Russia Hosts First BRIC Summit, India-Pakistan Meet

The world's biggest emerging market powers will seek to craft a united front on repairing the global financial system when they meet for the first formal BRIC summit on Tuesday.

Before the leaders of Brazil, Russia, India and China meet, a summit of the Shanghai Cooperation Organization (SCO) of Central Asian powers will also underline the growing international stature of China and Russia.

The four BRIC nations -- which account for 15 percent of the $60.7 trillion global economy -- will focus on ways to reshape the financial system after the economic crisis.

But immediate agreement on practical steps among the members of this loose and untested bloc appears most unlikely.

"These four countries are all quite influential in international economic development, and I think if in the meeting they raise some proposals and initiatives, that would be fair and reasonable,"  said Wu Hailong, a senior Chinese Foreign Ministry official.

"Especially, some countries have proposed establishing a super-sovereign currency, and I think their impetus is ensuring the security of each country's foreign currency reserves."

Chinese and Russian officials have in recent days played down talk of a discussion on a new supranational reserve currency to reduce dependency on the U.S. dollar.

The BRIC term was coined by Goldman Sachs economist Jim O'Neill in 2001 to describe the growing power of emerging market economies. Tuesday's summit in the Russian Urals city of Yekaterinburg marks a step towards cohesion as a group.
     
India, Pakistan

A one-on-one meeting between Indian Prime Minister Manmohan Singh and Pakistani President Asif Ali Zardari is planned on the sidelines of the SCO summit and could help break the ice between the two nuclear-armed powers.

The SCO summit is likely to produce general pledges to work together more closely for regional development and security.

Iran, while only an observer member of the SCO, has again stolen much of the attention at the SCO summit.

Doubt hangs over whether President Mahmoud Ahmadinejad will attend the SCO summit this year, defying street demonstrations that have decried his re-election last week as rigged.

He did not arrive on Monday, when the SCO opened its two-day summit, but he may arrive on Tuesday.

As part of proposals to rebuild the financial system, Russian President Dmitry Medvedev has made proposals on giving a greater role to the International Monetary Fund's Special Drawing Rights that echo ideas from Chinese central bank chief Zhou Xiaochuan.

Australia's Central Bank Sees No Pressing Need for Rate Cut

Australia's central bank saw no "pressing need" to cut interest rates at its  recent monthly policy meeting given signs of stabilization at home and abroad, though it judged there was  scope to ease further if necessary.

Minutes of its June policy meeting showed the Reserve Bank of Australia (RBA) looked for a gradual  economic expansion to get underway later in the year, supported by the lagged effect of past monetary and  fiscal easing.

"Board members did not see a pressing case for any further action at this meeting, though they viewed the  inflation outlook as affording scope for some further easing of monetary policy, if that were to be needed to  support demand at a later stage," the minutes showed.

The board thus chose to keep the official cash rate unchanged at 3.0 percent for a second month. The rate  had previously been slashed by 425 basis points over eight months. Financial markets are currently pricing in only a slight chance of any further easing, and for the first hike in rates to come within 12 months.

The minutes noted that this easing, coupled with aggressive fiscal action by the Labor government, "represented the largest macroeconomic policy stimulus over recent decades."

The full effect of this stimulus was yet to be felt, so the board judged that maintaining current rates  would be consistent with fostering economic growth and low inflation while leaving plenty of flexibility to  respond to events.

The board saw signs of stabilization in the global economy, though they felt the most likely outcome would  be for only subdued growth for the next year or two.

Board members took particular note of a strong recovery in Chinese industrial production and an  improvement in other east Asian economies, including Japan.

China has become increasingly important as a major buyer of Australian resource exports and its economic  health is considered vital to the domestic outlook.

"While some uncertainty about the durability of China's economic recovery inevitably remained, there were  reasonable grounds to expect that the Chinese economy would continue to record solid growth outcomes," the RBA  concluded.

At home, the latest economic data suggested the downturn in Australia would prove less severe than in most  other developed countries, while expanding spare capacity should lead to declining inflation.

"Recent information had not led to any downward revision to the outlook; if anything, some indicators had  been on the stronger side," the minutes showed.