Toronto’s overheated real estate market is expected to cool through the fall and winter, which should ease bidding wars and lead to more moderate price increases into 2012, says a CMHC housing market outlook released Wednesday.
Average Toronto house prices are expected to hit $463,500 by the end of this year, up 7.2 per cent from last.
But most of those gains have already occurred, thanks to a surge of home sales in spring and early summer fuelled by low interest rates as well as first-time buyers who rushed their purchases to beat the introduction of tighter lending rules, said Shaun Hildebrand, the federal housing agency’s Toronto market analyst.
“Prices will be treading water for the next few quarters,” he noted.
“We’re seeing sales levels start to moderate, we’re seeing new listings start to catch up to demand, and that’s going to create more balanced market conditions fast cash online. Prices won’t be growing as quickly as they were.”
New housing starts will also “moderate” and resume their growth late next year, the report notes.
CMHC revised slightly upward its forecast for Ontario, citing a rosier job picture and a stronger housing market than originally expected during the first half of this year.
But affordability is becoming such a concern, especially in overheated markets like Toronto, that CMHC predicts higher demand for rental apartments and condos by first-time buyers who have now found themselves priced out of the market.
House Speaker John Boehner said Thursday that Republicans controlling the chamber are willing to compromise on legislation increasing the government’s borrowing authority.
“Frankly, I think it would be irresponsible on behalf of the Congress and the president not to be looking at back-up strategies for how to solve this problem,” Boehner said. “At the end of the day, we have a responsibility to act.”
Asked whether GOP lawmakers supporting the House “cut, cap and balance” debt limit measure would be unwilling to ultimately compromise, Boehner said, “I’m sure we’ve got some members who believe that, but I do not believe that would be anywhere close to the majority.
His talk of possible accommodation in the protracted political stalemate over federal budget policy came as the Senate took up the tea party-backed House legislation Thursday. It ties an increase in the government’s borrowing authority to a series of conservative demands, including immediate spending cuts and a constitutional balanced budget amendment.
Majority Leader Harry Reid, D-Nev., called up the measure to placate Republicans demanding a vote. But he said it “doesn’t have one chance in a million of passing the Senate.”
Democrats argue that the so-called “cut, cap and balance” measure would impose untenable spending restraints and set spending levels, as a percentage of the overall economy, on par with the mid-1960s _ before the advent of Medicare and automatic Social Security cost-of-living adjustments.
The development Thursday reflected the reality that there’s more talk than progress as official Washington wrangles daily over finding a way out of a debt dilemma that has the government sliding inexorably toward a first-ever default on its financial obligations.
President Barack Obama met with House Speaker John Boehner, R-Ohio, at the White House for 90 minutes on Wednesday, but neither side would comment afterward.
Senate Minority Leader Mitch McConnell, R-Ky., said Thursday the legislation now before his chamber would be an opportunity for lawmakers to “go on record in support of balancing our books or against it.” He urged Democrats to join GOP senators in backing it.
Democrats are expected to kill the measure _ which they say would demand debilitating cuts to Medicare _ in a vote on Saturday if not before.
Meanwhile, momentum on a separate bipartisan budget plan by the Senate’s “Gang of Six” seemed to ebb as critics warned the measure contains larger tax increases than advertised and it became plain that the measure comes too late and is too controversial to advance quickly _ particularly as a part of a debt limit package that already would be teetering on a knife’s edge.
Sen. Kent Conrad, D-N.D., a member of the Gang of Six, said Thursday that some 40 senators of both parties back the plan his group has brought forward. It generally takes 60 votes to pass legislation in the 100-member Senate because the rules permit unlimited debate unless a supermajority votes to limit it.
But Conrad also said he feels there’s too little time between now and Aug. 2 to complete a comprehensive package of spending cuts, benefit program changes and an overhaul of the tax code.
Conrad said doing nothing is not an option, saying that “we’re all going to have to do things we’d prefer in a perfect world not to have to do.”
Absent a breakthrough between Obama and Republicans, there is a hotly contested backup plan by Senate Minority Leader Mitch McConnell, R-Ky direct payday lenders., that would give Obama broad new powers to obtain increases in the government’s borrowing unless blocked by veto-proof two-thirds margins in both the House and Senate.
Many conservative Republicans are in an uproar over the McConnell plan, and more than 70 House members signed a letter circulated by members of the conservative Republican Study Committee calling on Boehner to come out in public opposition to the McConnell-Reid plan..
In a shift, White House press secretary Jay Carney said Wednesday that Obama would back a short-term deal to prevent a disastrous financial default on Aug. 2 but only if a larger and still elusive deficit-cutting agreement was essentially in place.
Officially, the president continued to push for a big compromise that would cut the nation’s budget deficit and extend the government’s tapped-out borrowing power above the current $14.3 trillion cap. Obama had threatened to veto any stopgap expansion of the nation’s debt limit, at one point last week even challenging House Majority Leader Eric Cantor, R-Va., not to call his bluff about it.
Carney said if a divided Congress and the White House can agree on a significant deal, Obama would accept a “very short-term extension” of the debt limit to let bigger legislation work its way through Congress.
Obama also is open to the McConnell plan, but it seems barely aloft due to fervent tea party opposition in the House. The hope appears to be that such an option will look a lot better to the House in a week or so, given the lack of other ideas.
The Gang of Six plan has come under assault from critics like House Budget Committee Chairman Paul Ryan, R-Wis., who say the plan would increase taxes by $2 trillion over the next 10 years instead of the $1 trillion-plus claimed by proponents like Conrad _ a development likely to stunt momentum among Republicans.
The revenue increase is larger than advertised because the $1.2 trillion in new taxes comes on top of an underlying assumption used by Obama’s deficit commission _ and incorporated by the Senate group in its plan _ that the Bush-era income tax brackets for family income exceeding $250,000 would revert to the higher, Clinton administration levels. The deficit panel’s assumption was made before Obama buckled in December and signed a full extension of the Bush tax cuts.
The Gang of Six plan also earned poor reviews from liberals like Rep. Jerrold Nadler, D-N.Y., who said it would “balance the budget on the backs of the vulnerable.”
And Rep. Howard “Buck” McKeon, R-Calif., who is chairman of the House Armed Services Committee, blasted the plan in a missive to his panel members, saying it would cut the Pentagon much too deeply and would unfairly curb military health and retirement benefits.
The Gang of Six plan promises almost $4 trillion in deficit cuts, including an immediate 10-year, $500 billion down payment that would come as Congress sets caps on the agency budgets it passes each year. It also requires an additional $500 billion in cost curbs on federal health care programs, cuts to federal employee pensions, curbs in the growth of military health care and retirement costs, and modest cuts to farm subsidies.
Conrad made his remarks in an interview Thursday on MSNBC.
Shares of Research In Motion (TSX: RIM) are down slightly as the company denies reports it planned to halt production on the Wi-Fi version of its PlayBook tablet device.
The BlackBerry-maker
What began with a steep drop in the stock market ended with a modest decline Thursday. The Dow Jones industrial average lost just 60 points after being down nearly 240 points earlier in the day.
A jump in the number of people applying for jobless benefits and plummeting oil prices drove stocks lower at the market open. By 11 a.m., the Dow was down 234 points. Then came late afternoon reports that Greece may have reached a deal for a new austerity plan. The Dow made up nearly 100 points between 2:45 and 3 p.m. alone.
The Dow finished with a loss of 59.67 points, or 0.5 percent, to 12,050. The Standard & Poor’s 500 index, down as many as 24 points, closed down just 3.64, or 0.3 percent, to 1,283.50.
Since late April, reports on manufacturing, retail sales, home sales and other economic indicators have come in weaker than economists anticipated. Europe’s debt problems and a slowing growth rate in China have also raised concerns about the global economy. On Wednesday, Federal Reserve Chairman Ben Bernanke said problems plaguing the economy may last longer than previously thought.
As a result, the stock market has fallen six of the last seven weeks. The S&P 500 is down 5.9 percent from its high for the year of 1363.61 in April.
“This is no longer looking like a small soft patch. It’s beginning to look more like quicksand,” said Lawrence Creatura, a stock portfolio manager at Federated Investors.
The continued rise in first-time claims for unemployment benefits indicated little improvement in the job market since May, when there was a drop in the number of new jobs created. New applications for unemployment benefits rose to 429,000 last week, from 420,000 the week before.
“400,000 is the magic number and we’ve been above it for 11 weeks,” Creatura said.
Energy companies like Exxon Mobil and Chevron Corp. led the market downward after oil prices tumbled nearly 5 percent. Oil dropped after the International Energy Agency said 60 million barrels of oil would be released from reserves to make up for the loss of Libyan exports. Oil prices had spiked following unrests in Middle East and North Africa, raising concerns that higher fuel costs would slow the world economy.
Companies like Netflix, Priceline.com and others in the consumer discretionary industry were mostly up guaranteed payday loans. Overall, the group rose 0.4 percent. Investors are betting that a drop in oil costs could lead consumers to spend more money on things like movies, restaurants and clothing. Netflix was up 2.9 percent. Chipotle Mexican Grill gained 2.2 percent.
Companies that benefit from lower fuel costs also rose. Airline stocks like United Continental Holdings Inc. and AMR Corp, the parent company of American Airlines, rose more than 4 percent.
The two indexes most tied to economic growth fared better than the broader market. The tech-focused Nasdaq composite index was up 17.56, or 0.7 percent, to 2,686.75. And the Russell 2000 index of small companies gained 0.4 percent. For the week, both are up 2.7 percent.
“We’re starting to see that the supply-chain disruptions caused by the tragedy in Japan are easing a bit, and the biggest beneficiaries of that are technology and auto-supply companies” which tend to be smaller businesses, said Burt White, the chief investment officer at LPL Financial.
Among the most active stocks, Bed Bath & Beyond gained 5.3 percent after the home furnishings retailer posted a 31 percent jump in income. The company also raised its earnings forecast for the rest of the year, in part because of cost controls it has in place. ConAgra Foods Inc. fell 0.2 percent. The owner of Slim Jim and Hebrew National brands cut its earnings estimate for the current quarter.
Government bond prices were higher as traders shifted money into investments that are considered safe, pushing long-term interest rates lower. The yield on the 10-year Treasury note sank to 2.90 percent, near its low mark for the year. Bond yields fall when their prices rise.
Even so, portfolio manager Creatura says that the recent market slide could represent a chance to pick up some stocks on the cheap. Current prices already reflect reaction to most of the economy’s problems, he says. “The most fearful times can be the best times to invest,” he said. “It’s not only what you buy, it’s the price you pay that matters.”
Three stocks fell for every two that rose on the New York Stock Exchange. Volume was slightly above average at 4.4 billion.
China registered new concern Friday over the fate of its top trading partner, the embattled eurozone, saying the ability of stricken countries to overcome their financial woes is of “crucial importance.”
China’s support in terms of buying European debt and promoting imports is beneficial to both sides, Vice Foreign Minister Fu Ying told reporters at a briefing ahead of Premier Wen Jiabao’s visit next week to Hungary, Britain and Germany.
But she expressed some anxiety over the fate of the eurozone. Greece is at risk of defaulting on its debt even after a massive bailout, and European leaders fear the country’s problems could hurt other struggling economies that use the euro, including bailed-out Ireland and Portugal.
“Whether some European countries can overcome their difficulties and recover from the crisis is of crucial importance for China,” Fu said.
“Therefore since the advent of the financial crisis, China has on one hand been trying to stimulate our economy and overcome the impact of the crisis, while on the other hand provided support to European countries in their efforts to overcome the financial crisis,” she said.
China has supported highly indebted European countries, offering last year to buy Greece’s debt and reportedly pledging to buy $4 billion in Portuguese government debt.
While China has been quiet on how much money it will actually invest, the pledges from Beijing have temporarily taken some pressure off European debt markets.
No agenda has been announced for Wen’s visit, although the European debt crisis is expected to be a major topic of discussion.
Top on the list could be Greece, where rioters have clashed with police in Athens over proposed austerity measures and coalition talks between Greece’s government and opposition parties have collapsed, renewing fears of a government debt default.
Federal Reserve Bank of Kansas City President Thomas Hoenig, the central bank’s longest-serving policy maker, said the U.S. needs to raise interest rates to encourage individuals to save and avoid future asset bubbles.
Hoenig, who doesn’t vote on monetary policy this year, has repeatedly urged the central bank to tighten lending to prevent inflation and asset price bubbles. He voted eight times in 2010 against record monetary stimulus led by Chairman Ben S. Bernanke, tying former Governor Henry Wallich’s record in 1980 for most dissents in a single year.
The Fed cut its benchmark rate to zero to 0.25 percent in 2008 to boost economic growth and will keep it unchanged until the first quarter of 2012, according to the median estimate in a Bloomberg survey of economists and analysts.
“I’m not advocating for tight monetary policy, but I do think we have to get off of zero if we want to avoid repeating some of the mistakes of the past with a very easy credit environment,” Hoenig said in an interview on CNN’s “Fareed Zakaria GPS” show scheduled for broadcast today.
Fed officials are discussing how quickly to begin tightening policy after completing the purchase of $600 billion in U.S. Treasuries by the end of June. They are also considering a strategy for how to remove stimulus, with a majority favoring ending the policy of reinvesting proceeds from maturing securities first before raising interest rates or selling assets, minutes of their April 26-27 meeting showed.
Spending Encouraged
Leaving the Fed funds target at its current level encourages consumers to spend at a time when the U.S. needs higher savings rates to ensure long-term prosperity, Hoenig said in the CNN interview pay day advance.
The savings rate held at 4.9 percent in April, the Commerce Department said, the lowest level since October 2008.
The Fed under Chairman Alan Greenspan kept interest rates at 2 percent or less from December 2001 to December 2004. The savings rate averaged about 3.4 percent during that period, compared with 5.4 percent in the previous two decades, and fell to 0.8 percent in 2005, the lowest level since at least 1959, according to Commerce Department data. Defaults on home loans to the riskiest borrowers in 2007 and 2008 triggered the worst recession and financial crisis since the 1930s.
“We kept the interest rates too low,” Hoenig, who served on the Federal Open Market Committee that sets interest rates, said of those years in the CNN interview. “It’s not that I want to point blame to myself or anyone else, but I do have to say this is what happened, what were the consequences and what have I learned from it and — and adjust policy the next time going forward.”
Bernanke, speaking on April 27 at a press conference, signaled that the central bank will maintain its record monetary stimulus after June and indicated that the need to contain inflation means further easing is unlikely.
Hoenig plans to retire from the central bank in October after 20 years as leader of the Kansas City district bank.
“If we want to be a great nation, continue to be a great nation, then we do have to address our fiscal challenges,” Hoenig said in the CNN interview, according to an advance transcript of his remarks.
China ranks first among 22 emerging Asian economies as the country most likely to maintain steady and rapid growth over the next five years, according to the Bloomberg Economic Momentum Index for Developing Asia.
China scored 76.2 percent in a ranking of 16 areas including economic competition, education level, urban migration, high-technology exports and inflation that measure a country’s ability to continue delivering high growth. India was second with a score of 64.1 percent followed by Vietnam at 61.9 percent. Timor-Leste was last at 25.3 percent.
The index suggests China and India’s economic surge is durable and will likely continue to drive global growth as the U.S., Europe and Japan lag behind. China eclipsed Japan last year as the world’s second-largest economy.
“I am not surprised that China comes out on top on this metric, and China probably should be placed on top among emerging Asian economies,” said Victor Shih, a professor who studies China’s financial system at Northwestern University in Evanston, Illinois.
In the past 30 years, China’s economy has expanded on average by 10 percent a year as it overhauled state-owned companies and allowed more foreign investment. Among economies with annual gross domestic product above $1 trillion, India posted the second-highest growth rate after China last year, expanding by 8.2 percent in the last quarter of 2010.
The Organization for Economic Cooperation and Development forecasts U.S. economic growth of 2.6 percent this year, 2 percent for the eurozone and a 0.9 percent contraction for Japan.
China Shocks
Shih said the measure may overstate China’s rank relative to India’s and other countries, in part because Chinese official figures understate debt levels overnight pay day loans.
China could face economic and political shocks that would impact on its growth. Fitch Ratings said in March that China faced a 60 percent chance of a banking crisis by mid-2013 in the aftermath of record lending and surging property prices. Strikes, riots and protests are also on the rise, doubling in five years to 180,000 incidents last year, according to Sun Liping, a sociology professor at Beijing’s Tsinghua University.
The index put some countries with among the world’s highest growth rates in the past several decades, including Malaysia and Thailand, behind such countries as Vietnam, which ranked third, and Bangladesh, which ranked fifth.
Equity Markets
The index gives weightings of 10 percent each to four categories: the competitiveness of market structure, which rewards countries for having fewer big companies that dominate equity markets; the quality of the labor force, including education levels, the age of the work force, and the growth rate of scientific journal publications; gross national savings as a percentage of GDP; and the growth of high-technology exports.
A further 12 areas have 5 percent weightings, including growth in GDP per capita adjusted for the cost of living, growth in world share of GDP, stability of inflation rates, diversity of top trading partners, external and public debt burdens, lending costs, net foreign direct investment and deforestation. Four “cohesiveness factors” include ethnic and religious homogeneity, income equality, rates of urbanization and poverty reduction, and variation in the jobless rate.
A military spokesman in Ivory Coast says that French helicopters were fired upon during an evacuation mission by forces supporting the country’s strongman, who refuses to emerge from a bunker at his residence.
Cmdr. Frederic Daguillon, military spokesman for the French base in Ivory Coast, said Saturday that no soldiers were injured in the attack, but that French helicopters fired back at forces supporting Laurent Gbagbo and destroyed at least one armored vehicle payday advance lender.
He said the diplomatic evacuation mission was aborted.
France’s embassy was also hit by two mortars and a rocket fired by Gbagbo’s forces.
Forces supporting the democratically elected president have tried to force Gbagbo from his bunker but he refuses to emerge or cede power.
Thailand’s economy strengthened in the fourth quarter on exports and consumer spending, capping the fastest annual expansion in 15 years and adding to the central bank’s case to raise borrowing costs further.
Gross domestic product rose 1.2 percent from the previous three months, the National Economic and Social Development Board said in Bangkok today. That compared with a revised 0.3 percent decline in the third quarter, which reflected a mid-2010 slump stemming from political unrest and flooding, and the 0.9 percent median estimate in a Bloomberg News survey of 10 economists.
The Bank of Thailand is poised to extend interest-rate increases after saying inflation is a threat, as counterparts from Indonesia to China also strive to damp jumps in the cost of living. Prime Minister Abhisit Vejjajiva has raised the minimum wage and will boost civil service pay, which may push up prices ahead of an election he plans to hold by the end of June.
“A recovery in developed economies toward the year-end supported external demand and export-oriented countries like Thailand will continue to see benefit from that,” said Tohru Nishihama, an economist at Dai-ichi Life Research Institute Inc. in Tokyo.
The baht climbed 0.1 percent to 30.56 per dollar as of 11:06 a.m. in Bangkok from Feb. 17 and has risen about 3.2 percent in the past six months, the least apart from the Hong Kong dollar and Indonesia’s rupiah in a basket of 10 major Asian currencies tracked by Bloomberg, excluding the yen.
Asian Tightening
On a year-on-year basis, the expansion slowed to 3.8 percent from a revised 6.6 percent advance in the three months through September. Growth also eased last quarter from a year earlier in neighbor Malaysia while quickening in Indonesia, the Philippines and Vietnam. Thailand has joined Indonesia, South Korea, India and China in boosting borrowing costs this year.
The central bank is expected to raise rates further to tame price pressures, Arkhom Termpittayapaisith, secretary-general at the development board, told a news conference in Bangkok today.
Economic “growth momentum will continue this year,” supported by the global recovery, rising incomes and agricultural prices, Arkhom said, adding the board assumed borrowing costs would rise a total of 1 percentage point in 2011 so that they exceed the pace of inflation.
The agency raised its consumer-price growth forecast for this year to a range of 2.8 percent to 3.8 percent from the 2.5 percent to 3.5 percent estimated in September. The board said the baht would trade from 29.5 to 30.5 per dollar in 2011.
Rising Rates
Private consumption rose 3.8 percent last quarter from a year earlier, manufacturing expanded 4.8 percent and total investment advanced 6.4 percent, according to today’s report payday loans for bad credit.
Exports climbed 22.3 percent in January from a year earlier and may gain 15 percent in the first quarter of 2011, the commerce ministry said separately today.
The Bank of Thailand raised its one-day bond repurchase rate for the fourth time in seven months on Jan. 12, by a quarter of a percentage point to 2.25 percent.
Stocks and bonds across Asia have declined this year amid concern that accelerating inflation will erode purchasing power and spur further rate increases. The MSCI Asia Pacific Excluding Japan Index is down approximately 1.3 percent. Asian local- currency bonds have lost about 0.2 percent, based on an index compiled by HSBC Holdings Plc.
Central bank Governor Prasarn Trairatvorakul said last month the monetary authority needs to raise rates to damp inflation. Consumer prices increased 3.03 percent in January from a year earlier, compared with 3 percent the previous month.
Political Risk
The economy grew 7.8 percent last year, the strongest pace since 1995, today’s report showed. The development board, also known as the state planning agency, maintained its 2011 growth forecast of 3.5 percent to 4.5 percent. The agency, the finance ministry and the central bank release separate projections.
Disputes over the outcome of the last election in 2007 have fueled protests in the country of 67 million citizens, killing about 100 people and souring the investment climate. The government said this month a vote will be held within the first half of 2011, as Abhisit moves to ease the political turmoil.
“Politics remains the main question mark for the Thai economy. It’s very hard to predict what will come out,” said Santitarn Sathirathai, a Singapore-based economist at Credit Suisse Group AG.
Still, rising private consumption backed by higher agricultural prices will help the economy expand 4.6 percent this year, according to the company’s projections. Government efforts to boost incomes and curb costs will help, he said.
Abhisit increased the minimum wage last month and will raise the salaries of civil servants in April. The administration subsidizes the cost of diesel, cooking gas and electricity, and in January approved price controls on 39 products including pork and eggs.
Consumer confidence is rising, climbing for the second consecutive month in January. Central Group, controller of the nation’s biggest operator of shopping malls, said this month it plans to lift investment by 57 percent to tap into higher consumer spending. Sentiment fell in November after the worst flooding in five decades affected a 10th of the population.
Some Chinese banks have raised lending rates to as much as 1.45 times benchmark levels in response to government calls to rein in credit growth, the official China Securities Journal reported today.
One large commercial lender has told branches to charge between 1.1 and 1.45 times the rate, depending on which industries borrowers are in, the newspaper said, citing an unidentified official from the bank. The key one-year borrowing cost is 5.81 percent. The report didn’t name the lender.
The surge in lending typical of the start of each year may be hampering government efforts to rein in liquidity, cool inflation and prevent asset bubbles. This month’s loans reached 1.2 trillion yuan ($182 billion) by Jan. 24, according to a China Business News report today citing an unidentified person. That would compare with 481 billion yuan last month.
“The central bank is reining in liquidity more aggressively this year to prevent a surge in loan growth from fueling liquidity and inflation,” said Lu Ting, a Hong Kong- based economist at Bank of America-Merrill Lynch. Acting now may avoid the need for “aggressive tightening later in the year,” Lu said.
The China Securities Journal report didn’t specify the duration of the loans that the increased rates apply to.
ICBC, Bank of China
At Industrial & Commercial Bank of China Ltd., the world’s biggest lender by market value, Beijing-based press officer Xie Taifeng said he’s not aware of any increase in rates.
“The process of setting the lending rate is market based, our headquarters doesn’t give specific instructions to branches on that,” Xie said.
No comment was immediately available from Bank of China Ltd. or China Construction Bank Corp.
Higher lending costs may encourage some companies to sell bonds rather than borrow from banks, said Lu Zhengwei, a Shanghai-based economist at Industrial Bank Co. He also said that a “liquidity shortage” may persist for the coming month.
China’s benchmark money-market rate jumped to the highest level since October 2007. The seven-day repurchase rate, which measures lending costs between banks, advanced 17 basis points to 7.82 percent, the highest level since Oct. 26, 2007, according to a daily fixing published at 11 a.m. by the National Interbank Funding Center. A basis point is 0.01 percentage point.
‘Abnormal’ Loan Growth
Officials raised interest rates twice in the fourth quarter and have also ratcheted up banks’ reserve requirements. Premier Wen Jiabao has pledged to prevent “abnormal” loan growth.
The China Securities Journal also reported that the unidentified large commercial lender had increased rates for property loans and scrapped or partly removed special rates for preferred clients.
The central bank has told banks not to lend more than 12 percent of their annual loan target in January, the newspaper said, citing another unidentified bank official. Some banks’ lending may have exceeded monthly quotas within the first two weeks of the year, the official said.
Lending totaled 7.95 trillion yuan last year, breaching a government target of 7.5 trillion yuan. Inflation has topped 4 percent for each of the past three months and may peak at 6 percent this month, according to a Daiwa Capital Markets.
The central bank caps the interest that banks can pay on deposits and sets a floor on borrowing costs of 90 percent of the benchmark one-year rate.
–Li Yanping, with assistance from Eva Woo. Editors: Paul Panckhurst, Stephanie Phang.
To contact Bloomberg News staff for this story: Li Yanping in Beijing at +86-10-6649-7568 or yli16@bloomberg.net
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