Australia's central bank raises rates, anticipates further tightening

Australia's central bank raised its key interest rate by 25 basis points to 3.25 percent and anticipate further monetary tightening, saying that now that the greatest danger to the economy is over, it is safe to remove the monetary stimulus.
The Australian dollar rose the most in 14 months as investors were quick to discount at least one more rate increase around Christmas, with a rise in official borrowing costs above the 4 percent within a year.
Asian markets also moved to discount expectations of further monetary tightening on the part of central banks.
The decision by the Reserve Bank of Australia (NGA) makes this organism is the first of the central banks of the Group of 20 countries in raising rates as it eases the global financial crisis. The initiative of the USA was a surprise to many analysts.
However, the markets had been full of speculation about a move of the entity, given the strength of recent economic data.
"The USA had become known that was coming to raise rates from their lows a little extraordinary, and now he has done," said Rory Robertson, interest rate strategist at Macquarie.

"It will be a gradual move from an emergency rate of 3.0 percent to 4 percent, still expanding," he added.It was the first increase of the USA since March 2008, but only removes a small part of the incentive of 425 basis points applied when the global credit crisis was at its worst.

The WB president sees the influence of the dollar fall

"America would be wrong to assume the place of the dollar as the dominant reserve currency in the world," said Robert Zoellick.
United States will face a decline in the influence of its currency to the changes in the global economy, which inevitably reinforce other currencies, said World Bank President Robert Zoellick, in a speech inWashington.
"America would be wrong to assume the place of the dollar as the dominant reserve currency in the world," Zoellick said in his speech at the School of Advanced International Studies at John Hopkins University.

"Looking ahead, there will be more alternatives to dollar," said highlighting the emergence of the euro and slowly, the Chinese renminbi.
Overlooking the annual meeting of the World Bank and International Monetary Fund (IMF) this week in Istanbul, Zoellick said the financial crisis is This amendment to "power relations" and urged that greater voice to developing countries in multilateral institutions.
Zoellick welcomed the decision to promote the Group of 20 (G20) as the main block for international economic cooperation, as decided by those attending the meeting in Pittsburgh, Pennsylvania, on Friday.
They also agreed to establish a framework to monitor the economic policies of other countries in an attempt to make growth more "balanced" in the future.

The dollar fell to its lowest annual

The dollar fell on Friday to one-year lows against a basket of currencies, because of continuing concerns about its future value back to cloud the short-term technical picture, preventing a brake on sales of the greenback.

The dollar index, which measures its value against six major currencies, headed for its weekly fall deeper in nearly four months and the euro headed for its biggest weekly gain in the same period, after reaching the maximum of 2009 of 1 , $ 4627.

Strengthening China's economic data also fed the hopes of global recovery, which tempts investors to exit the dollar to move to riskier currencies.

On Friday, an official with the U.S. Treasury said it makes sense that China diversify its huge foreign reserves, which, at least marginally, fueled the feeling pessimistic about the dollar strengthened this week.

"It does not help the dollar, but he (the official) ties him to the idea of the creation of new reserve currencies, which, as we know, take a long time," said Paul Mackel, currency strategist at HSBC in London.

David Dollar, emissary for economic and financial affairs of the U.S. Treasury in China, said that greater diversification of China's international reserves, and the internationalization of the yuan, are meaningless.

"The general theme is that China has a huge amount of reserves and diversify makes some sense" these reservations, Dollar said at a meeting of World Economic Forum in the Chinese city of Dalian.

"It's healthy to have a wide variety of different types of reserve currencies," he added. The dollar index was down 0.25 percent to 76.63 daily, even after falling earlier to 76.511, its lowest since September 2008.

The euro rose 0.2 percent on the day at $ 1.4600, accumulating a rise of 2 percent in the week. The dollar declined by 0.9 percent a day against the yen at 90.90 units from Japan, after earlier falling to its lowest in seven months of 90.69 yen according to Reuters data.

The OECD and the ECB revised upward the growth forecast for the euro area

The Organization for Economic Cooperation and Development (OECD) also sees green shoots in the global economy. Although forecasts indicate that major world economies still have problems, the agency has revised and improved in nine tenths its growth estimates for the eurozone in 2009.

This is the new picture that describes the midterm review of semiannual outlook report from the Organization for Economic Cooperation and Development (OECD) presented today, which ensures that the Gross Domestic Product (GDP) in the euro area back up a 3.9% in 2009 instead of 4.8% as announced in late June.

The reason is that the authors of this new venture evaluation that the countries of the European single currency emerging from recession in the third quarter (+0.3% in quarterly development) and that trend continued in the fourth (+2 %).

The correction is even more pronounced in relative terms in Japan, where GDP should fall by 6.8% according to the report by early summer, although there despite all the progress will remain very strongly negative (-5.6% ).

Those responsible for this mid-term data have not changed for America, whose GDP is expected to fall 2.8% this year, with an inflection and a positive growth in the last two quarters (+1.6% and +2.4 %).

The OECD, which has limited this time to give forecasts for 2009 (not next year, as usual semi-annual reports) and only for a broken down for the G7 countries, has emphasized that their models " point to an earlier recovery of what was thought a few months ago.

"The economic news has been especially favorable in recent months," notes the OECD before alluding to the cheaper cost of money, the recovery in stock markets or the moderation of stress in bank lending standards.

In addition, housing offers "some signs of stabilization" in the UK and U.S., the industrial inventory adjustment was carried to a point where they no longer going to amputate growth and emerging economies have started their recovery in advance , particularly China, with a tug of GDP by around 14% in the second quarter.

The well-known as the "Club of developed countries," warns, in any case, that the recovery will be "modest" for a while due to various elements of fragility, as low levels of profitability, the high unemployment continues to increase The progression "anemic" of labor compensation and the continuation of the correction of the housing market.

The unemployment situation has deteriorated sharply in some OECD countries but not in many others.

Specifically, the increases in the unemployment rate between early 2008 and the second quarter of 2009 have become almost 9 percentage points in Spain, about 7 points in Iceland, 5.5 points in Ireland, something more four points in the U.S. and Turkey, while food prices have been lower than 2.5 points in the other 26 states in the same period.

The organization believes it will remain necessary in the short-term stimulus measures implemented by governments to counter the crisis and should be implemented quickly.

In the longer term, however, the study authors advise countries to prepare the removal of all such measures of fiscal and monetary support and develop and "exit strategies and plans for fiscal consolidation.