The US FED decided to keep the interest rates low for an extended period due to subdued inflation trends.
The core inflation rate in the US has fallen from 2.5% in mid 2008 to around 1.8% currently.
However this may be misleading.
In the computation of core inflation number a weigtage of 40% is for rent for owners. This basically refers to cost of home ownership by what someone would have to pay in order to rent the house one owns.
In the past two years due to falling house prices and increased vacancy the rental rates have got pushed down. This has in turn brought down the core inflation.
Excluding housing and rent the core inflation has actually increased from 1.8% in mid 2008 to 2.8% currently.
The US FED would be forced to increase the interest rates by Jul-Sep this year since trend would ease out in the coming months.
In India, in contrast the inflation number does not include any housing impact (other than raw materials used for construction). If we bring in the housing impact into the inflation number the number would surely be much higher that what is currently being reported.
The purpose of this blog is to share / gain knowledge on the various happening in the world of finance, investing & economics.
Friday, March 26, 2010
Monday, March 22, 2010
China Bank Lending
The total Chinese banks lending in Jan and Feb of 2010 has been around $ 300bn as per the reports of the People's Bank of China (PBOC), the central bank.
This is on the back of a $ 1.4 trillion lending in 2009 by Chinese banks.
Comparing this to our Indian Banking system. In India the total loan outstanding as on Feb 2010 is $ 650bn.
Lets ponder on this number and understand what ramifications this kind of credit in the economy can do. Will write on this later.
This is on the back of a $ 1.4 trillion lending in 2009 by Chinese banks.
Comparing this to our Indian Banking system. In India the total loan outstanding as on Feb 2010 is $ 650bn.
Lets ponder on this number and understand what ramifications this kind of credit in the economy can do. Will write on this later.
Thursday, March 18, 2010
Futures Market in China
In China the Futures and Options market started on February 22 2010.
Some of the pre-conditions which need to be satisfied to trade in the F & O Market are
1. One needs to have an investible surplus of RMB 5,00,000 (US$ 73,000 or INR 37.5 lacs)
2. One needs to attend 20 mock trading sessions and must have executed 10 mock transactions.
3. One further need to undergo 10 mock commodities transactions.
Only when you satisfy all the above conditions you are permitted to trade in the Futures.....
India is way ahead in financial reforms....
Some of the pre-conditions which need to be satisfied to trade in the F & O Market are
1. One needs to have an investible surplus of RMB 5,00,000 (US$ 73,000 or INR 37.5 lacs)
2. One needs to attend 20 mock trading sessions and must have executed 10 mock transactions.
3. One further need to undergo 10 mock commodities transactions.
Only when you satisfy all the above conditions you are permitted to trade in the Futures.....
India is way ahead in financial reforms....