amwalalghad :: Global central banks can copy Canada as bubbles inflate

Your English Portal To Arab Economy

Telecom Egypt   11.48        GMC GROUP FOR INDUSTRIAL COMME   1.29        Modern Company For Water Proof   1.03        Ismailia Misr Poultry   2.45        El Arabia for Investment & Dev   0.34        Pioneers Holding   2.84        Ezz Steel   7.86        Egyptian Real Estate Group   6.85        Rakta Paper Manufacturing   4.39        Orascom Telecom Holding (OT)   3.92        Naeem Holding   0.19        Egyptian Iron & Steel   6.87        Northern Upper Egypt Developme   4.93        Canal Shipping Agencies   7.39        Misr Chemical Industries   5.65        United Arab Shipping   0.43        Egyptians Housing Development    1.94        Universal For Paper and Packag   4.94        Egyptian for Tourism Resorts   0.69        Upper Egypt Contracting   0.8        Egyptian Financial Group-Herme   7.42        Orascom Construction Industrie   240.82        Modern Shorouk Printing & Pack   7        Heliopolis Housing   21.65        Raya Holding For Technology An   4.57        United Housing & Development   8.93        International Agricultural Pro   2.1        Gulf Canadian Real Estate Inve   18.08        Alexandria Pharmaceuticals   45.71        Arab Cotton Ginning   2.46        Egyptian Chemical Industries (   7.26        National Real Estate Bank for    11.84        Six of October Development & I   15.03        National Development Bank   6.72        Oriental Weavers   20.66        Arab Gathering Investment   16.29        Egyptians Abroad for Investmen   2.75        Credit Agricole Egypt   9.04        Palm Hills Development Company   1.61        Remco for Touristic Villages C   2.13        Commercial International Bank    29.87        El Ezz Porcelain (Gemma)   1.9        Egyptian Starch & Glucose   5.4        Arab Real Estate Investment (A   0.41        South Valley Cement   3.12        Citadel Capital - Common Share   2.5        Ceramic & Porcelain   2.88        Rowad Tourism (Al Rowad)   5.05        Union National Bank - Egypt "    3.25        El Nasr Transformers (El Maco)   4.78        Egyptian Media Production City   2.31        GB AUTO   27        Sharkia National Food   3.78        Egyptian Transport (EGYTRANS)   7.85        El Kahera Housing   4.97        El Shams Housing & Urbanizatio   2.45        Egyptian Kuwaiti Holding   0.7        Cairo Poultry   8.32        ARAB POLVARA SPINNING & WEAVIN   2.11        Egyptian Financial & Industria   8        T M G Holding   4.03        Asek Company for Mining - Asco   10.66        Misr Hotels   27        Egyptian Electrical Cables   0.56        Medinet Nasr Housing   22.51        Mena Touristic & Real Estate I   1.21        ELSWEDY CABLES   18        Prime Holding   0.91        Al Arafa Investment And Consul   0.17        Alexandria Spinning & Weaving    0.74        Gharbia Islamic Housing Develo   8.41        General Company For Land Recla   16.6        Alexandria Cement   8.9        Arab Valves Company   0.94        Sidi Kerir Petrochemicals   12.4        TransOceans Tours   0.09        Egyptian for Developing Buildi   6.43        Egyptian Gulf Bank   1.24        Kafr El Zayat Pesticides   18.19        Faisal Islamic Bank of Egypt -   35.1        National company for maize pro   11.86        Delta Construction & Rebuildin   4.03        Zahraa Maadi Investment & Deve   48.25        Samad Misr -EGYFERT   3.52        Egypt for Poultry   1.41        Cairo Development and Investme   11.7        Cairo Pharmaceuticals   20.1        Maridive & oil services   0.9        Suez Canal Bank   3.75        Nile Pharmaceuticals   15.81        The Arab Dairy Products Co. AR   73.85        National Housing for Professio   14.39        El Ahli Investment and Develop   4.87        Egyptian Saudi Finance Bank   10.79        Ismailia National Food Industr   5.16        National Societe Generale Bank   25.52        Acrow Misr   19.16        Alexandria Mineral Oils Compan   63.63        Paper Middle East (Simo)   5.59        Egypt Aluminum   12.31        Giza General Contracting   13.12        Middle Egypt Flour Mills   5.82        Extracted Oils   0.6        Assiut Islamic Trading   4.56        Engineering Industries (ICON)   3.95        North Cairo Mills   15.3        Arab Pharmaceuticals   11.88        Grand Capital   5.38        El Ahram Co. For Printing And    10.68        Minapharm Pharmaceuticals   25.49        El Arabia Engineering Industri   13.52        El Nasr For Manufacturing Agri   9.71        Naeem portfolio and fund Manag   1.7        Faisal Islamic Bank of Egypt -   6.76        Natural Gas & Mining Project (   68.26        Housing & Development Bank   13.95        East Delta Flour Mills   31.5        Orascom Development Holding (A   3.22        Memphis Pharmaceuticals   11.12        Abou Kir Fertilizers   134.23        Delta Insurance   5        Cairo Investment & Real Estate   12.18        Cairo Oils & Soap   12.98        Egyptian Arabian (cmar) Securi   0.36        Egyptian Real Estate Group Bea   15.56        Alexandria Containers and good   85.51        Upper Egypt Flour Mills   45.78        Development & Engineering Cons   9.94        Sinai Cement   15.18        Medical Union Pharmaceuticals   28.01        Torah Cement   24.2        Alexandria New Medical Center   46.55        Export Development Bank of Egy   5.04        Egyptian Company for Mobile Se   92.02        Middle & West Delta Flour Mill   32.7        El Kahera El Watania Investmen   4.18        Mansourah Poultry   12.41        Delta Sugar   11.04        Misr Beni Suef Cement   41.21        Egyptian Satellites (NileSat)   6.14        Cairo Educational Services   17.75        Lecico Egypt   7.55        Sharm Dreams Co. for Tourism I   5.3        General Silos & Storage   10.77        Al Moasher for Programming and   0.66        UTOPIA   5.28        Arab Ceramics (Aracemco)   25.4        Barbary Investment Group ( BIG   0.98        

Global central banks can copy Canada as bubbles inflate


Published Thursday, 12 October 2017 11:13 | Written by Amwal Al Ghad English

Global central banks, which fret about high asset prices, could take a page from the Bank of Canada which is helping cool an overheated housing market by raising interest rates even as inflation undershoots its 2 percent target.

Like Canada, major central banks such as the U.S. Federal Reserve, European Central Bank and Bank of Japan set monetary policy based on an inflation target.

But too rigid a focus on inflation can lead to bubbles in financial and housing markets, jeopardizing hard-won recovery in countries where central banks have kept interest rates at historically low levels.

For Canada, record household debt, which could leave the economy vulnerable to shocks, had to be balanced against too low inflation. The bank pulled the trigger with two rate increases since July, trusting its projections and betting that stronger growth will help push inflation to its target by the middle of next year.

In contrast, the Fed has dithered on whether to hike U.S. rates again this year.

The Canadian rate hikes, the first in seven years, helped calm the red-hot housing market along with measures taken by Ontario’s provincial government. Earlier this year, house prices in Toronto, Canada’s largest city, spiked by more than 30 percent.

“That is an important example of a responsible central bank acting on concerns of financial stability,” said Stephen Roach, a senior fellow at Yale University’s Jackson Institute of Global Affairs and Morgan Stanley’s former chief economist.

“Central banks that keep policy at crisis settings just because inflation remains below target are asking for trouble.”

Blame for financial instability flows to central banks because cheap money enables borrowers to bid up asset prices beyond their true worth.

The BoC had been criticized for fueling the housing bubble after it cut already low interest rates in 2015. That move came amid tumbling prices of oil, one of Canada’s major exports.

It remains too early to say whether rate hikes will successfully defuse a housing bubble. But a record high for Canadian financial stocks signals that some investors have bet on a soft landing.

Growth has picked up in other countries as well. But central banks, such as the Bank of Japan and the European Central Bank, have persisted with asset buying programs aimed ultimately at getting low inflation to their desired target, while the Reserve Bank of Australia has held rates at a record low despite household indebtedness even higher than Canada‘s.

Global central bankers say macro prudential measures, such as raising capital requirements, are more appropriate than the blunt tool of interest rates to tackle financial stability risks. They view additional stimulus as needed due to inflation running below targets.

“Pushing hard on monetary policy to try and turn 1.5 percent (inflation) into two percent is dangerous and irresponsible,” said James Athey, senior investment manager at Aberdeen Standard Investments, in London.

“It was a narrow focus on inflation when setting monetary policy which contributed enormously to the build-up of imbalances and excess debt which led to the global financial crisis.”

Fed policymakers had a prolonged debate about the prospects of a pickup in inflation and the path of future interest rate rises, according to the minutes of the central bank’s last policy meeting in September, released on Wednesday.

“It should go ahead and bite the bullet,” said investor Jim Rogers, who founded the Quantum Fund with George Soros four decades ago. “It is absurd they (interest rates) stayed so low. We are all going to pay a high price.”

Source: Reuters

Banks and Money Videos »

شاهد الفيديو

Breakingviews: Moody's not-too-blues

شاهد الفيديو

Breakingviews: To save the euro zone the muddling must stop

شاهد الفيديو

Breakingviews: Bailout bond buying is a backward idea

شاهد الفيديو

Breakingviews: Eurobonds: a guide for the perplexed