Tuesday, June 27, 2006


Central Banks 'Simultaneously' Raising Rates

The Street.com has the Tuesday metals numbers. "Gold and metals finished lower Tuesday, as crude oil prices reversed early gains and the dollar erased some of its earlier losses. Gold for June delivery dropped $3.30, or 0.6%, to close at $584.40. The precious metal earlier reached a high of $599 before falling back."

"Among other metals, silver for July delivery also reversed early gains, losing 4 cents, or 0.4%, to close at $10.29 an ounce."

"News that U.S. existing home sales declined in May fueled hope that the Federal Reserve will sound less hawkish when it announces its decision on interest rates Thursday. However, the housing data also reinforced concerns about the outlook for growth and demand for commodities, pressuring shares on Wall Street and, ultimately, metals themselves."

"Meanwhile, shares of metal-mining companies were lower, tracking a selling trend for stocks on Wall Street. Both The Philadelphia Gold and Silver index and the CBOE Gold index were down 1.7% recently, while the Amex Gold Bugs index was down 2.3%."

From Bloomberg. "Taiwan's central bank will probably raise its benchmark interest rate for the eighth straight time tomorrow to an almost five-year high after inflation picked up. 'Inflation is only part of the issue right now,' said Joseph Lau, an economist at Credit Suisse Group in Hong Kong. 'With U.S. interest rates set to climb further, the rate differential with the U.S. remains very wide and the central bank would like to close that.'"

"Central Bank of China, the island's central bank, may increase the discount rate on 10-day loans to banks by an eighth of a percentage point to 2.5 percent, according to 16 of 18 economists surveyed by Bloomberg News. Two forecast no change. A decision is expected after 5 p.m. local time tomorrow in Taipei."

"The world's major central banks are simultaneously raising borrowing costs for the first time since 2000 to keep rising oil costs from spilling into inflation. central bank Governor Perng Fai-nan is trying to bring rates closer to U.S. levels to keep the currency stable."

"Central banks across Asia have raised rates this year to ward against faster inflation. Bank of Thailand on June 7 increased its key rate for a ninth straight time. A day later, the Bank of Korea unexpectedly lifted its benchmark interest rate to a three-year high of 4.25 percent."

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