Friday, January 22, 2021

Pakistan holds rate, begins to look to positive real rates

      Pakistan's central bank kept its key interest rate steady for the third time but said the domestic economic recovery had gained further traction and while its rate will remain unchanged "in the near term" it is starting to look toward reaching "mildly positive real interest rates" as the economic recovery becomes more durable and the economy returns to full capacity.
     The State Bank of Pakistan (SBP) left its monetary policy rate at 7.0 percent, unchanged since it was last cut in June 2020. 
     "Most economic activity data and indicators of consumer and business sentiment have show continued improvement," SBP said, adding there were now upside risks to its current forecast for growth in fiscal 2021, which began July 1 last year.
      As other central banks, SBP began easing its monetary policy stance sharply in March last year in response to the COVID-19 pandemic and cut it 5 times by a total 625 basis points from March to June.
     Prior to the COVID-19 crises, SBP had been on a tightening path, raising the rate 7 times and by a total of 725 basis points from May 2018 to July 2019.
     "With the inflation outlook relatively benign aside from the possibility of temporary supply-side shocks, the MPC felt that the existing accommodative stance of monetary policy remained appropriate to support the nascent recovery while keeping inflation expectations well-anchored and maintaining financial stability," SBP said.
     After contracting sharply from March to June last year, Pakistan's large-scale manufacturing sector returned to expansion in July and SBP said this recovery had strengthened in recent months, with LSM output up 7.4 percent year-on-year in October and 14.5 percent in November.
     So far in the current fiscal year, LSM has grown an annual 7.4 percent compared with a contraction of 5.3 percent in the same period last year. However, the level of manufacturing activity is still below average levels seen in FY19, pointing to continued spare capacity in the economy.
     Pakistan's inflation rate eased to 8.0 percent in December from 8.35 percent in November and SBP confirmed it still expects inflation to fall within its expected range of 7-9 percent for FY21 and trend toward its 5-7 percent target range over the medium term.
      Although utility tariff increases may cause an uptick in inflation, SBP said this was likely transient given the excess capacity in the economy and well-anchored inflation expectations.
      But amid the favorable outlook, the central bank stressed the trajectory of COVID-19 is difficult to predict given the still-elevated global cases, the emergence of new strains and uncertainties about the roll-out of vaccines worldwide.
      "In light of such Covid-related uncertainties, the MPC considered its appropriate to provide some forward guidance on monetary policy to facilitate policy predictability and decisions-making by economic agents," the bank's monetary policy committee said.
      Most major central banks, such as the U.S. Federal Reserve and the Bank of Japan, use forward guidance to signal the expected path of interest rates to help guide the financial decisions by businesses, households and financial markets. 
      Forward guidance was first used during the Global Financial Crises to calm financial markets and investors and has increasingly been adopted by central banks worldwide as part of their tool kit.
      It appears to be the first time Pakistan's central bank has adopted forward guidance.
     "In the absence of unforeseen developments, the MPC expects monetary policy settings to remain unchanged in the near term. As the recovery becomes more durable and the economy returns to full capacity, the MPC expects any adjustments in the policy rate to be measured and gradual to achieve mildly positive real interest rates," SBP said.

Thursday, January 21, 2021

2021 Global Central Bank Monetary Policy Calendar - adds Namibia and Paraguay

     Herewith the third draft of the 2021 calendar of meetings by central bank committees that decide monetary policy, which adds the full-year schedules for Namibia and Paraguay. It also includes the January meeting for Pakistan and the February meeting for Rwanda.
     In future, the calendar will only be updated on the Calendar page on the Central Bank News website.
    
     The following table includes the date for scheduled monetary policy meetings for more than 70 of the world's central banks. In the event policy meetings take place over multiple days, the date listed below is for the final day when decisions are normally announced.
     During the year, the calendar is regularly updated as some times a previously announced date is changed and in other cases monetary policy committees only announce the date for upcoming meetings a few weeks in advance or decide on a date during the prior meeting.
     Readers are encouraged to check the latest version by clicking here.
     You may replicate the calendar in part or in fully only if you link to Central Bank News.
  
             DATE
  FX CODE COUNTRYCENTRAL BANK
        JANUARY 
4-Jan    ILSIsraelBank of Israel
8-Jan    RONRomania 1)National Bank of Romania
13-Jan    PLNPolandNational Bank of Poland
14-Jan    RSDSerbiaNational Bank of Serbia
14-Jan    PENPeruCentral Reserve Bank of Peru
15-Jan    KRWSouth KoreaBank of Korea
19-Jan    LKRSri Lanka Central Bank of Sri Lanka 
20-Jan    CNYChinaPeople's Bank of China 
20-Jan    MYRMalaysiaCentral Bank of Malaysia
20-Jan    CADCanadaBank of Canada
20-Jan    BRLBrazilCentral Bank of Brazil
21-Jan    JPYJapanBank of Japan
21-Jan     IDRIndonesiaBank Indonesia
21-Jan    NOKNorwayNorges Bank
21-Jan    UAH UkraineNational Bank of Ukraine
21-Jan    UZSUzbekistanCentral Bank of the Rep. of Uzbekistan 
21-Jan    EUREuro areaEuropean Central Bank
21-Jan    TRYTurkeyCentral Bank of Republic of Turkey
21-Jan    ZARSouth AfricaSouth African Reserve Bank
21-Jan    PYGParaguayCentral Bank of Paraguay
22-Jan    PKRPakistanState Bank of Pakistan 
25-Jan    KZTKazakhstanNational Bank of Kazakhstan
25-Jan    KGSKyrgyzstanNational Bank of the Kyrgyz Republic
26-Jan    HUFHungaryCentral Bank of Hungary
26-Jan    NGNNigeriaCentral Bank of Nigeria
27-Jan    KESKenya Central Bank of Kenya 
27-Jan    MZNMozambiqueBank of Mozambique
27-Jan    USDUnited StatesFederal Reserve
27-Jan    CLPChileCentral Bank of Chile
28-Jan    AOAAngolaBank of Angola
29-Jan    AZNAzerbaijanCentral Bank of Azerbaijan Republic
29-Jan    MDLMoldovaNational Bank of Moldova
29-Jan    MWKMalawiReserve Bank of Malawi
29-Jan    BGNBulgariaBulgarian National Bank 
29-Jan    COPColombiaCentral Bank of Colombia 
     

UPDATE-This week in monetary policy: Sri Lanka, China, Malaysia, Canada, Brazil, Japan, Indonesia, Norway, Turkey, Ukraine, Uzbekistan, ECB, South Africa, Paraguay and Pakistan

    (UPDATE- Following item updated with Pakistan after the State Bank of Pakistan on Jan. 19 announced its monetary policy committee would meet on Friday, Jan. 22 to decide on monetary policy. The bank's governor will also give a press conference the same day.)
     
     This week - January 18 through January 23 - central banks from 15 countries or jurisdictions are scheduled to decide on monetary policy: Sri Lanka, China, Malaysia, Canada, Brazil, Japan, Indonesia, Norway, Turkey, Ukraine, Uzbekistan, the euro area, South Africa, Paraguay and Pakistan.
     Following table includes the name of the country, the date of the next policy decision, the current policy rate, the local time a policy decision is announced, the result of the last policy decision, the change in the policy rate year to date, and the rate one year ago.
    The table is updated when the latest decisions are announced and can always be accessed by clicking on This Week.
WEEK 3
JAN 18 - JAN 23, 2020:
SRI LANKA19-Jan4.50%7:30006.50%         FM
CHINA20-Jan3.85%004.15%         EM
MALAYSIA20-Jan1.75%002.75%         EM
CANADA20-Jan0.25%10:00001.75%         DM
BRAZIL20-Jan2.00%18:30004.50%         EM
JAPAN21-Jan-0.10%00-0.10%         DM
INDONESIA21-Jan3.75%005.00%         EM
NORWAY21-Jan0.00%10:00001.50%         DM
TURKEY21-Jan17.00%14:000011.25%         EM
UKRAINE21-Jan6.00%0011.00%         FM
UZBEKISTAN21-Jan14.00%14:300016.00%
EURO AREA21-Jan0.00%13:45000.00%         DM
SOUTH AFRICA21-Jan3.50%006.25%         EM
PARAGUAY21-Jan0.75%004.00%
PAKISTAN22-Jan7.00%0013.25%         EM

 

 

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Norway holds rate, confirms rate hold on for some time

     Norway's central bank kept its monetary policy rate steady and confirmed its view from December that "the sharp economic downturn and considerable uncertainty surrounding the outlook suggest keeping the policy rate on hold until there are clear signs that economic conditions are normalizing."
     Norges Bank (NB), which slashed its policy rate three times last year by a total of 150 basis points during March and May, left its policy rate at 0.0 percent.
     Prior to the outbreak of COVID-19 early 2020, NB had been in a monetary tightening cycle, raising its rate three times and by a total of 100 basis points from September 2018 to September 2019.
     In its latest quarterly monetary policy report from December, NB pulled forward a rate hike to the first half of 2022 from an earlier forecast of late 2022, forecasting the economy would continue to gradually recover from the scars of the pandemic.
     Today's statement by the bank's monetary policy and financial stability committee says economic developments since the policy report have been broadly in line with expectations.
     Economic activity slowed towards the end of 2020 and the recovery now being held back by higher infection rates and stricter containment measures.
     "At the same time, vaccinations are well under way, and economic growth is expected to pick up further out in 2021," NB said, adding underlying inflation is above its target and the rise in the krona's exchange rate since March and prospects for low wage growth suggest inflation will ease ahead.
     Norges Bank will publish its next monetary policy report and policy decision on March 18.

Sunday, January 17, 2021

This week in monetary policy: Sri Lanka, China, Malaysia, Canada, Brazil, Japan, Indonesia, Norway, Turkey, Ukraine, Uzbekistan, ECB, South Africa & Paraguay

      This week - January 18 through January 23 - central banks from 14 countries or jurisdictions are scheduled to decide on monetary policy: Sri Lanka, China, Malaysia, Canada, Brazil, Japan, Indonesia, Norway, Turkey, Ukraine, Uzbekistan, the euro area, South Africa and Paraguay.
      Following table includes the name of the country, the date of the next policy decision, the current policy rate, the local time a policy decision is announced, the result of the last policy decision, the change in the policy rate year to date, and the rate one year ago. 
      The table is updated when the latest decisions are announced and can always be accessed by clicking on This Week on the homepage of Central Bank News.

WEEK 3
JAN 18 - JAN 23, 2020:
SRI LANKA19-Jan4.50%7:30006.50%         FM
CHINA20-Jan3.85%004.15%         EM
MALAYSIA20-Jan1.75%002.75%         EM
CANADA20-Jan0.25%10:00001.75%         DM
BRAZIL20-Jan2.00%18:30004.50%         EM
JAPAN21-Jan-0.10%00-0.10%         DM
INDONESIA21-Jan3.75%005.00%         EM
NORWAY21-Jan0.00%10:00001.50%         DM
TURKEY21-Jan17.00%14:00200011.25%         EM
UKRAINE21-Jan6.00%0011.00%         FM
UZBEKISTAN21-Jan14.00%14:300016.00%
EURO AREA21-Jan0.00%13:45000.00%         DM
SOUTH AFRICA21-Jan3.50%006.25%         EM


Romania cuts rate 4th time as virus weighs on recovery

     Romania's central bank lowered its monetary policy rate for the fourth time in its current easing cycle, pointing to the "significant uncertainties and risks" from the protracted COVID-19 pandemic that continues to weigh on Europe's economic recovery, probably until the effects of vaccinations take effect.
    The National Bank of Romania (NBR) cut its monetary policy rate by another 25 basis points to 1.25 percent and has now cut it by 125 points since it began easing in March last year.
     BNR also lowered its deposit rate by 25 basis points to 0.75 percent and the Lombard lending rate by the same amount to 1.75 percent at an unscheduled board meeting on Jan. 15
     In March last year NBR's board decided to scrap its meeting schedule in light of the uncertainty surrounding the pandemic and decide on monetary policy when necessary.
     In its statement he board confirmed it still won't meet to discuss monetary policy according to a schedule but hold meetings "whenever necessary."
      "The NBR board considers that, given the transmission lags of the policy rate impulses, such as calibration of the monetary policy conduct is likely to provide an underpinning to the recovery of economic activity over the projection horizon with a view to bringing and strengthening over the medium term the annual inflation rate in line with the 2.5 percent +/- 1 percentage point inflation target, while safeguarding financial stability," the central bank said.

Sunday, January 10, 2021

This week in monetary policy: Poland, Serbia, Peru and South Korea

   This week - January 11 through January 16 - central banks from 4 countries or jurisdictions are scheduled to decide on monetary policy: Poland, Serbia, Peru and South Korea.
    Following table includes the name of the country, the date of the next policy decision, the current policy rate, the local time a policy decision is announced, the result of the last policy decision, the change in the policy rate year to date, and the rate one year ago.
    The table is updated when the latest decisions are announced and can always be accessed by clicking on This Week.

WEEK 2
JAN 11 - JAN 16, 2020:
POLAND13-Jan0.10%001.50%         EM
SERBIA14-Jan1.00%12:00-2502.25%         FM
PERU14-Jan0.25%002.25%         EM
SOUTH KOREA15-Jan0.50%001.25%         EM
 
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