| Private banks hope to cut home loan rates
High liquidity and inflation remaining below 5 per cent for six weeks in a row have raised banks' hopes for a cut in home loan rates after the credit policy review on July 31. But it is unlikely to be broad-based cut with public sector banks preferring to remain away from slashing rates. Private banks, which effected severe hikes over the last few months, however, may slash them. The Reserve Bank of India (RBI), however, is not likely to signal reversal of upward trend in interest rates in the upcoming credit policy review on July 31, according to experts. The reversal in benchmark interest rates like reverse repo rate and repo rate could be seen only by the year-end, they say. “Public sector banks have been quite considerate of home loan borrowers. We did not hike rates twice when private banks did so.
U.S. crisis hits local mortgages
THE US mortgage crisis has hit Australian home buyers for the first time after one lender yesterday hiked its rates by up to double last week's official interest rate rise. Bluestone, with about $3billion worth of loans on its books, yesterday blamed higher funding costs as a result of the global credit squeeze for its decision to lift its lending rates by between 17 and 55 basis points. The rise comes on top of the 25-basis-point hike prompted by last week's rise in official rates, which may not be the last this year after the Reserve Bank warned yesterday that inflation was running at the top of its comfort zone. Many economists believe the warning suggests official rates, which hit 6.5 per cent last week, will rise by a further 25 basis points before the end of the year, and possibly before the federal election.
Interest rates unchanged in RBI's new credit policy
That should be good news for those paying back home loans in particular or is it? "I think the home loan and credit rates should not be affected. The RBI has done a fabulous balancing act," said CMD of Bank of Baroda Anil Khandelwal. The good news is on the interest rates front as the RBI has refrained from increasing interest rates two times in a row with the Bank rate remaining at 6 per cent, the repo rate at 7.75 per cent and the reverse repo rate untouched at 7 per cent. But the Cash Reserve Ratio (CRR) has been increased by 50 basis points to 7 per cent. .
Keep politicians away from the production line
WHILE most commentators have welcomed the Reserve Bank's inflation-dampening interest rate rise, interest payments are part of the direct expenses of doing business. Hence the latest move will bring additional costs of debt servicing for industry. In addition, higher interest rates will probably further strengthen the Australian dollar. Increased debt servicing costs and a stronger dollar put particular pressure on the trade-exposed activities involved in export markets and in competing with imports. Trade-exposed industries now have to find cost savings to retain their competitiveness. Victorian companies and jobs are more vulnerable to general cost increases than those in other states, because of the state's prominent manufacturing base and its strengths in exporting educational services.
Bank of America Profit Trails as Citigroup, JPMorgan Go Abroad
July 16 (Bloomberg) -- Bank of America Corp. does more business in the U.S. than any of its competitors, and that's eroding returns for shareholders of the Charlotte, North Carolina-based company. Demand for financial services is increasing three times as fast outside the U.S., fueled by companies and investors in Brazil, China, India and Russia. While Bank of America operates in 45 countries, they produce only 13 percent of its revenue. That's puny compared with Citigroup Inc., which derives almost half its sales from abroad and ranks among the biggest banks in Mexico, Poland and South Korea. The same domestic focus that made Bank of America, Wachovia Corp. and Wells Fargo & Co. the best performing of the biggest U.S. bank stocks during the first half of the decade is working against them now.
Interest rates unchanged in RBI's new credit policy
That should be good news for those paying back home loans in particular or is it? "I think the home loan and credit rates should not be affected. The RBI has done a fabulous balancing act," said CMD of Bank of Baroda Anil Khandelwal. The good news is on the interest rates front as the RBI has refrained from increasing interest rates two times in a row with the Bank rate remaining at 6 per cent, the repo rate at 7.75 per cent and the reverse repo rate untouched at 7 per cent. But the Cash Reserve Ratio (CRR) has been increased by 50 basis points to 7 per cent. .
"Dollarization" buys optimism, little else
U.S. dollars can buy anything and everything in the sprawling Central Market here: steaming tortillas, live ducks, bootleg liquor, love potions — even a hit man if you know whom to ask. This Central American nation adopted the greenback as its official currency in 2001, thinking the move would spur economic growth. But the ubiquitous "$" sign on shoe racks and vegetable bins hasn't been the magic elixir many had hoped. And it's been a particular disappointment among low-income shoppers and vendors. Potato peddler Jessica Janette said she used to sell 100 pounds of spuds daily from the pile in her stall. Now she's lucky to move that much a week. The switch from El Salvador's former currency, the colon, to the dollar drove up prices of many staples as producers and merchants rounded up to the nearest nickel, dime or quarter.
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