SINGAPORE: Asian central banks may be among the first in the world to raise interest rates as regional economic growth rapidly outpaces that in the West and fuels inflationary pressures, according to …

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SINGAPORE: Asian central banks may be among the first in the world to raise interest rates as regional economic growth rapidly outpaces that in the West and fuels inflationary pressures, according to Reuters.

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Bad news for banking has good news for Central Bank of Stillwater.

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The Federal Reserve chairman, Ben S. Bernanke , urged senators on Thursday not to strip the central bank of its authority to supervise the country’s largest banks, warning that to do so would pose a “grave risk,” The New York Times’s Sewell Chan reports from Washington.

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The European Central Bank left its benchmark interest rate unchanged at 1 percent as it waits to see whether a massive infusion of credit into the banking system will help the euro zone’s struggling economy.

Markets and analysts will be looking to Thursday’s remarks by bank President Jean-Claude Trichet about the ECB’s $623 billion in 12-month loans offered to banks last week, its biggest ever, and what it augurs for the 16-nation euro zone in a bid to try to keep cash flowing to, from and between banks. Read more…

The Federal Reserve should break with past policy and try to identify and deflate asset bubbles before they can damage the U.S. economy, New York Federal Reserve President William C. Dudley said.

While interest-rate policy may not be the appropriate tool for popping bubbles, Fed officials have “other instruments in their toolbox,” Dudley notes in the text of a speech scheduled for July 26 at the Bank for International Settlements in Basel, Switzerland. The New York Fed released his remarks yesterday. Read more…

Israel’s cabinet approved a draft of a law on Sunday that would overhaul monetary policy and other decision-making by the Bank of Israel, the finance ministry said.

The law was submitted by Prime Minister Benjamin Netanyahu and Finance Minister Yuval Steinitz.

It has been in the works since Netanyahu was prime minister the first time, in the 1990s, and is aimed at strengthening the central bank’s independence. Read more…

Sri Lanka’s central bank chief said Saturday that the island could live without a major IMF bailout that had been delayed by the final stages of the government’s fight with Tamil Tiger rebels.

The government had requested the 1.9-billion-dollar loan in March to help stave off its first balance of payments deficit in four years after foreign currency reserves fell to around six weeks’ worth of imports.

The loan was delayed under political pressure from the United States, Britain and other countries who felt the government was not doing enough to avoid civilian casualties as it closed in on the remnants of the once-powerful Tamil Tiger army. Read more…

THE PHILIPPINES may be next in a growing number of countries that have lessened their use of the US dollar, which has lost its luster as the world’s most reliable currency, the central bank said.

While it may not replace the US dollar, the Chinese yuan may soon share prominence on the global stage as more countries diversify their currency holdings to shield themselves from the volatility similar to that exhibited by the greenback at the height of the subprime-mortgage-turned-global economic crisis. Read more…

Russian Prime Minister Vladimir Putin told state-run banks to expedite loans to companies to help stem a financial crisis that will force the government to run deficits for at least three years.

Putin called on banks such as OAO Sberbank and VTB Group to boost lending by as much as 500 billion rubles ($16 billion) by October. The government will guarantee 300 billion rubles of the total, he said.

“The government expects that banks will consistently expand lending for the priority industries and reduce borrowing costs,” Putin said today on state television. Read more…

UAE banks have ’significant’ exposure to Saudi Arabia’s troubled Saad Group and Algosaibi conglomerates, the UAE central bank governor was quoted as saying today by Reuters. Read more…

The Monetary Authority of Singapore said on Monday they had signed a deal to provide emergency liquidity to banks in each others’ territories.

Under the terms of the arrangement Dutch banks in Singapore can approach the MAS, and Singapore banks in the Netherlands can approach the DNB, if they require “liquidity assistance”. Read more…

The Bank for International Settlements said there’s a risk central banks will raise interest rates and withdraw emergency liquidity too late, triggering inflation.

History shows that policy makers “have a tendency to be late, tightening financial conditions slowly for fear of doing it prematurely or too severely,” the BIS, which oversees central banks, said in its annual report published today in Basel, Switzerland. “Because their current expansionary actions were prompted by a nearly catastrophic crisis, central bankers’ fears of reversing too quickly are likely to be particularly intense, increasing the risk that they will tighten too late.” Read more…

Dresdner Kleinwort Securities LLC dropped from the ranks of securities firms that trade Treasuries with the Federal Reserve, bringing the dealer network back to the smallest in the 49-year history of the system.

Dresdner is the second dealer this year to resign from the network of firms which was formalized by the Fed in 1960. The dealers are mandated to bid at Treasury auctions and that act as counterparties for the central bank as it conducts open-market operations. At 16 firms, the number of dealers is less than the original 18. Read more…

The Czech central bank unexpectedly left the benchmark interest rate unchanged at a record low on concern further cuts would fuel inflation even as the eastern European economy’s recession deepens.

Policy makers kept the two-week repurchase rate at 1.5 percent at their meeting today in Prague after lowering it a quarter of a percentage point last month, Ceska Narodni Banka said. Risks to inflation are “balanced,” and chances of a significantly deeper-than-projected economic slump are waning, Governor Zdenek Tuma said. Read more…

The Monetary Authority of Singapore said on Friday it has extended a $30 billion swap facility with the U.S. Federal Reserve that will let the Singapore central bank access additional dollars if required. Read more…

A Brazilian newspaper says the nation’s central bank chief will resign next March to run for governor in his home state.

Valor Economico says Henrique Meirelles will seek office in Brazil’s Goias state next year. Read more…

Iceland’s central bank said Friday that Prime Minister Johanna Sigurdardottir has appointed a new governor.

The Central Bank of Iceland said in a statement that Mar Gudmundsson will become the new governor, taking office for a five-year term. The interim governor, Svein Harald Oygard, will remain in charge until Gudmundsson takes over Aug. 20. Read more…

The Federal Reserve said on Wednesday that it would leave interest rates unchanged, and that economic activity would remain weak for “some time” before growth resumes.

It maintained that it was moving ahead with its $300bn Treasury purchase plan and said that it would “continue to evaluate the timing and overall amounts of its purchases of securities”. It made no changes to its previously announced plans for the total volume of purchases or for timing.

There were few surprises for the markets in the announcement and the initial response in foreign exchange and bonds was relatively muted. The stock and bond markets both sold off soon after the Fed’s announcement. Read more…

THE PRICE OF GOLD leapt overnight and early Wednesday, recovering all and more of this week’s losses at $938 an ounce as world stock markets ticked higher but crude oil slipped for the second day running.

US Treasury bond prices also drifted as the US Dollar Index held flat ahead of today’s interest-rate announcement from the Federal Reserve, widely expected to reaffirm its commitment to Quantitative Easing and 0% interest rates.

The world’s No.1 reserve currency rose however against its main competitor, the Euro, after the European Central Bank pumped a record €442 billion ($618bn) into the region’s banks, offering unlimited loans for 12 months at the current policy rate of just 1%.
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