Month: January 2012

Jury selection is set to start Tuesday at a trial resulting from a $20 million civil dispute between billionaire Ronald Perelman and a one-time close friend and business partner. The jury will be asked to decide the merits of claims Donald Drapkin brought against Perelman in 2009 after he left Perelman’s company to run a hedge fund. He said he did not receive roughly $20 million in compensation that he was promised. Perelman countersued, saying Drapkin abused the health care plan he was given when he left and failed to return some documents.

Roche Holding AG began its 5.7 billion dollar hostile takeover offer for Illumina. This as investors signaled they expect the Swiss drugmaker to raise its bid for the gene-mapping company. Shareholders of Illumina have until midnight on February 24 to tender their shares at 44 dollars and 50 cents each, Roche said today in a statement. But the offer can be extended. Roche also wants to nominate six members of the Illumina board at the U.S. company’s annual meeting. Illumina’s stock has traded above the offer price since the announcement amid speculation of a higher bid. Roche Holding (NASDAQ:RHHBY) has potential upside of 25.4% based on a current price of $43.03 and an average consensus analyst price target of $53.95.

This report provides an update on where inflation is tracking in countries where the central bank has an inflation target.  Central Bank News has compiled a table of countries/central banks that have publicly announced an official inflation target.  In some cases the target is a government target, but in many cases it is one of the central bank’s key performance indicators.  Of the 39 countries which have inflation targets that Central Bank News is monitoring; 22 last reported inflation above target, 8 had inflation below target, and 9 reported inflation within their target range. Note, the inflation figures in the table below are all on a headline, or gross, inflation basis.

Of those that saw inflation above target, the standouts were Uganda (27% vs target 7%), Turkey (10.5% vs target 5.5%), Botswana (9.2% vs target range 3-6%), Iceland (5.2% vs 2.5%), and Uruguay (8.6% vs target range 4-6%).  Of those with inflation below target, the standouts were Georgia (2% vs target 6%), Norway (0.2% vs target 2.5%), Albania (1.7% vs target 3%), Japan (-0.2% vs target 1%), and Switzerland (-0.7% vs target range 0-2%). 

The chart below shows the change in inflation versus target, between the most recently reported inflation figures and the end of 2010 inflation figures (from the IMF).  Of the 39 countries, 23 saw inflation go above target, or go higher above target, 10 saw inflation falling closer to target (2 fell into target range), while 6 saw inflation staying within target, and 5 saw inflation fall below target.

Compared to the previous report on inflation vs target as of June 2010, inflation momentum against target has slowed and in some cases reversed. This trend lines up with the themes noted in the Global Interest Rate Movements in 2011 report, which noted an increasing shift to monetary policy easing biases. The trend of waning inflation impulse vs target is likely to be welcomed by many as the threat of economic and financial market disruption from the European sovereign debt crisis persists and as global growth decelerates somewhat, as lower inflation readings compared to targets will allow greater policy flexibility.

However, the threat of a resurgence in inflation cannot be discounted either, particularly as some central banks have engaged in significant balance sheet expansion (e.g. ECB, Bank of England, Swiss National Bank, Bank of Japan, and the US Federal Reserve). Indeed, if further rounds of significant quantitative easing are undertaken, the unintended consequence may well be a rise in commodity price inflation, which for lesser-developed nations has a more direct flow through to general inflation.

But for the first half of 2012 at least, it appears that globally, on balance, the economic growth risks are skewed more to the downside than the upside; and the same can be said of the inflation outlook. Thus this half is also likely to see further policy easing on average. The second half of 2012 will likely be a distinctly binary set of scenarios that depend on the absence or otherwise of event risk and further deterioration of global growth momentum; for now the risks appear to be finely balanced.


What is inflation targeting?
Inflation targeting is an often cited goal of monetary policy, alongside other goals such as maximizing GDP growth, optimal employment, and financial stability.  While there is some debate about the merits of inflation targeting, the benefits often cited of explicit inflation targeting include greater certainty and transparency of central bank interest rate decisions, price stability, and ultimately a lower neutral interest rate, provided inflation can be contained within a reasonable range. See the Wikipedia entry on inflation targeting for a summary of the issues and debate on explicit inflation targeting in monetary policy.

Source: www.CentralBankNews.info

Article source: http://www.centralbanknews.info/2012/01/central-bank-inflation-targeting-report.html

There’s a palpable sense of hope at the annual Davos World Economic Forum that the euro zone is edging away from the brink of catastrophe- but- business leaders say Europe’s woes are still holding back a global recovery. According to experts, a growth strategy is the missing ingredient in the policy cocktail that euro zone leaders are mixing to save the currency bloc from break-up. Without economic recovery, re-election will be challenging for presidents in Europe and beyond this year.

The Banco Nacional de Angola (BNA) cut its new benchmark monetary policy interest rate by 25 basis points to 10.25% from 10.50% previously.  The BNA said: “Keeping in mind the analysis of macroeconomic indicators, which includes recent developments and prospects of the Angolan economy and internationally, the Monetary Policy Committee decided to reduce the BNA Basic Interest Rate – Rate BNA, to 10.25%.”  The next meeting of the Monetary Policy Committee will take place on the 27th of February 2012.

 The BNA only introduced the interest rate in October at 10.50%, and this move marks the first adjustment to the rate.  Previous monetary policy moves from the BNA include a 500 basis point cut to the required reserve ratio (from 25% to 20%), and a 500 basis point cut to the rediscount rate (also from 25% down to 20%) earlier this year.  Angola reported annual inflation of 11.9% in September, compared to 13.7% in August, 14.1% in July.  According to IMF data Angola’s economy grew 7.06% in 2010 and recorded annual average inflation of 15.04% and full year inflation of 13% last year. 

The World Bank is forecasting the Angolan economy to expand about 8% in 2012 year.  Angola reported exports of US$52 billion in 2010, driven by oil earnings as Angola is Africa’s second largest oil producer.  Angola recently had its sovereign credit rating upgraded to BB- by Standard & Poor’s.  Angola’s currency, the Angolan Kwanza (AOA), last traded around 95 against the US dollar.

Citigroup will close a proprietary-trading desk that makes bets with the firm’s own money and most of the unit’s staff will leave before rules banning the practice take effect. The third-biggest U.S. lender is shutting their Equity Principal Strategies business and most of that staff will leave the bank after Feb. 6th, according to Bloomberg.Citigroup’s CEO is closing the unit as regulators draft the so-called Volcker rule…which seeks to restrict banks that accept deposits from trading with shareholders’ money.Citigroup (NYSE:C) has potential upside of 35.3% based on a current price of $30.46 and an average consensus analyst price target of $41.22.

The Bank of Albania cut its main monetary policy interest rate a further 25 basis points to 4.50% from 4.50% previously.  The Bank said: “in the Supervisory Council assessment, inflationary pressures remain controlled over the monetary policy relevant horizon. Moreover, economic agents’ expectations on inflation remain anchored to the Bank of Albania’s target band. At the conclusion of discussions, the Supervisory Council decided to cut the key interest rate by 0.25 percentage points to 4.50%. This decision serves to comply with the medium-term inflation target and provides the appropriate monetary conditions to stimulate Albania’s economic activity.”

Wegelin & Company agreed to a sale to Switzerland’s Raiffeisen Group after coming under investigation in the U.S. for allegedly helping Americans evade taxes. The US branch of the 270-year-old Swiss private bank will remain with current partners, St. Gallen, Wegelin said today. Wegelin said earlier this month that three bankers were charged with conspiring to help U.S. clients hide more than $1.2 billion from American tax authorities. Wegelin, which describes itself as the oldest Swiss bank, didn’t disclose their sale price.

John Manley, head of the Canadian Council of Chief Executives and a former finance minister and deputy prime ministers, discusses what the buzz is at the World Economic Forum in Davos, Switzerland