FINANCIAL CHRONICLE™
Dear Reader,

Registration with the Sri Lanka FINANCIAL CHRONICLE™️ would enable you to enjoy an array of other services such as Member Rankings, User Groups, Own Posts & Profile, Exclusive Research, Live Chat Box etc..

All information contained in this forum is subject to Disclaimer Notice published.


Thank You
FINANCIAL CHRONICLE™️
www.srilankachronicle.com


Join the forum, it's quick and easy

FINANCIAL CHRONICLE™
Dear Reader,

Registration with the Sri Lanka FINANCIAL CHRONICLE™️ would enable you to enjoy an array of other services such as Member Rankings, User Groups, Own Posts & Profile, Exclusive Research, Live Chat Box etc..

All information contained in this forum is subject to Disclaimer Notice published.


Thank You
FINANCIAL CHRONICLE™️
www.srilankachronicle.com
FINANCIAL CHRONICLE™
Would you like to react to this message? Create an account in a few clicks or log in to continue.
FINANCIAL CHRONICLE™

Encyclopedia of Latest news, reviews, discussions and analysis of stock market and investment opportunities in Sri Lanka

AI CHAT

Latest topics

» ASSOCIATED MOTOR FINANCE COMPANY PLC (AMF.N0000)
by Equity Win Today at 9:55 am

» Sri Lanka: Financial Sector Unsoundness Indicators - Q2 of 2023
by Hawk Eye Yesterday at 12:13 pm

» Growing interest for Port City Colombo from potential investors
by Shiranli Tue Sep 26, 2023 12:13 pm

» PROPERTY BUBBLE IS IMMINENT !
by sandamal Tue Sep 26, 2023 12:08 pm

» HOTEL AND TRAVEL SECTOR
by GOSL Tue Sep 26, 2023 10:35 am

» LOLC Group: Ready to be the Market Leaders!
by D.G.Dayaratne Mon Sep 25, 2023 6:35 pm

» TRADING SUSPENSION of NHL
by sandamal Mon Sep 25, 2023 11:10 am

» PRIME LANDS RESIDENCIES PLC (PLR.N0000)
by ashan silva Mon Sep 25, 2023 10:04 am

» LCBF Future
by ErangaDS Sun Sep 24, 2023 9:08 pm

» BUY EAST WEST
by skyfall Fri Sep 22, 2023 12:32 pm

» LAND AND PROPERTY SECTOR
by samansilva Fri Sep 22, 2023 1:36 am

» Prime Land Residencies (PLR. N0000) record phenomenal profits in 2Q2022
by rukshan1234 Thu Sep 21, 2023 10:57 pm

» PACK.NOOO will acquire another corrugated company Pending news
by atdeane Thu Sep 21, 2023 12:44 pm

» Sri Lanka: Movement of Treasury Bill Rates during 2023
by God Father Tue Sep 19, 2023 3:07 pm

» Good news for JAT Holdings- Agreement with China Harbour Engineering Company Ltd
by Anushka Perz Mon Sep 18, 2023 10:09 am

» එන සතියේ ලාභයක් ගන්න හොදයි කියලා හිතෙන කොටස් මොනවද?
by Walbaba Sun Sep 17, 2023 11:37 pm

» Sedora: The AI Assistant for the Colombo Stock Market
by Walbaba Sun Sep 17, 2023 11:31 pm

» Millennial Capital Youtube Channel
by MillennialC Sat Sep 16, 2023 9:46 pm

» EAST WEST PROPERTIES PLC
by soileconomy Sat Sep 16, 2023 7:24 am

» What is the real impact of Sri Lanka’s DDO on the EPF?
by God Father Sat Sep 16, 2023 7:19 am

LISTED COMPANIES

Submit Post
Poll

US$ EXCHANGE RATE PREDICTION 2023

Interest Rate Increases, Volatile Markets Signal Rising Financial Stability Risks Vote_lcap9%Interest Rate Increases, Volatile Markets Signal Rising Financial Stability Risks Vote_rcap 9% [ 26 ]
Interest Rate Increases, Volatile Markets Signal Rising Financial Stability Risks Vote_lcap8%Interest Rate Increases, Volatile Markets Signal Rising Financial Stability Risks Vote_rcap 8% [ 24 ]
Interest Rate Increases, Volatile Markets Signal Rising Financial Stability Risks Vote_lcap16%Interest Rate Increases, Volatile Markets Signal Rising Financial Stability Risks Vote_rcap 16% [ 47 ]
Interest Rate Increases, Volatile Markets Signal Rising Financial Stability Risks Vote_lcap18%Interest Rate Increases, Volatile Markets Signal Rising Financial Stability Risks Vote_rcap 18% [ 51 ]
Interest Rate Increases, Volatile Markets Signal Rising Financial Stability Risks Vote_lcap16%Interest Rate Increases, Volatile Markets Signal Rising Financial Stability Risks Vote_rcap 16% [ 47 ]
Interest Rate Increases, Volatile Markets Signal Rising Financial Stability Risks Vote_lcap25%Interest Rate Increases, Volatile Markets Signal Rising Financial Stability Risks Vote_rcap 25% [ 72 ]
Interest Rate Increases, Volatile Markets Signal Rising Financial Stability Risks Vote_lcap7%Interest Rate Increases, Volatile Markets Signal Rising Financial Stability Risks Vote_rcap 7% [ 19 ]

Total Votes : 286

ශ්‍රී ලංකා මූල්‍ය වංශකථාව - සිංහල
Submit Post


CONATCT US


Send your suggestions and comments

* - required fields

Read FINANCIAL CHRONICLE™ Disclaimer



EXPERT CHRONICLE™

ECONOMIC CHRONICLE

GROSS DOMESTIC PRODUCT (GDP)



CHRONICLE™ YouTube


You are not connected. Please login or register

Interest Rate Increases, Volatile Markets Signal Rising Financial Stability Risks

2 posters

Go down  Message [Page 1 of 1]

CHRONICLE™

CHRONICLE™
Admin

Financial conditions have tightened as central banks continue to hike interest rates. Amid the highly uncertain global environment risks to financial stability have increased substantially.
Major issues facing financial systems include inflation at multi-decade highs, continuing deterioration of the economic outlooks in many regions, and persistent geopolitical risks, as we discuss in our latest GlobalFinancial Stability Report.
To avoid inflationary pressures from becoming entrenched, central banks confronting stubbornly high inflation have had to accelerate monetary policy tightening. What’s more, those in advanced and emerging economies alike also face magnified risks and vulnerabilities across different sectors and regions.Interest Rate Increases, Volatile Markets Signal Rising Financial Stability Risks Gfsr-blog-chart-1
Financial vulnerabilities are elevated for governments, many with mounting debt, as well as nonbank financial institutions such as insurers, pension funds, hedge funds and mutual funds. Rising rates have added to stresses for entities with stretched balance sheets.
At the same time, the ease and speed with which assets can be traded at a given price has deteriorated across some key asset classes due to volatile interest rates and asset prices. This poor market liquidity, together with pre-existing vulnerabilities, could amplify any rapid, disorderly repricing of risk, were it to occur in the coming months.
Global markets are showing strains as investors have recently become more risk-averse amid heightened economic and policy uncertainty. Financial asset prices have fallen as monetary policy has tightened, the economic outlook has deteriorated, recession fears have grown, borrowing in hard currency has become more expensive, and stress in some nonbank financial institutions has accelerated. Bond yields are rising broadly across credit ratings, with borrowing costs for many countries and companies already rising to the highest levels in a decade or more.
Property concerns
The faltering property sector in many countries raises concerns about risks that could broaden and spill over into banks and the macroeconomy. Risks to housing markets are growing because of rising mortgage rates and tightening lending standards, with many more potential borrowers now being squeezed out of markets. Stretched housing valuations could adjust sharply in some market segments.
Emerging markets are confronting a multitude of risks, including high external borrowing costs, stubbornly high inflation and volatile commodity markets. They also face heightened uncertainty about the global economy, and policy tightening in advanced economies.
Strains are particularly severe in frontier markets —generally smaller developing economies—where challenges are driven by a combination of tightening financial conditions, deteriorating fundamentals, and high exposure to commodity price volatility.
Investors have so far continued to differentiate across emerging economies. While many frontier markets are at risk of sovereign default, many of the largest emerging markets are more resilient to external vulnerabilities to date. Having said that, after the stabilization of outflows in the first half of the year, foreign investors are again pulling back.Interest Rate Increases, Volatile Markets Signal Rising Financial Stability Risks Gfsr-blog-chart-2
Emerging and frontier market bond issuance in US dollars and other major currencies has slowed to the weakest pace since 2015. Without improved access to foreign funding, many frontier market issuers will have to seek alternative sources and/or debt reprofiling and restructurings.
The global banking sector has been bolstered by high levels of capital and ample liquidity buffers. However, the IMF’s Global Bank Stress Test warns these buffers may not be enough for some banks. In the event a sharp tightening of financial conditions causes a global recession next year amid high inflation, 29 percent of emerging-market banks (by assets) would breach capital requirements. Most banks in advanced economies would fare much better, the stress test indicates.Interest Rate Increases, Volatile Markets Signal Rising Financial Stability Risks Gfsr-blog-chart-3
The challenging macroeconomic environment is also putting pressure on the global corporate sector. Credit spreads have widened substantially, and high costs are eroding corporate profits. For small firms, bankruptcies have already started to increase because of higher borrowing costs and diminished fiscal support.
Policy recommendations
Central banks must act resolutely to bring inflation back to target and avoid a de-anchoring of inflation expectations, which would damage their credibility. Clear communication about policy decisions, commitment to price stability, and the need for further tightening will be crucial to preserve credibility and avoid market volatility. 
Exchange rate flexibility helps countries adjust to the differential pace of monetary policy tightening across countries. In cases where exchange rate movements impede the central bank’s monetary transmission mechanism and/or generate broader financial stability risks, foreign exchange intervention can be deployed. Such interventions should be part of an integrated approach to addressing vulnerabilities as laid out in the IMF’s Integrated Policy Framework .
Emerging and frontier markets should reduce debt risk through early engagement with creditors, multilateral cooperation, and international support. For those in distress, bilateral and private sector creditors should coordinate on preemptive restructuring to avoid costly defaults and prolonged loss of market access. Where applicable, the Group of Twenty Common Framework should be used.
Policymakers face an unusually challenging financial stability environment. Though no globally systemic event has materialized so far, they should contain further buildup of vulnerabilities by adjusting selected macroprudential tools to tackle any pockets of risk. In this highly uncertain environment, striking a balance between containing these potential threats and avoiding a disorderly tightening of financial conditions will be critical.
—This blog is based on Chapter 1 of the October 2022 Global Financial Stability Report, “Financial Stability in the New High-Inflation Environment.”

https://www.srilankachronicle.com

target1


Manager - Equity Analytics
Manager - Equity Analytics

The best answer for high rates is find a home in cash rich companies.

https://www.fidelity.co.uk/markets-insights/investing-ideas/shares/the-stocks-to-watch-if-interest-rates-rise-again/

Back to top  Message [Page 1 of 1]

Permissions in this forum:
You cannot reply to topics in this forum