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Indonesia c.bank holds rates, stresses QE for economic support

Indonesia c.bank holds rates, stresses QE for economic support

By Gayatri Suroyo and Fransiska Nangoy

JAKARTA, Oct 13 (Reuters)Indonesia’s central bank kept interest rates steady on Tuesday, holding fire for a third straight meeting to avoid adding pressure to a falling rupiah but reiterated its pledge to use quantitative easing measures to support the economy.

Bank Indonesia (BI) kept the 7-day reverse repurchase rate IDCBRR=ECI at 4.00%, as expected in a Reuters poll, after delivering 100 basis points of rate cuts so far this year.

Southeast Asia’s largest economy is headed for its first recession in over two decades with the coronavirus outbreak still raging in the country with the largest COVID-19 death toll in the region.

“We see that (quantitative easing measures) are more effective to support the national economy,” Governor Perry Warjiyo said in a streamed news briefing, underlining that BI has injected 667.6 trillion rupiah ($45.45 billion) of fresh liquidity to fight the pandemic’s impact.

BI has also cut interest rates four times this year, cut required reserves and loosened lending rules to fight the economic fallout from the coronavirus pandemic.

It has made direct purchases of government bonds to fund President Joko Widodo’s relief programmes and is expected to remain a standby buyer in the local-currency sovereign bond market in 2021.

Governor Perry Warjiyo said during the briefing an increase in government spending, including for infrastructure projects, and improvement in exports should prop up the economy, even when private consumption remained weak.

The rupiah IDR= barely changed after the decision, while the main stock index .JKSE rose slightly. The rupiah has fallen 5.4% this year, making it the worst performing emerging currency in Asia so far in 2020.

Analysts have said they are monitoring BI’s debt monetisation operations closely particularly as parliamentary debates on amending the central bank act has raised concerns

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Here’s what 710 years’ worth of Italian bond market data is showing about central banks ‘crushing rates’

Here’s what 710 years’ worth of Italian bond market data is showing about central banks ‘crushing rates’

The yield on Italian 10-year
TMBMKIT-10Y,
0.680%

and 30-year
TMBMKIT-30Y,
1.529%

debt fell to record lows on Monday.

As this chart from Deutsche Bank shows, the yield on the Italian 10-year is lower than it was even before Italy became a country. Deutsche Bank strategist Jim Reid attached proxies for Italian debt, such as from Naples, to chart pre-1861 data. (There is also a gap in the data series for the 1700s.)

He also charted debt-to-gross-domestic-product, which shows the Italian economy with an all-time low capability to service that debt.

The move on Monday came after the European Central Bank’s chief economist gave an interview suggesting the central bank may take further action. Among the ECB’s actions stimulus so far is the purchase of government debt from countries including Italy, through what’s called the pandemic emergency purchase program.

“Has the ECB permanently suppressed yields and spreads or are there many more twists and turns to this story over the years ahead? I would lean towards the latter but for now Italian politics and their control of the second wave are acting as strengths and not weaknesses,” Reid said.

David Stockman, the former Reagan-era budget director and acerbic critic, looked at the same chart and issued this brief but withering analysis: “when central banks crush rates, politicians bury their governments in debts.”

The current explosion in debt-to-GDP has been because the latter dropped, precipitously. The Italian economy shrank by 18% year-over-year in the second quarter.

Italy also has been issuing more debt. According to Italian bank Intesa Sanpaolo, Italy is forecast to issue a net €177 billion in new debt in 2020, compared with €54 billion in 2019.

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How Can Senior Drivers Get Cheaper Car Insurance Rates

How Can Senior Drivers Get Cheaper Car Insurance Rates

Press release content from Accesswire. The AP news staff was not involved in its creation.

LOS ANGELES, CA / ACCESSWIRE / October 10, 2020 / Compare-autoinsurance.org ( https://compare-autoinsurance.org ) is a top auto insurance brokerage website, providing car insurance quotes online from trustworthy agencies all over the United States. This website offers car insurance info about different coverage types, available discounts, and money-saving tips.

Age is a very influential factor when determining insurance costs. Seniors, like teen drivers, are considered high-risk drivers. But the reasons are different. However, the elderly can still find ways to lower insurance premiums. Follow the next tips:

  • Take a driving class. Graduating a defensive driving course will help to secure a discount. These classes are don’t cost much and can be offered in-person in a classroom, or you can stream them online. In these driving courses, senior citizens will find out how aging and medication affect their ability to drive and how to deal with certain age-related conditions.
  • Install anti-theft devices. On the market, there are multiple types of devices that will make your vehicle safer against the thieves. Electronic alarms, ignition kill switches, GPS tracking systems, steering wheel locks, electronic immobilizers, and many other safety devices will help drivers acquire a discount.
  • Buy a cheaper car. The vehicle brand, model, and year of production are all important factors that determine the price of a policy. The cheapest vehicles to insure are slightly used SUVs, minivans, and crossovers. Also, look for models that have safety features installed.
  • Join a UBI program. Allow the insurer to install a small telematics device inside the vehicle. This device will record mileage, sudden changes in speed, hard braking, cornering, and the time of day when the vehicle is driven. The insurer will customize the price
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RBI holds rates steady, sees economic recovery taking root

RBI holds rates steady, sees economic recovery taking root

MUMBAI (Reuters) – The Reserve Bank of India (RBI) left key interest rates unchanged on Friday as widely expected, while keeping policy accommodative to help pull the coronavirus-ravaged economy out of its worst slump in four decades.

FILE PHOTO: A worker walks past the logo of Reserve Bank of India (RBI) inside its office in New Delhi, India July 8, 2019. REUTERS/Anushree Fadnavis

India’s economy has been the worst hit by the pandemic among major countries and new infections continue to climb, but RBI Governor Shaktikanta Das said there were some encouraging signs of a business turnaround and activity could return to growth in the January-March quarter.

As expected, the monetary policy committee (MPC) kept the repo rate, its key lending rate, at 4.0%, while the reverse repo rate or the key borrowing rate stayed at 3.35%.

The RBI has slashed the repo rate by 115 basis points (bps) since late March to cushion the shock from the coronavirus crisis and sweeping lockdowns to check its spread.

The RBI sees India’s real GDP contracting by 9.5% in the current fiscal year, Das said in a webcast after the MPC meeting.

“The MPC is of the view that revival of the economy from an unprecedented COVID-19 pandemic assumes the highest priority in the conduct of monetary policy,” he said.

“The MPC decides to maintain status quo on the policy rate in this meeting and await the easing of inflationary pressures to use the space available for supporting growth further.”

August inflation, at 6.69%, held above the top end of the RBI’s medium-term target range of 2-6% for the fifth consecutive month amid supply disruptions.

“The main reason for inaction today was the stickiness of inflation,” said Shilan Shah, senior India economist at Capital Economics in Singapore.

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Years of low interest rates made the current economic crisis worse, Fed’s Rosengren says

Years of low interest rates made the current economic crisis worse, Fed’s Rosengren says

  • Boston Fed President Eric Rosengren said years of low interest rates that encouraged risk-taking are making the current economic downturn worse.
  • He specifically cited “low rates persisting for an extended period even after the economy has made progress in the recovery” that can create problems.



Eric S. Rosengren wearing a suit and tie smiling and looking at the camera: The Federal Reserve Bank of Boston's President and CEO Eric S. Rosengren


© Provided by CNBC
The Federal Reserve Bank of Boston’s President and CEO Eric S. Rosengren

Years of low interest rates led to excessive risk taking in commercial real estate and will make the current economic downturn even more severe, Boston Federal Reserve President Eric Rosengren said Thursday.

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The central bank official said he expects a wave of defaults and bankruptcies to hit that will aggravate an unemployment problem that has hit lower-wage workers disproportionately.

Regulatory authorities, he added, should have been able to see conditions building up that would make any unexpected crisis worse.

“Clearly a deadly pandemic was bound to badly impact the economy,” Rosengren said. “However, I am sorry to say that the slow build-up of risk in the low-interest-rate environment that preceded the current recession likely will make the economic recovery from the pandemic more difficult.”

The Fed has been at the center of the coronavirus pandemic crisis response, slashing already-low interest rates and implementing a slew of programs to ensure market functioning and lend money to areas of the economy in need.

In recent days, it has adapted an even more dovish approach to monetary policy, pledging not to raise rates even if inflation runs above the Fed’s preferred 2% target.

Former Goldman Sachs CEO Lloyd Blankfein on monetary policy

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A loose Fed also often finds itself the target during times of excess, like the financial crisis and the dotcom bubble. Rosengren’s remarks reflected concern about the consequences of the low rates that

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