With the global recession finding a bottom, central bankers must choose one
of two starkly different historical lessons to bring to the mother of all policy debates – the question of when to unwind their extraordinary stimulus measures.
Should they worry about repeating the mistakes that produced U.S. inflation
in the 1970s? Or those that fueled Japan’s deflation in the 1990s?
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Sensex slides, down 0.5% at 15,304.01 vs earlier high of 15,463.09, as profit-taking kicks in after jump of nearly 14% in last 2 weeks; immediate support tipped at 15,225; heavyweight Reliance Industries (500325.BY)
remains weak on 1Q earnings, down 4.5% at INR1,923.20 – biggest percentage loser; profit-booking in autos, banks that rallied last week also weighs, 13 of 30 index issues down; “This weakness was expected after the recent rally but I don’t think we are going to see any sharp fall from these levels,” says Ranjit Kapadia, vice-president, institutional research, HDFC Securities. ONGC (500312.BY) down 3.4% at INR1,088, Tata Motors (500570.BY) down 3.2% at INR361.50, Maruti Suzuki (532500.BY) down 1.4% at INR1,358.
Hungarian and Polish central bankers will decide on monetary policy next week, and while no change is expected in Warsaw, Budapest’s policy makers are poised to cut interest rates.
Analysts and financial markets both expect monetary easing in Hungary Monday. All 16 private bank economists polled by Dow Jones Newswires see the Hungarian Monetary Policy Council lowering the policy rate from 9.5%, the highest in the European Union. And 13 of them expect a 50 basis-point rate cut, while the others foreseeing that or a 25 basis-point cut.
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