Headlines

Pakistan’s central bank lowered its benchmark rate by a bigger margin than expected, the first reduction in four years, after consumer prices eased in the South Asian nation, Bloomberg News reported. The State Bank of Pakistan reduced the target rate by 150 basis points to 20.50%, compared to a median estimate for a 100 basis point cut. Only two economists predicted the decision. “The committee, on balance, viewed that it is now an appropriate time to reduce the policy rate,” the central bank said in a statement.

China's efforts to clear massive inventory by turning unsold homes into affordable housing are unlikely to help cash-strapped developers due to the programme's limited size and potentially low prices, analysts and developers say, Reuters reported. As part of a support package for the crisis-hit property sector, Beijing announced last month a plan for a 300 billion yuan ($41 billion) lending facility, which could result in 500 billion worth of bank financing for local state-owned enterprises (SOEs) to purchase completed and unsold homes.

Egyptian inflation decelerated to the slowest pace in a year and a half, even after a steep currency devaluation and a historic move to raise the cost of subsidized bread, Bloomberg News reported. Consumer prices in urban parts of the North African country grew an annual 28.1% in May, compared with 32.5% the previous month, state statistics agency CAPMAS said Monday. That was lower than forecast by economists at Goldman Sachs Group Inc., EFG Hermes and Naeem Brokerage.

Citigroup Inc., DBS Group Holdings Ltd. and other banks caught up in Singapore’s biggest money-laundering scandal are ramping up scrutiny of their wealthy customers and potential clients to avoid exposure to illicit flows, Bloomberg News reported. Private bankers at several institutions are also receiving additional training to help them spot tricks used by criminals to mask their backgrounds and sources of funds, said the people, who asked not to be identified discussing private matters.

The two-decade run of low levels of corporate defaults is over, with the jump in interest rates set to increase the number of borrowers failing to repay debts, according to analysts at Deutsche Bank AG, Bloomberg News reported. Going forward, default rates will rise to higher levels, analysts at the German lender wrote in a note published Monday, even if a big surge may still be avoided.

The European Central Bank must stay cautious, and last week’s cut in borrowing costs won’t necessarily be followed by further rapid moves, according to President Christine Lagarde, Bloomberg News reported. “We’ve made the appropriate decision, but it doesn’t mean interest rates are on a linear declining path,” she said in an interview with leading European newspapers. “There might be periods where we hold rates again.” Euro-zone borrowing costs aren’t on a predetermined trajectory, the president reiterated.

Poland’s Finance Minister Andrzej Domanski expects the country will face the European Union’s procedure for its excessive deficit last year, Bloomberg News reported. Domanski told reporters on Monday he hopes the EU’s executive will be lenient in demanding budget cuts because the government needs to increase defense spending. “The procedure will be definitely launched,” he said on the sidelines of a financial congress in Sopot, northern Poland.

Britain’s next government will immediately face a funding crunch in town halls after councils warned of a £6.2 billion ($7.9 billion) hole in their budget plans over the next two years, Bloomberg News reported. The Local Government Association said council budgets will be stretched to the “limit” after many administrations ran into financial trouble in recent years.

Lenders to debt-laden Jaiprakash Associates Ltd, or Jaypee, will pursue the insolvency route against the company, putting plans to sell the company's massive debt to government-backed National Asset Reconstruction Co Ltd (NARCL) on the back burner as they hope to fetch better returns for these assets, the Economic Times of India reported. Jaypee, which owes a group of 32 creditors led by ICICI Bank nearly ₹30,000 crore, was admitted to the National Company Law Tribunal (NCLT) earlier this week after a six-year delay.

As China’s property downturn grinds into a fourth year and house prices continue their downward march, an increasing number of mortgages are slipping underwater, placing fresh financial strain on both households and banks, Bloomberg News reported. Now, with income growth slowing and job losses increasing, people are questioning whether it’s worth the struggle to pay a loan on a property that’s in negative equity. The spectre of negative equity is also concerning banks.