The Reserve Bank of Australia left the benchmark cash rate at 2.0% on Tuesday, summarising the thinking as follows:
“At today’s meeting, the Board judged that there were reasonable prospects for continued growth in the economy, with inflation close to target. The Board therefore decided that the current setting of monetary policy remained appropriate.
In academic discourse, it has become almost ritualistic to begin a piece on foreign aid by highlighting the sharp controversies over its effectiveness as a tool to promote social and economic progress in developing countries. This has happened even though evaluations of development aid at project and sector levels have consistently pointed to the positive impact they have.
Instead, controversy has centred on the ability of aid to promote overall economic growth. In this domain, conclusions have varied from positive to perverse.
Recently, the International Monetary Fund announced “historic reforms” in its governance. In reality, changes have barely begun. The IMF does not look like the world it purports to represent.
During the global crisis of 2008/9, advanced economies could no longer contain the devastation. As a result, the G20, which includes both advanced and emerging economies, surpassed the old G7 club of Western powers.
The US dollar remains under broad pressure after yesterday’s sharp decline. Neither dovish comments by ECB President Draghi, nor the Reserve Bank of New Zealand have managed to reverse the gains of their respective currencies. Similar, the rise in US yields and firm equities have failed to push the yen lower.
By 9.30am today I will have skyped Malawi, emailed Ghana, Facebooked Nepal, paid a bill online and used the satnav on my mobile phone. It feels a long time since we first got colour TV at home and, years later, when I accessed the internet using a dial-up modem. When I recalled these moments to my son he yawned. Aged, 19, he does not remember a time before ubiquitous connectivity.
On 14 January 2016, four Indonesian militants mounted a brazen lunchtime assault on a Starbucks Café and a police post in downtown Jakarta. The general area boasts government offices, shopping malls and eateries as well as a United Nations office and the United States embassy.
The attackers were killed by the security forces. Three civilians also died in the firefight. Another 20 were injured including four foreigners from the Netherlands, Algeria, Austria and Germany.
The US dollar is sporting a softer profile today as the global capital markets are trying to stabilize. Oil prices have steadied, with WTI back above $30. Bond markets are narrowly mixed though the 10-year US Treasury is steady near 1.85%. Asian and European equities followed US markets lower, but American equities have stabilized, and ahead of the ADP employment estimate and the ISM for non-manufacturing, S&P 500 is set to open slightly higher.
Christine Lagarde, managing director of the International Monetary Fund and a former French finance minister, faces trial for accusations of negligence. However, that has not undermined her recent declaration of her candidacy for a second term, which representatives of some of the IMF’s major member countries swiftly endorsed.
The decline in oil and equities are lifting European bonds and Treasuries. The US dollar is firmer against most major and emerging market currencies.
The term ‘hedging’, one of the most widely used in contemporary discussions on East Asian security, intends to capture the fact that most states in the region face conflicting economic and security interests. States wish to maximise trade and investment ties with Beijing and welcome China into the region’s political order, but also feel the need to maintain a close security relationship with Washington.
