Wednesday, July 1, 2015

Albania holds rate, ready to act on any Greece impact

    Albania's central bank maintained its key interest rate at 2.0 percent and said it was carefully assessing any scenario that may arise in connection with the situation in Greece and is "ready to undertake all necessary measures to comply with our objective of price stability."
    The Bank of Albania, which cut its rate by 25 basis points in January after cuts of 75 points in 2014, said the solution to the public debt crises in Greece will to a large extent determine the external economic and financial environment that it will face, and the country's economy and financial system had a low exposure to Greece and is resilient to possible shocks.
    "Nevertheless, the Supervisory Council is carefully assessing any scenario of the Greek crises, which may dictate a revision of our projections," central bank Governor Gent Sejko said.
    Albania borders Greece to the south and Macedonia to the east.
    Sejko said the current direction and intensity of the central bank's stimulus is considered adequate to comply with its inflation target but the interest rate will still be kept low "for some quarters" due to low inflationary pressures from the cyclical weakness of the economy and low global inflation.
    During this year, inflation is expected to range from 1.8 to 2.2 percent and then rise towards the central bank's target of 3.0 percent, plus/minus 1 percentage point, over the next two years.
    In May Albania's inflation rate eased to 1.8 percent from 2.3 percent in April.
    Albania's economy is expected to improve in the second half of this year and in the next two years as easy monetary policy boosts consumption and investments after a slowdown in the first quarter but economic activity is still expected to remain below potential in 2015.
    "A better capacity utilization will drive the rise in wages and employment, and the firm return of inflation to target," Sejko said. In 2014 Albania's economy grew by 1.9 percent.

Georgia raises rate 50 bps to 5.5%, sees 6.5% end-year

    Georgia's central bank raised its benchmark refinancing rate by a further 50 basis points to 5.5 percent and said it considers it necessary to raise the rate gradually to 6.5 percent by the end of the year, an increase from 5.5 percent that it forecast in May.
    The National Bank of Georgia (NBG), which has now raised its rate by 150 basis points this year, said it expects inflation to reach it's 5.0 percent target in the second half of this year.
    Georgia's inflation rate rose to 3.5 percent in May from 2.5 percent in April though the rise in inflation is being partly offset by lower fuel prices.
    But the lari's exchange rate depreciated from November last year until mid-May, putting pressure on long-term interest rates and driving up inflation expectations, the central bank said. Changes in the exchange rate have already affected demand for imports, which will help adjust the external balance.
    The lari started falling in November 2014 and hit a low of 2.36 to the U.S. dollar on May 16 before rebounding. Today the lari was trading at 2.24 to the dollar, for a 16 percent depreciation this year.
    "The domestic demand remains weak," the NBG said, with economic activity up by 2.1 percent in May.

Central Bank News Link List - July 1, 2015: Greece poses risk to UK financial system, says Bank of England

Here's today's Central Bank News' link list, click through if you missed the previous link list. The list comprises news about central banks that is not covered by Central Bank News. The list is updated during the day with the latest developments so readers don't miss any important news.

Romania holds rate on Greek uncertainty, low inflation

    Romania's central bank held its monetary policy rate steady at 1.75 percent, as expected, citing the uncertainty surrounding the situation in Greece, the country's agreements with international institutions, the divergence in monetary policy among major central banks worldwide and the expectation that inflation will be negative in the short term.
    The National Bank of Romania (NBR), which cut its rate by 350 basis points from July 2013 through May this year, added that the exchange rate of the leu had "posted relatively larger fluctuations, on the back of tensions relative to the situation in Greece and international financial market volatility."
    The leu started depreciating against the U.S. dollar in July 2014 before falling to a low of 4.23 in mid-March. Since then it has been largely stable though its exchange rate has been fluctuating. Today the leu was trading at 4.03 to the dollar, down 8 percent this year.
    Romania's inflation rate rose to 1.16 percent in May from 0.65 percent in April but the central bank said it still expects inflation to enter and remain in negative territory in the short term as the scope of a reduced VAT rate hits all food items and public food services along with a narrowing of the negative output gap and a rise in unit labour costs.
   Last month the NBR forecast inflation of around nil between June and May 2016, before returning to the bank's tolerance rate in the fourth quarter of 2016, as the VAT rate on June 1 was cut to 9 percent from 24 percent on all food items, non-alcoholic beverages and public food services.

Tuesday, June 30, 2015

Dominican Republic maintains rate, sees inflation rising

   The central bank of the Dominican Republic held its monetary policy interest rate steady at 5.00 percent, saying inflation is expected to remain below the lower limit of the target range in 2015 but then converge to the center of the range during the policy horizon.
   The Central Bank of the Dominican Republic (CRBBB) has cut its rate by 125 basis points this year and most recently in May.
    Consumer price inflation in the Dominican Republic rose slightly to 0.23 percent in May from minus 0.04 percent in April.
    The central bank targets inflation of 4.0 percent, plus/minus 1 percentage point.
    The economy of the Dominican Republic is developing in line with forecasts and the monthly indicator of economic activity (IMAE) expanded by 6.1 percent at the end of April while the annual growth of credit to the private sector expanded by around 12 percent in the June.
    Last month the central bank's governor raised his forecast for economic growth this year to around 6 percent, up from the previous forecast of 5.0-5.5 percent.

Central Bank News Link List - June 30, 2015: ECB ready to test freedom to act with new tools for Greek crises

Here's today's Central Bank News' link list, click through if you missed the previous link list. The list comprises news about central banks that is not covered by Central Bank News. The list is updated during the day with the latest developments so readers don't miss any important news.

Monday, June 29, 2015

Kyrgyzstan holds rate as external markets still uncertain

   The central bank of the Kyrgyz Republic kept its policy rate steady at 9.50 percent, saying the situation on external financial markets have remained uncertain since last month, and the key factors determining inflation and economic growth remain unchanged.
    The National Bank of the Kyrgyz Republic cut its rate by 150 basis points in May in light of the decline in inflation and a slowdown in domestic and foreign demand.
    Inflation in Kyrgyzstan slowed further in May to 6.0 percent from 7.9 percent in April for the fourth consecutive month of deceleration and as of June 19 inflation had declined further to 4.8 percent compared with 11.6 percent in January, the central bank said.
    The central bank added that high economic growth in January through May of 6.9 percent was driven by the expansion of output at the Kumtor gold mine. Excluding Komtor, Gross Domestic Product growth was 3.9 percent.
    In the first quarter of 2015, Kyrgyzstan's GDP expanded by an annual 7.0 percent.


Central Bank News Link List - June 29, 2015: ECB Coeure: ‘Grexit’ can no longer be ruled out

Here's today's Central Bank News' link list, click through if you missed the previous link list. The list comprises news about central banks that is not covered by Central Bank News. The list is updated during the day with the latest developments so readers don't miss any important news.

Angola raises rate 50 bps as inflation accelerates

    Angola's central bank raised its benchmark Basic Interest Rate (BNA) by 50 basis points to 9.75 percent, citing accelerating inflation but a slight deceleration in credit to the economy.
    The National Bank of Angola (BNA), which has raised its rate by a total of 75 basis points this year after also raising its rate in March, said inflation rose by 0.63 percentage points during May to an annual rate of 8.86 percent, the highest since October 2013.
    Preliminary data showed that credit grew by a cumulative 1.83 percent from January through May, below the 1.95 percent rise through April.
    The BNA added that the average reference rate of the kwanza depreciated by 0.91 percent from April to May, quoted at 11.84 to the U.S. dollar.
    Angola is Africa's second largest crude oil exporter and its export earnings have been hit by last year's decline in oil prices.
    It's currency, the kwanza, has been depreciating since July 2014 and on June 5 the central bank said it had devalued the kwanza by about 6 percent. On June 22 the BNA's governor was quoted as saying the central bank would implement measures to ease the shortage of U.S. dollars.
    Today the kwanza was trading at 109.97 to the dollar, down 6.5 percent since the start of the year but unchanged since June 5.
    In addition to raising the BNA rate, the central bank also raised the standing lending liquidity facility rate to 10.50 percent from 10.0 percent while the absorption rate was maintained at zero percent.

Sri Lanka holds rates, sees low inflation, stronger activity

    Sri Lanka's central bank left its benchmark policy rates unchanged, including the Standing Deposit Facility Rate at 6.0 percent and the Standing Lending Facility Rate at 7.50 percent, saying the prospect of improved growth in advanced economies along with low inflation and low market interest rates were expected to benefit domestic economic activity.
    The Central Bank of Sri Lanka, which last cut its policy rate by 50 basis points in April, added that inflation was projected to remain comfortably below 4.0 percent during the rest of the year.

    The Central Bank of Sri Lanka issued the following statement:

This week in monetary policy: Sri Lanka, Kyrgyzstan, Angola, Albania, Romania, Georgia and Sweden

    This week (June 29 through July 4) central banks from seven countries or jurisdictions are scheduled to decide on monetary policy: Sri Lanka, Kyrgyz Republic, Angola, Albania, Romania, Georgia and Sweden.
    Following table includes the name of the country, its MSCI classification, the direction of the latest decision, the date the new policy decision will be announced, the current policy rate, and the rate one year ago.
    The table is updated when the latest decisions are announced and can be accessed by clicking on This Week.

JUN 29-JUL 4, 2015:
SRI LANKA FM UNCH. 29-Jun 6.00% 6.50%
KYRGYZ REPUBLIC CUT 29-Jun 9.50% 6.00%
ANGOLA UNCH. 29-Jun 9.25% 9.25%
ALBANIA UNCH. 1-Jul 2.00% 2.50%
ROMANIA FM CUT 1-Jul 1.75% 3.50%
GEORGIA RAISE 1-Jul 5.00% 4.00%
SWEDEN DM UNCH. 2-Jul -0.25% 0.75%