Thursday, June 24, 2010

News From The Market

INDIAN ECONOMY

RBI may hike rates to cool prices: Sen
The central bank could tighten key interest rates at any time, after inflation flared up once again in May to cross into double digits, the country's chief statistician, Pronab Sen, said on Wednesday. The case for a rate hike could become stronger if an empowered group of ministers that will meet on Friday decides to increase fuel prices. Yes, it (RBI) can do so at any time, Mr Sen said on Wednesday referring to the central bank increasing key policy rates. That is a call it has to take as core inflation is starting to get worrying, he said. The Reserve Bank of India,or RBI, will review its monetary policy on July 27, but it could well decide to raise rates earlier. Bond yields have remained steady in recent weeks. The wholesale price index based inflation shot up to 10.16% for May, amid signs of the price rise becoming more generalised. Mr Sen expects WPI inflation to be below 10% in June because of the base effect, but Mr Sen expressed concern about price rise spreading to manufactured items. We are seeing it (inflation) happen in non-agricultural products. That is one area of worry that has to be tackled, he said. 


WORLD ECONOMY

Germany could cause euro collapse'
Germany's budget savings policy risks destroying the European project and a collapse of the euro cannot be ruled out, billionaire investor George Soros said in a newspaper interview released on Wednesday. "German policy is a danger for Europe, it could destroy the European project," he told German weekly Die Zeit. Soros, who earned $1 billion in 1992 by betting against the British pound, added that he "could not rule out a collapse of the euro". "If the Germans don't change their policy, their exit from the currency union would be helpful for the rest of Europe," he said.

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