The aim is to make billions of pounds of cheap funds available to banks but only if they use the money to boost loans to businesses and consumers. The move is part of a raft of measures taken to try to increase lending. This is the first initiative which makes loans to banks conditional on the money being passed on through mortgages or business loans.
The belief is the bank of England could initiate circa £80bn to be available if High Street banks increase lending by 5%.
Crucial to its success will be whether it really does persuade banks to make affordable credit widely available.
2. Republic of Ireland growth in 2011 Double Original Estimate
It means Ireland escaped technical recession last year – two consecutive quarters of negative growth, although the economy shrank by 1.1% in the first three months of this year.
The figures were produced by the Central Statistics Office (CSO).
3. Euro falls to it lowest against the US Dollar since 2010
The euro has fallen to its lowest level against the dollar for two years on worries over Eurozone prospects and as minutes from the US Fed dampened hopes of any new stimulus measures.
The euro fell to $1.2165, its lowest level since mid-2010.
US Fed minutes released on Wednesday from its June meeting suggested it was not planning any imminent additional moves to boost the US economy. In contrast, the European Central Bank cut interest rates last week from 1.00% to 0.75% (a record low for the Eurozone). It also cut its deposit rate, from 0.25% to zero.
The value of the euro has also been hit by worries over growth prospects for the Eurozone and whether it can tackle the current debt crisis.
4. China’s GDP Glows at its Slowest in Three Years – 2nd Quarter 2012
China’s GDP grew at its slowest pace in three years in the second quarter, but other less-cited indicators are already signaling that the world’s second-largest economy may be starting to turn around.
The economy grew 7.6% in Quarter 2. This is slower than the 8.1% in Quarter 1 and 8.9% in Quarter 4 2011. There are fears of a hard landing but the Chinese economy is still relatively strong.
JPMorgan’s Chief Asian equity strategist Adrian Mowat has stated that he expects China’s GDP to come in at 7.7% for the year overall and 6.6% quarter over quarter. That would make Quarter 2 the weakest quarter since the final quarter of 2008.
5. Moody’s Downgrades Italy by Two Notches
Moody’s Investors Service downgraded Italy’s government bond rating by two notches to Baa2 from A3, and warned it could cut it much further if the country were to lose access to debt markets.
The move left Italy’s rating just two notches above junk status and could raise its borrowing costs ahead of a bond sale due later on Friday.
6. LIBOR And The Banks – Fines Estimated At $22 Billion
Twelve global banks that have been publicly linked to the Libor rate-rigging scandal face as much as $22 Billion in combined regulatory penalties and damages to investors and counterparties.
The analysis, which the authors admit is “crude”, assumes that 11 more banks will be penalised like Barclays, which paid $456 Million in June to US and UK authorities for attempting to manipulate the London Interbank Offered Rate, the benchmark for $360 Trillion in derivatives, loans and mortgages.
The calculation excludes the potential fallout from ongoing US and European Union cartel investigations, which could result in multibillion-dollar fines.
7. Markets Await JPMorgan Report on Its Derivatives Trading Losses
Later today, J P Morgan will reveal details of its controversial derivatives trading loss along with second-quarter earnings.
8. US Cracks Down on Iran’s Use of Front Companies
Theoretically, the S&P 500 would be more than 50 percent lower, if the bullish price action preceding Fed announcements was excluded, the study showed.
This was posted on the New York Fed’s website on Wednesday. The study sought to explain why equities receive such a high premium over less risky assets such as bonds. What was found was the Federal Reserve has had an outsized impact on equities relative to other asset classes.
10. Fear of Year-End Fiscal Stalemate
With the economy having slowed in recent weeks, business leaders and policy makers are growing concerned that the tax increases and government spending cuts set to take effect at year’s end have already begun to cause companies to hold back on hiring and investments.
Economists say the magnitude of the effect remains unclear and the fiscal uncertainty is probably not the economy’s main problem, but is instead one of several factors — along with Europe’s troubles, the spike in oil prices and a continuing hangover from the housing bubble — restraining growth.
11. Markets Expected To Rebound in Second Half
I think in the next couple of months, what we will see is the battle between earnings and how bad is this news? or we will start to see signs the soft patch is ending and we’re bouncing. If that happens I don’t think we’ll worry about earnings in the last quarter. We’ll care about where the market is going.
But if the economic data remains soft, the earnings seasons news will take on more significance.
Global policymakers should also succeed in bolstering the worldwide economy. This is the first time in this recovery that you have almost every policy official around the globe easing.
This recovery is like the last longer – it’s rolling out much slower, but each time in the last two recoveries it took three years before we decided that we are in recovery. Years 4 of the economic cycle things started to gear, confidence finally went up, the job market finally came to life. I think this is likely to follow a similar trend.
welshmoneywiz 