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Bank of England Keeps Interest Rates on Hold Amidst Economic Pressure

Official figures on Wednesday showed a surprise fall in inflation in August, and brought to a halt the central bank’s most aggressive round of rate increases in decades…reports Asian Lite News

Mortgage holders have been offered relief after the Bank of England kept interest rates on hold for the first time in almost two years, raising the prospect that a peak in borrowing costs has been reached in the battle against inflation.

In a knife-edge decision as the economy comes under growing pressure, the Bank’s monetary policy committee (MPC) voted by a narrow majority to hold its key interest rate at 5.25% – already the highest level since the 2008 financial crisis.

Official figures on Wednesday showed a surprise fall in inflation in August, and brought to a halt the central bank’s most aggressive round of rate increases in decades – 14 consecutive rises since the end of 2021.

Exposing a split within the Bank’s most senior ranks, the nine-strong MPC was divided 5-4 with a minority pushing for a further quarter-point rise. The Bank’s governor, Andrew Bailey, cast the decisive vote in favour of a pause.

“Inflation has fallen a lot in recent months, and we think it will continue to do so. That’s welcome news. But there is no room for complacency,” he said, indicating that the Bank stood ready to take further action if required. “We need to be sure inflation returns to normal and we will continue to take the decisions necessary to do just that.”

Financial markets bet the central bank had reached the end of its round of rate increases, while Britain’s biggest high street lenders – including Nationwide – cut the rate on their mortgage products amid the anticipation of no further changes.

The chancellor, Jeremy Hunt, said Britain was “starting to see the tide turn against high inflation”, while saying the government was on track to meet its promise to halve inflation this year. “Now is the time to see the job through,” he said.

However, borrowing costs are expected to remain at high levels for a lengthy period as the central bank attempts to return inflation to the 2% target set by the government without tipping the economy into recession.

Threadneedle Street said risks to the economy were gathering as the impact from previous rate increases weighs heavily on households and businesses, saying it foresaw only a slight rise in output in the third quarter of the year and “weaker than expected” growth in the second half.

Financial markets had been finely balanced in the run-up to the decision, with the City predicting a near-even chance of a quarter-point rise, reflecting the difficulty for the Bank in steering through a period of high inflation and deteriorating economic growth.

The Bank, the chancellor and City investors were wrongfooted by the unexpected fall in UK inflation in August, to 6.7%, while separate figures showed a cooling jobs market and weaker levels of economic activity.

Central banks around the world are approaching the end of the rate-hiking cycle, which started after the inflation shock triggered by the Covid pandemic and Russia’s war in Ukraine. The US Federal Reserve left borrowing costs unchanged on Wednesday, while the European Central Bank raised interest rates last week in a move many economists said could be its final increase.

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Highlighting divisions within the MPC, the Bank’s outgoing deputy governor Jon Cunliffe broke ranks to join three of the independent economists on the nine-strong panel in calling for a further quarter-point rate rise. His decision is considered unusual because the five Bank insiders on the MPC typically move as a bloc.

Cunliffe, who will leave the committee after completing his final term at the Bank this autumn, was joined in the minority by the independent economists Megan Greene, Jonathan Haskel and Catherine Mann. The other external member, Swati Dhingra, voted with the majority to leave rates on hold.

The decision to leave rates unchanged will come as a rare piece of welcome economic news for Rishi Sunak as the prime minister comes under fire over his plans to water down the government’s net zero promises.

However, millions of mortgage holders are yet to refinance from cheaper deals agreed before the Bank started raising borrowing costs, a ticking timebomb for households in the run-up to the next election.

Rachel Reeves, the shadow chancellor, said: “Households coming off fixed rate mortgages will be paying an average of £220 more a month and inflation remains high because of the Conservatives’ disastrous mini-budget.”

ALSO READ-Bank of England increases key interest rate to 15-year high  

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Swedish central bank raises key interest rate, signals further tightening

Inflation in the country stood at 9.7 per cent in May, according to Statistics Sweden…reports Asian Lite News

Sweden’s central bank announced a 25 basis point hike of its benchmark interest rate to 3.75 per cent — a level not seen since 2008.

This is the seventh consecutive rate hike by the Riksbank since May last year, reports Xinhua news agency.

Before this round of interest rate hikes, the policy rate in Sweden had been at zero or sub-zero for more than seven years.

Another increase is also likely to come before the end of the year, the Riksbank said in a statement on Thursday.

Inflation in the country stood at 9.7 per cent in May, according to Statistics Sweden.

Although it is falling, the rate is still “far too high”, the bank said.

The unexpected rapid rise in service prices, which may reflect demand pressures in parts of the Swedish economy, is the main reason for the high inflation.

The weak krona is also contributing to keeping inflation up, the bank added.

“The high inflation is being felt by households with small margins in particular, but is also problematic for the economy as a whole. It is therefore of the utmost importance that inflation falls back to the target of 2 per cent within a reasonable period of time,” the Riksbank said in the statement.

In the bank’s latest forecast, inflation is expected to remain substantially above the target, at 8.9 per cent this year and 4.3 per cent in 2024, before reaching 2.3 per cent in 2025 and 1.9 per cent in 2026.

The Swedish economy is expected to shrink by 0.5 per cent this year, stay level in 2024, and only grow slightly by 1.8 per cent in 2025.

ALSO READ-Sweden boosts defense spending to meet NATO target

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Bank of England hikes borrowing rates

The size of the bank’s 13th hike in a row was a surprise after most economists had predicted a smaller quarter-point increase…reports Asian Lite News

Fears that the British economy is heading for recession have mounted sharply after the Bank of England raised borrowing costs by more than anticipated, seeking to combat stubbornly high inflation with a hike that will hit borrowers hard, particularly homeowners who have to refinance in the coming months.

On a busy day for central bank action in Europe, the Bank of England said on Thursday that its nine-member Monetary Policy Committee decided to lift its main interest rate by half a percentage point to a new 15-year high of 5 percent. All but two members of the panel backed the half-point increase.

The size of the bank’s 13th hike in a row was a surprise after most economists had predicted a smaller quarter-point increase. Some even called it a panic move, given that there had been hopes as recently as last month that the bank would pause its rate-hiking cycle.

Financial markets are pricing in a potential rate peak of 6 percent, a level not hit since early 2000, after Governor Andrew Bailey warned of further increases if inflation fails to show clear signs of slowing.

“We are committed to returning inflation to the 2 percent target and will make the decisions necessary to achieve that,” he said.

Clearly, the bank has been spooked by inflation failing to ease as fast as predicted from October’s peak of 11.1 percent. Figures on Wednesday showed UK inflation unexpectedly holding steady at 8.7 percent.

Inflation has proven stickier in the UK than in other major economies with many blaming the bank’s slow start at raising borrowing rates and Britain’s departure from the European Union, which has added to import costs.

With wages rising fast, it is increasingly clear that high inflation has become embedded in the economy.

“We know this is hard — many people with mortgages or loans will be understandably worried about what this means for them,” Bailey said. “But if we don’t raise rates now, it could be worse later.”

Across Europe, other central banks also decided to push up borrowing costs on Thursday, including the Swiss National Bank with a quarter-point hike and Norway with a half-point increase. Turkey nearly doubled its benchmark rate in a signal of a shift from unorthodox economic policies.

Banks around the world, from the US Federal Reserve to the European Central Bank, have rapidly raised interest rates over the past couple of years to bring down inflation first stoked by supply chain backups tied to the rebound from the pandemic and then Russia’s invasion of Ukraine, which caused energy and food costs to surge.

The Fed decided last week to keep rates unchanged but indicated the possibility of more hikes this year.

Higher interest rates help lower inflation by making it more expensive for individuals and businesses to borrow, meaning they potentially spend less, reducing demand and pressure on prices.

The UK rate hike will pile further pressure on borrowers, particularly the 1.4 million or so households that will have to refinance their mortgages over the rest of the year. Those on variable mortgages, which track the bank’s base rate, will face an imminent increase in their repayments. Renters, too, are facing increases.

“The rise in interest rates to 5 percent will push millions of households with mortgages towards the brink of insolvency,” warned Max Mosley, an economist at the National Institute for Economic and Social Research.

The increases will clearly come at a cost, and there are concerns over the outlook for the British economy, which has so far avoided falling into recession even as Europe’s economy contracted slightly in the six months ending in March.

“It is increasingly difficult to see how the UK avoids a recession as part of the process of bringing inflation down,” said Luke Bartholomew, senior economist at asset management firm Abrdn. “And today’s large rate increase will probably be seen in retrospect as an important milestone towards that recession.”

In a recession, unemployment would inevitably increase, and home repossessions would become more prevalent — hardly the backdrop the Conservative government wants ahead of a likely general election next year. It is trailing the main opposition Labour Party in the polls.

Prime Minister Rishi Sunak, who has made halving inflation this year to about 5 percent his main priority, said he understood the “anxiety” people are feeling.

“I’m here to tell you that I am totally, 100 percent on it, and it’s going to be OK, and we are going to get through this,” he told workers at a warehouse in Dartford, just east of London.

Not everyone is convinced the bank is doing the right thing, arguing that previous interest rate increases have yet to work their way through the economy. There’s always a lag.

“Pushing interest rates so high that the economy is driven into recession will only make the current crisis worse, costing people their jobs and their homes,” said Paul Nowak, general secretary of the umbrella Trades Union Congress.

ALSO READ-Interest rate rise expected after inflation shock in UK


Samsung cuts pay hike

The announcement was said to be made internally earlier in the day, according to the sources, reports Asian Lite News

Samsung Electronics’s management and its workers have agreed to an average 4.1 per cent pay raise for the year, while effectively freezing raises for its board members due to poor performance amid a worsening chip glut and a global slowdown.

The pay raise is lower than the 9 per cent wage hike of the previous year, which was the highest in a decade, and lower than the initial demand from the workers.

The world’s largest memory chip and smartphone maker reached an agreement with representatives of its employees over wages and other labour policies, including extending shortened working hours for pregnant employees.

The announcement was said to be made internally earlier in the day, according to the sources, reports Yonhap News Agency.

Both parties hammered out the compromise, taking into consideration the external headwinds that caused the quarterly profit to plunge nearly 96 per cent in the first quarter.

The management decided to apply last year’s pay policy for board members, effectively putting off its initial plan to raise the pay ceiling for board members by 17 per cent.

Separately, Samsung’s unionised workers, which accounted for around 4 per cent of the total 110,000 workers, have engaged in wage negotiations with the management since late last year.

The two parties have so far held 10 rounds of negotiations but could not iron out differences.

Last week, Samsung said it has cut memory production in the short term, as its quarterly profit plunged significantly (likely 96 per cent) amid the chip downturn, in a sharp departure from its previous position that it would not artificially reduce output.

The world’s largest memory chip and smartphone maker estimated its January-March operating profit at 600 billion won ($454.9 million), sharply down from 14.12 trillion won a year ago.

Samsung blamed sluggish demand for tech devices, coupled with customers’ inventory adjustment, for the poor performance.

ALSO READ-Bosch buys US chipmaker TSI Semiconductors

-Top News UK News

Bank of England hikes rates

The central bank’s 11th consecutive rate hike takes benchmark borrowing costs to 4.25%, the highest since October 2008…reports Asian Lite News

The Bank of England hiked interest rates by a quarter of a percentage point Thursday, extending its long-running fight to rein in prices after a surprise increase in inflation in February.

The central bank’s 11th consecutive rate hike takes benchmark borrowing costs to 4.25%, the highest since October 2008. Like other major central banks, it has pushed ahead with raising rates despite recent turmoil in the banking sector.

The Bank of England said in a statement that since its last meeting in February, inflation “had surprised significantly on the upside and the near-term path of GDP was likely to be somewhat stronger than expected previously.”

Employment growth had also been more robust than anticipated and household disposable income was now expected to remain flat in the near term — rather than falling significantly — after the government extended its support for energy bills, the bank added.

It said that it would raise rates further “if there were to be evidence of more persistent [price] pressures.”

UK consumer prices surged by 10.4% in February compared with a year ago, the first rise in inflation in four months, as food prices soared and the cost of visiting restaurants and hotels increased. The Office for National Statistics noted particular price rises for some salad and vegetable items, partly caused by shortages, which led to rationing by supermarkets.

In a letter Thursday to finance minister Jeremy Hunt, Bank of England governor Andrew Bailey said inflation had “increasingly been driven also by factors that are more domestic,” in particular labor shortages.

However, wage growth, which remains below inflation, was expected to fall back “more quickly” than projected in February, Bailey added.

The Office for Budget Responsibility, the government’s fiscal watchdog, expects inflation to fall rapidly, reaching around 3% in the final quarter of this year, helped by falling energy prices and further easing of supply bottlenecks. The Bank of England targets an inflation rate of 2%.

The turmoil in the banking sector has increased uncertainty over the inflation outlook, because banks are now widely expected to tighten lending criteria, which would weigh on consumer demand and business investment, and so alleviate price pressures.

The Bank of England said it would “continue to monitor closely” any effects from the banking crisis on credit conditions faced by households and firms. It added that the UK banking system “remains resilient.”

The Bank of England’s job is made even more complicated by the fact that the UK economy is expected to shrink this year.

People out and about in the rain along the market area on Watney Street in Shadwell on 8th March 2023 in London, United Kingdom.

The British Chambers of Commerce said Thursday’s hike, while necessary to fight inflation, would pile further pressure on small businesses, which are facing a double-whammy from rising prices and rising borrowing costs.

“The only way out of this vicious cycle is through taking action to boost economic growth, through investment in infrastructure, skills, and global trade,” said David Bharier, head of research at the business group.

Some economists said the central bank might even be mulling rate cuts by the end of the year.

“With a flagging economy and lower energy costs still set to drive a significant fall in inflation this year, despite February’s surprise increase, the case for cutting interest rates is only likely to grow,” commented Suren Thiru, economics director at the Institute of Chartered Accountants in England and Wales.

The Bank of England has now raised interest rates at each of its rate-setting meetings since December 2021.

The European Central Bank, the US Federal Reserve and the Swiss National Bank have also raised interest rates in the past week.

Luke Bartholomew, senior economist at the U.K.-based fund manager abrdn, said he expects Thursday’s move to be the last rate increase of this cycle because the impact of past hikes and recent market volatility will begin to slow economic growth.

“However, there is still a significant risk of one final rate increase if inflation proves to be a bit stickier in coming months,” he said.

The Bank of England will have to make that decision in an even more complex environment than other central bankers.

A high level of dependence on natural gas and limited storage capacity left British energy users particularly exposed to the surge in global gas prices following Russia’s invasion of Ukraine. Britain also is still adjusting to the impact of leaving the European Union, which reduced trade with its neighbors, curtailed the supply of cheap labor and slowed economic growth.

Treasury chief Jeremy Hunt applauded the central bank’s decision.

“With rising prices strangling growth and eroding family budgets, the sooner we grip inflation the better for everyone,” he said.

ALSO READ-Bank of England consider plans for a digital pound

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Cool hiking destinations for your new year trip plan

The Tadiandamol walk is situated in Karnataka’s Kodagu district, which is well known for producing India’s best coffee and is full of lush green landscapes…reports Asian Lite News

Mountaineering and hiking are becoming into some of the most fascinating adventure sports, and many individuals have started choosing them recently. The lovely pathways make it easier to slip away into nature and re-establish a connection between the mind, body and spirit.

“India has seen immense growth in the number of people interested in hiking activities. The country’s rich landscape has multiple locations packed with some of the most mesmerising mountain ranges where aspiring adventurers and travellers can go for a hike. Hikers/mountaineers can opt for these based on their experience and slowly increase the level of difficulty,” shares ace mountaineer and fitness coach, Gayatri Mohanty.

For those who are keen on planning their next hiking trail, here’s a list of the must-visit mountains from beginner’s level to advanced.

Triund trek, Himachal Pradesh

Distance – 11.5 km/7 miles round trip

Time – 6-7 hours

Level – Easy and perfect for beginners

The tranquil Triund Trek, one of the most well-liked treks for novices, offers a stunning view of the majestic Dhauladhar peaks on one side and the stunning Kangra valley on the other. This climb, which is only 18 kilometre from Dharamsala, offers breathtaking panoramic vistas all day long, including stunning sunsets. In the Kangra valley below, one can also take pleasure in stargazing.

March to June is the best time to visit as the weather has a balance and is cosy and comfortable. The hike is not available in January and February because of extreme snowy conditions. The path begins with Galu Temple in Dharamkot or you can also begin from McLeodganj. Although this is only a day trek, tents, sleeping bags and food are available at the camp summit so one need not carry extra luggage with them.

char dham yatra

Tadiandamol trek, Karnataka

Distance – 12km/7.5 miles round trip

Time – 7-9 hours

Level – Easy and perfect for beginners

The Tadiandamol walk is situated in Karnataka’s Kodagu district, which is well known for producing India’s best coffee and is full of lush green landscapes. This hike gives breathtaking views of misty green hills painted by cloud swirls. Three hours from Mysuru, at Nalakunad Palace, one can start their walk. Travellers can see Brahmagiri Wildlife Sanctuary along the way, a protected region with magnificent meadows, tinkling streams, and stunted tropical shola woods. It is easy to hike here without a guide from September to March, which is the optimum time to do it.

Nongriat Trek, Meghalaya

Distance – 7km/4.3 miles round trip

Time – 1 day

Level – Moderate

Nongriat Trek is the ideal climb to see the local indigenous culture because it is situated in the heart of Meghalaya’s vibrant local population. The “suspended live root bridges” constructed by the Khasi villagers between secret valleys, natural ponds and waterfalls serve as a reminder of their great old engineering and draw numerous tourists all year long. The trail begins in the community of Tyrna, close to Cherrapunji, which is also recognised as the wettest place on earth by the Guinness Book of Records.

As it rains frequently in this area, one should bring raincoats, jackets, waterproof shoes and a bag cover. Also prevalent here are a lot of moths, insects and butterflies, so bring appropriate clothing.

Deoria Tal and Chandrashila Trek, Uttarakhand

Distance – 18-20km/11-12 miles round trip

Time – 2 days

Level – Moderate

The Deoria Tal and Chandrashila Trek, often known as “the bathing spot of the gods,” is the greatest climb for viewing the winter landscape. The Deoria Tal path begins near the town of Sari, and it is accessible all year round. The trail is well-maintained and is straightforward to follow without a map. It is surrounded by rhododendron trees that bloom with vivid pink blossoms in the spring.

On the other hand, Chandrashila is the ridge that rises above Tungnath Mandir and is just 20 kilometre from Sari to the tiny settlement of Chopta, which also serves as the starting point for the pilgrimage trip to the tallest Shiva temple in the world. Look out for the vibrant Himalayan Monal pheasant, Uttarakhand’s state bird, as you make your journey back down.

Top 5 hiking destinations in India for your New Year trip.(photo:IANSLIFE)

Goecha La Trek, Sikkim

Distance – 91km/57 miles

Time – 10 days

Level – Difficult

One of the best high-altitude excursions for explorers is the Goecha La Trek, which must be reserved through a trekking organisation. The old Buddhist kingdom of Sikkim and the breathtaking views, which include expansive panoramas of northeast India, are the main highlights. The trek starts out easy, but as you gain altitude, it gets harder and harder, therefore experienced hikers are required. The greatest seasons to visit are in the spring and fall in India. If you’re lucky, you might see red pandas, musk deer, blue sheep, or blood pheasants on high-altitude portions of the trail while hiking.

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-Top News UK News

Bank of England makes historic rate hike

The BoE said the economy had shrunk since the third quarter, entering a technical recession that is forecast to last until the first half of 2024…reports Asian Lite News

The central bank may opt to raise rates by as much as 1 percentage point to show it is serious about tackling inflation

The Bank of England has announced its biggest interest rate increase in three decades as it tries to beat back stubbornly high inflation fuelled by Russia’s invasion of Ukraine and the disastrous economic policies of former Prime Minister Liz Truss.

The bank boosted its key rate by three-quarters of a percentage point on November 3, to 3%, after consumer price inflation returned to a 40-year high in September.

The aggressive move to prevent inflation from becoming embedded in the economy was in line with market expectations after a more cautious half-point increase six weeks ago.

The interest rate decision is the first since Truss’ government announced 45 billion pounds of unfunded tax cuts that sparked turmoil on financial markets, pushed up mortgage costs and forced Truss from office after just six weeks.

Her successor, Rishi Sunak, has warned of spending cuts and tax increases as he seeks to undo the damage and show that Britain is committed to paying its bills.

The rate increase is the Bank of England’s eighth in a row and biggest since 1992. It comes after the US Federal Reserve on November 2 announced a fourth consecutive three-quarter point jump as central banks worldwide tackle inflation that is eroding living standards and slowing economic growth.

Recession fears

Minutes of its meeting warned of a “challenging outlook for the UK economy” that was “expected to be in recession for a prolonged period”, dealing a blow to Britain’s troubled government.

The BoE said the economy had shrunk since the third quarter, entering a technical recession that is forecast to last until the first half of 2024.

The pound tumbled two percent against the dollar on expectations of a long-lasting recession.

“A typical textbook trade is out of the window because currencies usually move higher when a central bank increases rates,” noted Naeem Aslam, chief market analyst at Avatrade.

“Tough times are ahead, and we are going to see the economy, markets, and the currency tanking in the coming months.”

London’s FTSE 100 shares index fared better, losing about half-a-percent.

Cost-of-living crisis

The BoE rate increase is set to worsen a cost-of-living crisis for millions of Britons as hikes by central banks see retail lenders push up interest rates on their own loans.

“The central bank has had the unenviable job of fighting soaring inflation amid enormous economic and political uncertainty,” said Craig Erlam, analyst at trading platform OANDA.

Repayments on UK mortgages have surged in recent weeks also after the debt-fuelled budget of previous British prime minister Liz Truss spooked markets, forcing her to resign and triggering emergency buying of UK government bonds by the BoE.

Her successor Rishi Sunak has attempted to bring calm to markets by hinting at tax rises in a fresh budget on November 17, even if such a move further harms Britain’s economy.

“I think everyone knows we do face a challenging economic outlook and difficult decisions will need to be made,” Sunak, a former UK finance minister, told parliament on Wednesday.

British annual inflation stands at 10.1 percent, the highest level in 40 years.

As the Covid-19 pandemic began in early 2020, the BoE slashed its key interest rate to a record-low 0.1 percent and also pumped massive sums of new cash into the economy.

The Bank of England started raising rates last December, while Thursday’s hike was the eighth increase in a row.

“Importantly, most of the tightening in policy over the past year was yet to feed through to the real economy,” said the BoE minutes.

ALSO READ-Bank of England hikes key rates

-Top News UK News

Britain braces for biggest hike in interest rates in 27 years

Former Chancellor of the Exchequer Rishi Sunak says that would fan inflation, forcing interest rates to go even higher…reports Asian Lite News

The Bank of England is expected to step up its fight against inflation in the coming week, joining some 70 other institutions around the world in delivering a half-point increase in borrowing costs.

The move anticipated by most analysts and investors would mark the UK’s biggest increase in interest rates in 27 years and accelerate a historic pivot away from the era of cheap money. Governor Andrew Bailey has suggested the hike won’t be the last, saying policy makers are prepared to act “forcefully,” if necessary, to rein in inflation.

The BOE was first among major-economy central banks to raise rates after the pandemic, but is struggling to keep up with the US Federal Reserve, which has delivered back-to-back 75 basis-point hikes. Key rates now stand at 1.25 per cent for the BOE, 2.5 per cent for the Fed, and zero at the European Central Bank, Bloomberg reported.

The UK central bank’s move will add to the pressure on contenders seeking to replace Boris Johnson as prime minister. Foreign Secretary Liz Truss has promised tax cuts if she wins the race to lead the ruling Conservative Party.

Former Chancellor of the Exchequer Rishi Sunak says that would fan inflation, forcing interest rates to go even higher.

With the BOE expecting prices to leap as much as 11% this year, consumers are feeling the sharpest squeeze in living standards in at least two decades and are calling for aid from the government. Even so, a half-point rate rise is no longer a sure thing. Risks of a recession prompted investors to pare back bets on a big hike on Aug. 4. They now see a 70 per cent chance of a move that size, down from near certainty just a week ago.

In the run-up to the BOE decision, manufacturing PMIs Monday and UK house prices on Tuesday are set to show a slowdown in the economy.

In Germany, which just reported a surprise stagnation for the second quarter, June factory orders and industrial production readings toward the end of the week are predicted to confirm that Europe’s biggest economy is on a weak footing.

On Thursday, the Czech central bank will decide on rates for the first time since the reconstitution of its policy-making board, with more dovish members replacing people who backed an unprecedented wave of nine interest-rate hikes since last year.

ALSO READ-Britain will have slowest growth in G-7, says IMF

India News Travel

Fuel prices hiked again for fourth time in week

In New Delhi, the price of petrol and diesel were increased again by 80 paise per litre…reports Asian Lite News

State-owned oil marketing companies (OMC) on Saturday raised petrol and diesel prices for the fourth time this week.

These prices were revised for the very first time on Tuesday, March 22, after a gap of more than four months.

Accordingly, the increase in selling price which includes state levies, central excise and cess amongst others, came days after crude oil prices saw an astronomical rise due to the ongoing Russia-Ukraine war.

In New Delhi, the price of petrol and diesel were increased again by 80 paise per litre.

As per pump prices, petrol now costs Rs 98.61 per litre and diesel Rs 89.87 per litre in the national capital.

On Friday, petrol prices were increased to Rs 97.81 per litre and diesel Rs 89.07 per litre in Delhi.

In the financial capital Mumbai, prices were hiked to Rs 113.35 per litre for petrol and diesel to Rs 97.55 per litre.

Besides, the prices of both the transport fuels were raised in Kolkata. The petrol prices rose to Rs 108.01 and diesel to Rs 93.01 per litre.

In Chennai too, they were increased. Petrol there now costs Rs 104.43 and diesel Rs 94.47 per litre.

Till Tuesday, fuel prices were steady since November 2021 when the Centre reduced excise duty on petrol and diesel by Rs 5 and Rs 10 per litre, respectively.

The OMCs revised the transportation fuel cost based on various factors such as rupee to US dollar exchange rate, cost of crude oil and demand of fuel amongst others.

Resultantly, the final price includes excise duty, value-added tax and dealer’s commission.

It was widely expected that the OMCs will revise the current prices due to high crude oil costs.

Lately, crude oil prices have been volatile surging by nearly 35-40 per cent on fear of tight supplies.

Furthermore, it is feared that current sanctions against Russia will curtail more global supplies and stifle growth.

The crude oil price range is a cause of concern for India as it may ultimately add Rs 15-Rs 25 in petrol and diesel selling prices.

At present, India imports nearly 85 per cent of its crude oil requirements.

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PSU non-life insurers not to hike staff health insurance premium

The companies in question are National Insurance Company, New India Assurance Company, Oriental Insurance Company, United India Insurance and General Insurance Corporation of India…reports Venkatachari Jagannathan

With wage revision not happening for the employees of government owned non-life insurers, the companies seem to have decided to provide a relief by not hiking the premium rates for the staff Group Mediclaim Policy for 2022-23, said a senior industry official.

The Group Mediclaim Policy for the staff and retirees of the five government owned non-life insurers expires on March 31 and has to be renewed for a year from April 1.

Similarly for the retirees, the companies not only retained the old premium charged but also decided not to recover the 12.75 per cent premium that was due on their Group Mediclaim Premium.

The companies in question are National Insurance Company, New India Assurance Company, Oriental Insurance Company, United India Insurance and General Insurance Corporation of India.

“Charity should begin at home. At a time when the health insurance business is unprofitable and the premium for the general public is revised upwards regularly, employees and retirees of government owned insurers should pay adequate premium for the risk covered,” the senior industry official told on the condition of anonymity.

“In the case of retirees, the amount foregone is paltry which they can very well pay up. At the top most bracket, say for Rs.50 lakh sum insured the 12.75 per cent premium amount foregone will be about Rs 4,000. It will be much lower for those who have opted lower sum insured,” the official added.

According to him, the policy is underwritten by insurers among themselves.

In a circular issued, the United India Insurance said The General Insurers’ (Public Sector) Association of India (GIPSA) board at its meeting held on 27.1.2022 considered the claims data for 2020-21 (Covid-19 year) and for the first three quarters of 2021-22 (Covid-19 second wave year) for the Group Mediclaim Policy of the staff and the retirees of the five insurers.

The GIPSA has decided that the companies shall renew the Group Mediclaim Policies for their staff and retirees at the premium rate that was charged in 2020-21.

Based on the claims experience, the premium on the Group Mediclaim Policy for staff and retirees were loaded by 47.75 per cent in 2020-21 and was continued in 2021-22.

It was decided in 2020-21, the 47.75 per cent premium loading for the retirees to be spread over three years – 25 per cent in 2020-21, 10 per cent in 2021-22 and 12.75 per cent in 2022-23.

The GIPSA board has advised the insurers not to recover the 12.75 per cent premium due from the retirees while renewing their Group Mediclaim premium.

According to the industry expert, instead of foregoing the 12.75 per cent premium, the correct way is for the companies to pay up the shortfall.

It may be recalled, in 2021 the GIPSA had allowed the reimbursement of the cost of one pulse oximeter per family under the group mediclaim insurance policy for the staff of five insurers.

According to GIPSA, the reimbursement of pulse oximeter cost is capped at Rs 2,000.

It should be noted that, for the general public policyholders, the cost of pulse oximeter is not reimbursable.

Physicians heal thyself is passe. Insurers reimburse themselves is the new phrase.

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