| Fed keeps key interest rate steady
Wall Street turbulence, Main Street credit problems and a nationwide housing slump pose increasing risks to the economy, the Federal Reserve said Tuesday, even as it left interest rates unchanged. Although Federal Reserve Chairman Ben Bernanke and his central bank colleagues acknowledged challenges that have intensified since their last meeting in late June, they nonetheless expressed hope that the economy will safely make its way. The policymakers also stood by their belief that the biggest potential danger to the economy is that inflation won't recede as they anticipate. Against these economic crosscurrents, the Fed left an important interest rate at 5.25 percent on Tuesday. In turn, commercial banks' prime interest rate for certain credit cards, home equity lines of credit and other loans -- would stay at 8.25 percent.
SBI: Impressive performance despite the gloss
Chennai, July 28 SBI's performance looks spectacular, although the gloss has much to do with a relatively poorer performance a year ago. At that time (quarter ended June 2006), profits had dipped 35 per cent to Rs 799 crore due in part to a drop in treasury income and the presence of a tax refund in the earlier year). On the average most banks have reported a 35 per cent growth in profits this quarter, riding on the back of a fairly consistent increase in interest income. Four years of 30 per cent growth in loans has provided volume and a certain amount of stability to interest income. Other income too has grown for most banks, without relying excessively on the gains made by selling government securities. Even factoring the effect of extraordinary items, SBI's performance has been impressive.
Business Highlights
Wall Street gave up a moderate gain in late trading and closed marginally lower Monday after the Federal Reserve and other central banks added more cash to their banking systems, helping investors set aside some concerns about credit tightness. .
Lenders strike again
Last time I dared look, the financial sector of our economy accounted for about 20 percent of all stock market value. At the end of June, for instance, financial services accounted for that much of both the S&P 500 index and the broader Russell 3,000 index. Either way, financial services are a hefty chunk of the market pie. It's a bit reminiscent of technology in 1999 – except the price-to- earnings ratios are lower, and no one expects Bank of America or Citibank to triple in the next month. Otherwise, what we see all around us is a great symphony of financial sector excess. We could talk about hedge funds, private equity funds, derivatives or even the ridiculous growth of exchange-traded funds. But let's not be so esoteric.
Transcript of a Press Briefing on the Release of the Updates to the April 2007 World Economic Outlook and the Global ...
Jaime Caruana, Counsellor and Director of the Monetary and Capital Markets Department Charles Collyns, Deputy Director, Research Department Olga Stankova, Senior External Relations Officer, External Relations Department Washington, D.C. Wednesday, July 25, 2007 .
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