RBI governor Subbarao terms economic view 'disturbing'


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JRF   
Member since: Jul 04
Posts: 1853
Location: GTA, Ontario

Post ID: #PID Posted on: 15-04-12 06:17:36

RBI governor Subbarao terms economic view 'disturbing' - http://timesofindia.indiatimes.com/business/india-business/RBI-governor-Subbarao-terms-economic-view-disturbing/articleshow/12673888.cms

The RBI Governor needs to consult TK immediately before issuing such statements..

I'm curious how this will affect the investment of some of Canadian desis. If we ever repeat 1991, can't imagine the pain the investors would need to endure.

What I feel skeptical is in the last 4-5 years, the finance industry is way wide open in India, with agressive selling of loans which are most probably sold to investors in India and abroad as a stable product (within a a Mutual Fund), some one is going to need the money soon.... sort of Deja Vu of US loans / mortgage (and ah! well Canada too)..

I have a feeling, Financial collapse of India and Canada are going to be together to put many canadian desi's in "Double Whammy".. I hate to sound negative.. but let us accept the reality of a dingy 2 bed house in Toronto selling for 850K with unconditional competing sales bids.


-----------------------------------------------------------------
The cowards never started,
The weak died on the way,
Only the strong arrived.
http://www.youtube.com/watch?v=_yK1i9cLAMM


web2000   
Member since: May 06
Posts: 849
Location:

Post ID: #PID Posted on: 16-04-12 10:46:50

A very interesting article on how to save Indian rupee.

http://dheerajagrawal.wordpress.com/2012/02/12/how-to-save-the-indian-rupee/



web2000   
Member since: May 06
Posts: 849
Location:

Post ID: #PID Posted on: 16-04-12 10:48:07

Duplicate



JRF   
Member since: Jul 04
Posts: 1853
Location: GTA, Ontario

Post ID: #PID Posted on: 17-04-12 06:27:32


As expected, the RBI drama started unfolding with the interest rate cut, if this continues, the urban property prices would start shooting up further.


-----------------------------------------------------------------
The cowards never started,
The weak died on the way,
Only the strong arrived.
http://www.youtube.com/watch?v=_yK1i9cLAMM


Vandematram   
Member since: Nov 08
Posts: 1448
Location: Sunny - Leone

Post ID: #PID Posted on: 17-04-12 19:54:43

http://www.thestar.com/business/article/1162739--bank-of-canada-keeps-key-interest-rate-unchanged-at-one-per-cent?bn=1

Back to Watch out! Higher interest rate and borrowing costs coming (just not yet)
Watch out! Higher interest rate and borrowing costs coming (just not yet)
April 17, 2012

Les Whittington


Bank of Canada Governor Mark Carney warns of higher rates to come.
Frank Gunn/THE CANADIAN PRESS
OTTAWA — The Bank of Canada kept its trend-setting overnight interest rate steady at 1 per cent but warned that higher borrowing costs are on the way.

If the economy continues to improve, a gradual increase in the central bank’s key rate may lead to an uptick in the interest rates commercial banks charge consumer and business borrowers, central bank governor Mark Carney said Tuesday.

“Some modest withdrawal of the present considerable monetary policy stimulus may become appropriate, consistent with achieving the (Bank’s) 2-per cent inflation target over the medium term,” he said in a statement accompanying the rate-setting announcement.

Higher interest rates tend to draw in foreign capital, in turn bolstering the Canadian dollar, so the Bank’s hawkish hints touched off an upsurge in the loonie’s value. It closed on exchange markets at 100.99 (U.S.) cents, up .96 of a cent from Monday.

The central bank raises interest rates to slow economic activity and thus dampen inflation, and this was Carney’s strongest warning about a possible rate hike since last summer. However, the move toward increased borrowing costs in July 2011 never materialized because of the eurozone crisis. And this time the central bank was vague about timing.

Economists doubt the upward move will come before late 2012 or early 2013.

“We anticipate that, despite the change in language in (the Bank’s) announcement, rates will remain lower than normal for some time,” TD Bank economist Diana Petramala said. “The language of the communiqué makes a rate hike by the end of 2012 highly likely, but the timing is still uncertain.”

Carney has kept the central bank’s trend-setting rate at 1 per cent since September 2010 because of lacklustre economic conditions.

But Canadians’ high level of household debt, a development in part driven by the central bank’s low-interest-rate policy, remains “the biggest domestic risk” to the economy, Carney said. He has repeatedly warned the Bank’s inflation-fighting mandate will require it to raise Canadians’ borrowing costs as soon as possible.

The central bank said the Canadian economy is picking up speed but could be slowed by high oil prices.

The “headwinds” from overseas that have been holding back Canada’s economy have somewhat abated as the U.S. recovery has shown some staying power, Carney pointed out.

And he said Canada’s growth this year would hit 2.4 per cent, a significant improvement over the 2-per cent growth for 2012 predicted only a few months ago.

Despite the more upbeat outlook, the Bank expressed concerns about the possible negative impact of high energy prices. It said improved global economic prospects, supply disruptions and geopolitical risk have kept commodity prices elevated.

“If sustained, high oil price developments could dampen the improvement in economic momentum,” Carney said.

Analysts say Carney remains in a bind. If the Bank raises rates to fight inflation, it is likely to drive up the value of the loonie on exchange markets, which makes Canadian exports less competitive and thus undercuts economic growth at home. This predicament has led to speculation that the central bank governor has in the meantime turned to trying to shock the public into thinking twice about loading up on more debt.

Higher interests rates are not inevitable in the near future given the still-fragile nature of the recovery, notes CIBC World Markets chief economist Avery Shenfeld. “We’re going to walk the line on whether those interest rate hikes are needed in terms of growth rates this year,” he commented.

The Bank releases its quarterly outlook Wednesday and the next interest rate-setting target is June 5.


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Sunny Leone a true Canadian DESI now back in India !.


Vandematram   
Member since: Nov 08
Posts: 1448
Location: Sunny - Leone

Post ID: #PID Posted on: 17-04-12 20:26:59

6.9 % v/s 2.4 %.

It reminds me of a Goundamani - Sendhil comedy which is greater 10th fail or 7th pass ?.


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Sunny Leone a true Canadian DESI now back in India !.


JRF   
Member since: Jul 04
Posts: 1853
Location: GTA, Ontario

Post ID: #PID Posted on: 17-04-12 21:24:23


I really doubt the fed would dare to revise the interest rate in the near future to collapse the economy by choking the mortgage payments that many wouldn't afford, which might have domino's effect on Banks (can't really happen).

More over, the slump in housing (esp GTA) will leave the Canadian economy severely battered.

I doubt the banks are fool enough to allow 3.99% / 10 year mortgages.


-----------------------------------------------------------------
The cowards never started,
The weak died on the way,
Only the strong arrived.
http://www.youtube.com/watch?v=_yK1i9cLAMM




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