10/03 Bank of Korea raises key interest rate to 3%

Bank of Korea raises key interest rate to 3%

English.news.cn 2011-03-10 11:08:26FeedbackPrintRSS
Kim Choong-soo, governor of the Bank of Korea(BOK), attends the monthly monetary committee meeting at the BOK head office in Seoul, capital of South Korea on March 10, 2011. South Korea's central bank said Thursday it raised the benchmark interest rate by 25 basis points to 3.00 percent. (Xinhua/Park Jin Hee)

SEOUL, March 10 (Xinhua) -- The Bank of Korea (BOK) said Thursday it raised the benchmark interest rate by 25 basis points to 3.00 percent in an effort to curb rising inflationary pressures.

Governor Kim Choong-soo and monetary policy board members decided to lift the 7-day repurchase rate by 25 basis points to 3.00 percent this month following freezing the rate in February.

The BOK's rate decision came amid spreading concerns over rising inflationary pressures which could hurt the nation's economic recovery. All the six economists surveyed by Xinhua right after the February monetary policy expected the BOK to hike the rate in a bid to preemptively prevent the inflation expectations from spreading.

South Korea's consumer price index (CPI) climbed 4.5 percent in February from a year earlier, after gaining 4.1 percent in January. The February reading breached the central bank's 4 percent ceiling for the second consecutive month and stayed much higher than the government's inflation target of 3 percent.

Concerns over the demand-pull inflation emerged as core CPI, which excludes volatile oil and food items, jumped 3.1 percent in February from a year earlier, the highest in 18 months.

DEMAND-PULL INFLATION

Senior officials at the South Korea's finance ministry have recently expressed worries about the demand-pull inflation, hinting that demand-pull inflation is emerging in the Asia's fourth largest economy.

"Inflation stemmed mainly from supply-side shocks, such as higher oil prices and supply shortages of agricultural and livestock products caused by abnormal cold weather and the foot- and-mouth disease outbreak," South Korean Finance Minister Yoon Jeung-hyun said at a forum Wednesday.

"However, demand-pull inflationary pressures have been gradually building up, driven by inflation expectation and economic recovery," he said.

His remarks came one day before the BOK's rate-setting meeting, boosting expectations that the South Korean government is willing to allow the rate hikes for curbing inflation.

The state-run think tank Korea Development Institute (KDI) also noted in its monthly report Wednesday that the country's services price, which largely reflects the factors in the demand side, rose 2.5 percent in February from the previous month, suggesting demand factors contributed to rising inflation.

"Clearly, the BOK aimed at combating inflation with headline CPI inflation running at 4.5 percent and core inflation at 3.1 percent. Short-term real rates are negative and rate hikes from the BOK are necessitated," Ma Tieying, a Singapore-based economist at DBS Group, said in an email interview.

"The demand-pull price pressures and the imported inflation pressures both exist in Korea. The rise in oil and food costs is spreading across wider areas of the economy, as manifested by the price hikes in core CPI items such as eating-out and accommodation," Ma added.

The consumer prices for restaurants & hotels rose 1.4 percent in February from a month earlier, implying higher food and oil costs passed through the prices of eating-out and accommodation.

RATE HIKE IN MAY

Experts expect the BOK to lift the key rate by 25 basis points to 3.25 percent in May as the South Korea's inflationary pressures are projected to strengthen further down the road.

The BOK also warned against growing inflationary pressures, saying that inflation will likely be on the strong upward trend.

"Consumer prices are likely to sustain their strong upward trend due mainly to the rises in prices of international raw material and agricultural, livestock and fisheries products, while demand-side pressures are on the increase," the BOK said in a statement after the rate decision.

"South Korea's core inflation has accelerated sharply in the last two months and I expect it will accelerate again in March. I expect more of the convergence between headline and core inflation will come from rising core inflation due to wage inflation," Tim Condon, the head of Asian research in Singapore at ING Groep, told Xinhua.

"The BOK has revealed a preference to avoid hiking in consecutive months, which leads me to think it will wait until May to hike again," Condon said.

Governor Kim said last month that the BOK will raise the key rate not too slowly, nor too fast, hinting the central bank will continue to hike rates gradually. Experts said that a back-to-back rate hike seems to be burdensome to dovish policymakers of the BOK, experts said.

"The BOK rarely hiked rates in a back-to-back basis, so the BOK is likely to tighten further in May," Thio Chin Loo, a Singapore- based analyst at BNP Parisbas, said in an email interview.

"There remains a risk for higher inflation as global fuel and commodity prices continue to escalate," Thio said, adding that the BOK's major concern is over inflation.

Editor: Xiong Tong

03/03 Singapore home prices may fall in next few years

English.news.cn 2011-03-03 10:47:31

SINGAPORE, March 3 (Xinhua) -- Home prices in Singapore may fall in the next few years as a record number of homes are expected to be completed over the period of time, local daily the Straits Times reported.

Analysts expected 2013 and 2014 to be the risky years, the newspaper said Thursday.

Statistics of the Urban Redevelopment Authority on homes under construction or already with planning approvals show 17,111 new homes were expected to be completed in 2013 and 17,421 in 2014, higher than the record 14,000 or so private apartments completed in 1998, said Chua Chor Hoon, head of real estate firm DTZ's southeast Asia research.

The numbers could go even higher if the projects that get planning permission in the near future are included, she added, projecting a total of 21,680 homes to be completed in 2014 and 22, 520 in 2015.

Together with the supply of new government-built flats, this could lead to a serious supply spike in two to three years.

"The demand-supply imbalance is expected to lead to prices and rentals coming under pressure, especially if interests are higher then," she said.

In comparison, an average of only 8,563 homes were supplied to the market a year over the past ten years.

Nomura analyst Sai Min Chow recently also noted a possible supply tsunami next year, suggesting that 15,457 non-landed private homes are scheduled for completion next year, which is double official estimates.

Private residential units expected to be completed by 2015 amounted to 65,699, with 32,776 unsold as of the end of last year, the Urban Redevelopment Authority said.

The luxury segment in the city center will be the most susceptible to price falls next year, Sai said, about 47 percent of the homes to be completed this year are in the segment, which has already seen signs of rental weakness.

Editor: Xiong Tong

22/02 Home prices in U.S. big cities further drop in December 2010 on weak market

Home prices in U.S. big cities further drop in December 2010 on weak market

English.news.cn 2011-02-22 23:08:53FeedbackPrintRSS

WASHINGTON, Feb. 22 (Xinhua) -- U.S. home prices in 20 metropolitan areas nationwide including New York, Miami and Boston continued to decline in December 2010, a leading measure for the U.S. residential housing market revealed on Tuesday.

The Standard and Poor's/Case-Shiller Home Price Indices, revealed that the U.S. national 20-city home price index dipped 2.4 percent in December 2010 from their December 2009 levels, fresh evidence of the still slackening U.S. property market.

"We ended 2010 with a weak report, and 18 of 20 cities are down over the last 12 months. Despite improvements in the overall economy, housing continues to drift lower and weaker," says David Blitzer, Chairman of the Index Committee at Standard and Poor's.

Of all the 20 metropolitan areas tracked by the report, 19 metropolitan areas saw a price decline in December 2010 over November. The only exception was Washington D.C., which registered a slight price gain of 0.3 percent in the period.

Blitzer said that home prices in 11 markets, including Atlanta, Charlotte, Chicago, Detroit, Las Vegas, Miami, New York, Phoenix and Seattle had hit their lowest levels from their peaks in 2006 and 2007. "We have seen more markets hit new lows in each of the past three months," he added.

Editor: yan

22/02 Home prices in U.S. big cities further drop in December 2010 on weak market

Home prices in U.S. big cities further drop in December 2010 on weak market

English.news.cn 2011-02-22 23:08:53FeedbackPrintRSS

WASHINGTON, Feb. 22 (Xinhua) -- U.S. home prices in 20 metropolitan areas nationwide including New York, Miami and Boston continued to decline in December 2010, a leading measure for the U.S. residential housing market revealed on Tuesday.

The Standard and Poor's/Case-Shiller Home Price Indices, revealed that the U.S. national 20-city home price index dipped 2.4 percent in December 2010 from their December 2009 levels, fresh evidence of the still slackening U.S. property market.

"We ended 2010 with a weak report, and 18 of 20 cities are down over the last 12 months. Despite improvements in the overall economy, housing continues to drift lower and weaker," says David Blitzer, Chairman of the Index Committee at Standard and Poor's.

Of all the 20 metropolitan areas tracked by the report, 19 metropolitan areas saw a price decline in December 2010 over November. The only exception was Washington D.C., which registered a slight price gain of 0.3 percent in the period.

Blitzer said that home prices in 11 markets, including Atlanta, Charlotte, Chicago, Detroit, Las Vegas, Miami, New York, Phoenix and Seattle had hit their lowest levels from their peaks in 2006 and 2007. "We have seen more markets hit new lows in each of the past three months," he added.

Editor: yan

14/03 Premier Wen: local governments to be held accountable for curbing housing prices

Premier Wen: local governments to be held accountable for curbing housing prices

English.news.cn 2011-03-14 12:11:56FeedbackPrintRSS

Chinese Premier Wen Jiabao attends a press conference after the closing meeting of the Fourth Session of the 11th National People's Congress (NPC) at the Great Hall of the People in Beijing, China, March 14, 2011.(Xinhua/Pang Xinglei)

BEIJING, March 14 (Xinhua) -- Chinese Premier Wen Jiabao on Monday pledged to hold local governments strictly accountable for reining in runaway housing prices.

"It is of uttermost importance to ensure the implementation of policies aimed at curbing housing prices," Wen told a press conference after the conclusion of the annual session of the National People's Congress (NPC), China's top legislature.

The central government will enhance inspections on the local governments' efforts in curbing housing prices. A strict accountability mechanism will be implemented, he said.

He called for the local governments to fulfill their responsibilities of regulating the real estate market. "First of all, the local governments should announce their targets in lowering the housing prices and publicize related policies."

The central government will closely follow the development of the country's real estate market to make more effective policies, he added.

Special Report: NPC, CPPCC Annual Sessions 2011

Editor: Wang Guanqun

14/03 Premier: Welfare apartments key measure to curb housing prices in China

Premier: Welfare apartments key measure to curb housing prices in China

English.news.cn 2011-03-14 11:48:15FeedbackPrintRSS

Chinese Premier Wen Jiabao gestures as he speaks during a press conference after the closing meeting of the Fourth Session of the 11th National People's Congress (NPC) at the Great Hall of the People in Beijing, China, March 14, 2011.(Xinhua/Pang Xinglei)

BEIJING, March 14 (Xinhua) -- China will focus on building more and better welfare apartments to curb the runaway housing prices, Premier Wen Jiabao said Monday.

"Speeding up the construction of welfare apartments is a key measure to curb housing prices. It will cut demand and help solve the problem of the real estate market," he said.

China will build 10 million welfare apartments respectively in 2011 and 2012. A total of 36 million welfare apartments will be built from 2011 to 2015, Wen said.

Most of the welfare apartments, except those renovated from bungalows, will be used for low-income renting, he said.

The central government will appropriate 103 billion yuan to local governments for welfare housing projects, he said, urging local governments to expand investment in welfare housing and extensively utilize social resources.

The government will give priority to the land supply of welfare housing, he added.

Wen also stressed that welfare apartments must be of high quality, safe and environment-friendly. "It is a great opportunity for China's real estate industry. Losing it would be a shame," he said.

Special Report: NPC, CPPCC Annual Sessions 2011

Editor: Wang Guanqun

16/03 China's depositors say home prices "too high," inflation expectations ease: survey

English.news.cn 2011-03-16 15:21:12

BEIJING, March 16 (Xinhua) -- Three out of four Chinese urban depositors said China's housing prices now were "too high to afford," while their inflation expectations dropped in the first quarter this year, according to a central bank survey released Wednesday.

The People's Bank of China (PBOC), or the central bank, found in its latest quarterly survey of urban bank depositors that one third of respondents anticipated home prices to remain stable despite the government's tightening measures, 30 percent said prices would continue to rise, while one fifth expected prices to decline.

Also, the quarterly survey said two thirds of urban bank depositors thought inflation was "too high to accept" in the first quarter this year, down 7 percentage points from the fourth quarter last year, according to the survey result published on the central bank's website.

The first-quarter survey's "future price expectations index" dropped to 72.8 percent, down 8.9 percentage points from the previous quarter.

Further, the survey showed 47.1 percent of respondents thought prices would increase in the coming quarter, down 14.3 percentage points from the fourth quarter of last year.

Taking into account current prices, interest rates and income levels, 85.8 percent of urban residents preferred depositing more money in banks, with the willingness to "consume more" falling to 14.2 percent, the lowest since 1999 when the survey started.

As for investment options, according to the survey, "property" was top priority for one fourth of the respondents, followed by "funds and other wealth management products" for 21.9 percent and the "equity market" for 13.5 percent.

The PBOC carried out the quarterly survey among 20,000 urban bank depositors in major 50 cities.

Prices of newly-built homes in the nation's major 70 cities continued to rise in January, with the hike above 10 percent year on year in 10 cities. The National Bureau of Statistics (NBS) has yet to release the February data on Friday.

China's consumer price index (CPI), a main gauge of inflation, rose 4.9 percent year on year in February 2011 and the inflation rate was the same as January, compared with 4.6 percent in December last year, according to NBS.

Editor: Wang Guanqun

17/03 Indian central bank raises key interest rates by 25 basic points

English.news.cn 2011-03-17 14:52:00

MUMBAI, March 17 (Xinhua) -- Indian central bank Reserve Bank of India (RBI) announced on Thursday that it will hike key interest rates by 25 basis points (bps) to contain inflation.

Indian repo rate for RBI to inject liquidity to the system and reverse repo rate for RBI to drain liquidity from the market are lifted to 6.75 percent from 6.45 percent and 5.75 percent from 5.5 percent, respectively.

The monetary tightening move falls in line with market expectations but will bring some pressure to the banking system.

Meanwhile, RBI revised its inflation forecast by the end of March upwardly to around 8 percent from previous projection of 7 percent, due to higher international crude oil prices and domestic liberalization of petroleum pricing.

The central bank also warned that the continuing uncertainty on energy and commodity prices may vitiate Indian investment climate, posing a threat to current growth trajectory.

Though it's early to assess macroeconomics impacts of natural disaster in Japan, substitution of thermal for nuclear energy in Japan may exert further pressure on petroleum prices, said the monetary policy review issued by RBI.

India government shall focus on the quality of expenditure and keep the aggregate under control without compromising on the delivery of services, said RBI.

The monetary review added that, only by doing this can the fiscal situation contribute to demand-side inflation management, highlighting the possible increase of subsidies on petroleum and fertilizers due to high oil prices.

Indian current account deficit for fiscal year 2010-2011 ending March 31, 2011 is estimated at around 2.5 percent, providing some comfort to the decision makers, said RBI.

Still, it's necessary to focus on the quality of capital inflows with greater emphasis on attracting long-term components including foreign direct investment to sustain the balance of payment in the medium term.

Going forward, overall liquidity situation is expected to move close to the comfort level of RBI despite of likely temporary pressures in the second half of March, according to the report.

Indian central bank has raised key interest rates eight times since March 2010 to curb persistent inflation with repo and reverse repo rate lifting by 2 percent and 2.5 percent, respectively.

Editor: Yang Lina

05/04 Turkey's central bank raises reserve requirement ratio over soaringoil prices

English.news.cn 2011-03-24 00:08:00

ANKARA, March 23 (Xinhua) -- Turkey's central bank on Wednesday raised the ratio of Turkish lira-denominated deposits lenders have to set aside by two to five percentage points to curb inflation risks brought by soaring oil and commodity prices.

The decision will be valid as of April 1 and will absorb almost 19.1 billion Turkish lira (12.2 billion U.S. dollars) of liquidity from markets, the bank said in a statement.

It said it increased the reserve requirement ratio (RRR) for demand deposits, notice deposits and private current accounts to 15 percent from 12 percent.

The RRR for up to six-month deposits, participation accounts and special fund pools rose to nine percent from seven percent and that for liabilities other than deposits or participation funds climbed to 13 percent from nine percent, among hikes for several kinds of accounts.

The decision will "provide the monetary tightening required for containing the potential second round effects of the recent increases in oil and other commodity prices," the bank said.

Meanwhile, the bank kept the one-week repo rate, the policy rate, unchanged at 6.25 percent, the overnight borrowing rate at 1. 5 percent and lending rate at nine percent.

Economic activity continued to strengthen amid increasing domestic demand, while external demand remained relatively weak despite the recent pick up, the bank said, noting that employment conditions continued to improve though unemployment rates remain at high levels.

After a 4.7 percent slump in 2009, Turkey's economy spearheaded with an 11.8 percent growth in the first quarter of last year and 10.2 percent in the second quarter. It expanded 5.5 percent year-on-year in the third quarter.

Editor: yan

05/04 China announces 2nd increase in benchmark interest rates this year to tackle inflation

China announces 2nd increase in benchmark interest rates this year to tackle inflation

English.news.cn 2011-04-05 18:39:08FeedbackPrintRSS

Photo taken on March 24, 2011 shows the office building of the People's Bank of China (PBOC) in Beijing, capital of China. The PBOC, China's central bank, announced on Tuesday that it would raise the benchmark one-year borrowing and lending interest rates by 0.25 percentage points as from Wednesday. (Xinhua/Wang Zhen) (ljh)

BEIJING, April 5 (Xinhua) -- The People's Bank of China (PBOC), the central bank, announced Tuesday it would raise the benchmark one-year borrowing and lending interest rates by 25 basis points beginning Wednesday.

This was the second time that China's central bank raised the benchmark interest rates this year and the fourth such increase since the start of last year.

After the hikes, the one-year deposit interest rate will climb to 3.25 percent while that of the one-year loan interest rate will reach 6.31 percent.

Analysts said the move indicated that the central bank was enhancing efforts to ease stubborn consumer price increases.

The consumer price index (CPI), a main gauge of China's inflation, jumped 4.9 percent in February from a year earlier, exceeding the government's full-year target of 4 percent.

Food prices, which account for about one-third in the basket of goods used to calculate China's CPI, surged by 11 percent in February from a year ago.

"It's widely expected that the reading of March's CPI will hit a new high. The interest rate rise is the central bank's advance response to the pressure of rising inflation," said Liu Yuhui, an economist with the Chinese Academy of Social Sciences, a government think tank.

Rising oil and commodity prices on the global markets will also push prices higher in China during the year, said Lu Zhengwei, chief economist with Industrial Bank.

Lu expected China's CPI growth to reach a new high of 5.2 percent in March, adding that there would be another two or three benchmark interest rate hikes during the rest of the year.

The National Bureau of Statistics is scheduled to release the March economic data on April 15, including the CPI, industrial production and fixed asset investment.

The Chinese government has prioritized price stability in this year's government work report and stepped up efforts to bring inflation under control.

To mop up the excessive liquidity that helps fuel inflation, the central bank has raised the reserve requirement ratio for commercial banks nine times since the beginning of last year.

Besides the monetary tools, the government also implemented production boosts and intensified crackdown on price speculations and hoarders.

Related:

China's economic planner expects inflation to ease later this year

BEIJING, March 25 (Xinhua) -- China's consumer prices are expected to rise about 4.9 percent in the first half of this year, and inflation is expected to ease in the second half, China's top economic planner said in a report published by China Securities Journal on Friday.

The report, issued by the price monitoring center under the National Development and Reform Commission (NDRC), estimated that China's consumer price index (CPI), a main gauge of inflation, would rise about 5 percent from the previous year in March. Full story

Special Report: Global Financial Crisis

Editor: Xiong Tong