While the Centtal Banks' rates in U.K., U.S., Japan, E.U. remain at record lows, the BRICS countries have started to make a move in the right direction, with South Africa reducing the benchmark rate to 5 percent yesterday. It remains to be seen what India and Russia will decide in the next few weeks. At 8 percent, the repo rate is hand-tying mechanism, unlikely to stimulate growth when growth is what is needed. All other factors such as inflation, high food prices, high prices due to shortage of manufacturing will fall into line favourably once this key macro driver is at a good level. A swift reduction is what is needed to counter the slowdown; it would take the pressure out of a restrained economy.
As to the Oil price, the other key macro driver, it is slightly too high. A few days does not six months make. Brent at $107 and WTI Nymex at $91 need to be about $8-10 per barrel cheaper. With the improving weather, people could forego leisure motoring if the price remains high. For the longer term sustainability of projects in the OPEC nations, Oil simply will have to be at a lower level then currently.
It does not serve the world community to play the Iran wild card. At the minimum, the Ayatollahs there could be asked to give their written pledge to Mr Netanyahu that Iran is following a programme of alternative energy source in their nuclear facilities, and (despite the rhetoric) has no intention of attacking Israel or anyone else. Peace in the Middle East will always enable free movement of goods through there, necessary for all the economies to keep on track in the worldwide economic Recovery.
I pray for that.