial banks the percentage of deposits to
hold as reserves so they have enough cash on hand to pay depositors
who want to withdraw their money
✤ The higher the reserve ratio, the less banks can lend out
✤ Currently 10% in U.S., 20.5% in China from Feb. 24
Monday, 18 March, 13
27. Impact of reserve ratio
adjustments
Ratio UP borrowing DN Money supply DN
ratio DN borrowing UP Money supply UP
Monday, 18 March, 13
28. Open-market operations
✤ By offering to purchase government bonds from commercial banks, or
offering to sell banks more bonds, a central bank can directly
influence the supply of money in an economy
✤ As interest rates are in effect the price of borrowing money, the supply
of money will have a direct – and immediate – impact on interest rates
Monday, 18 March, 13
29. Impact of open-market actions
Open Mkt purchases UP
Money supply UP
interest rates DN
Open Mkt sales UP
Money supply DN
interest rates UP
Monday, 18 March, 13
30. Examples of key benchmark rates
✤ Fed Funds rate in U.S. (zero-0.25%)
✤ HKMA base rate (0.5% or a half-percentage point above Fed Funds)
✤ Overnight call rate in Japan (zero-0.10%)
✤ European Central Bank benchmark rate (0.75%)
Monday, 18 March, 13
31. Quantitative Easing
✤ First used by the Bank of Japan from 2001 after a long period of
near-zero short-term interest rates failed to kick-start the
economy
✤ A central bank “expands its balance sheet” by offering to buy
government or other bonds (assets) from commercial banks
✤ The central bank pays the commercial bank with new money
✤ In effect, it “prints” money to expand the money supply
Monday, 18 March, 13
32. With central banks, even no news
is news!
BOJ Leaves Overnight Call Rate At 0.0% To 0.1% Range
By Tatsuo Ito and Takashi Nakamichi
7 March 2013
03:24 GMT
(c) 2013 Dow Jones & Company, Inc.
TOKYO--The Bank of Japan kept monetary policy on hold at its final policy board meeting under Gov. Masaaki Shirakawa,
setting the stage for a change in leadership widely expected to adopt more aggressive easing measures.
Thursday's decision comes amid some bright signs in the economy, and is in line with forecasts by 10 analysts polled by
Dow Jones Newswires, who all said the BOJ would stand pat on policy to better examine the effects of its past easing
steps.
The board decided to maintain the size of the central bank's asset-purchase program--its main tool for monetary easing--
at Y101 trillion by the end of the year and also voted unanimously to leave unchanged its policy rate, or the unsecured
overnight call loan rate, in a 0.0%-0.1% range.
One policy board member Sayuri Shirai proposed to immediately put into effect open-ended asset purchases scheduled
to begin in 2014 and to consolidate them with purchases to facilitate money market operations. Another policy board
member, Ryuzo Miyao, also proposed that the bank keep its policy rate at the current level around zero until its 2%
inflation target is in sight. However, the proposals from Ms. Shirai and Mr. Miyao proposals were voted down 8-1.
"The BOJ will pursue aggressive monetary easing through its virtually zero interest rate policy and asset purchases" to
achieve its 2% price stability target, the central bank said in a statement released together with the announcement.
Upgrading its monthly assessment, the BOJ said "Japan's economy has stopped weakening."
The central bank said last month that Japan's economy appears to have stopped weakening.
Monday, 18 March, 13
33. Everything central bankers say is
news!
ECB’s Nowotny Says It’s Not the Right Time to Cut Interest Rates
By Stefan Riecher and Jonathan Tirone - Mar 14, 2013
European Central Bank Governing Council member Ewald Nowotny said it’s not the right time to reduce
borrowing costs.
“It isn’t the appropriate time to take interest-rate action,” Nowotny, who heads Austria’s central bank, said in
Vienna today. “We’re working on the assumption that growth signs will improve over the course of the year.”
While officials discussed cutting borrowing costs last week, the “prevailing consensus” was to leave the benchmark
rate unchanged at a record low of 0.75 percent, ECB President Mario Draghi said on March 7. He expects the euro-
area economy to “gradually recover” later this year.
“We have an unsatisfactory growth in Europe,” Nowotny said today, adding that the Frankfurt-based ECB is
“observing the situation.”
The ECB last week cut its growth forecasts and now expects the 17-nation economy to shrink 0.5 percent this year
before growing 1 percent in 2014. It sees inflation slowing to 1.3 percent next year, well below its 2 percent limit.
Source: Bloomberg
Monday, 18 March, 13