Thursday, November 20, 2014

South Africa holds rate on lower inflation, weak economy

    South Africa's central bank maintained its benchmark repurchase rate at 5.75 percent, as expected, due to the lower trajectory of inflation and weak state of the economy.
    But the South African Reserve Bank (SARB), which has raised its rate by 75 basis points so far this year, said it still believes that rates have to be raised over time and the "timing of future rate increases will be dependent on a range of factors, including the evolution of inflation expectations, the speed of normalization of monetary policy in the US and the state of the domestic economy."
    The outlook for inflation has improved since the central bank's previous meeting in September, with the risks roughly balanced and headline inflation is now forecast to average 6.1 percent this year, down from the previous forecast of 6.2 percent.
   For 2015 inflation is expected to average 5.3 percent, a sharp drop from the previous forecaster of 5.7 percent and for 2016 the forecast has been revised down to 5.5 percent from 5.8 percent, dropping to 5.4 percent in the final quarter of that year.
    However, given the elevated level of core inflation and that fact that inflation is expected to increase as the impact of lower oil prices dissipates, SARB said it remains vigilant.
    In October, South Africa's headline inflation rate was steady at 5.9 percent, just within the bank's target range of 3 to 6 percent.

   The South African Reserve Bank issued the following statement by its new governor, Lesetja Kganyago, who took over from Gill Marcus earlier this month.

Turkey holds rates, tight stance until inflation improves

    Turkey's central bank kept its policy rates steady, including the benchmark repo rate at 8.25 percent, and confirmed its guidance that the "tight monetary policy stance will be maintained, by keeping a flat yield curve, until there is a significant improvement in the inflation outlook."
    But the Central Bank of the Republic of Turkey (CBRT), which raised its repo rate in January by 550 basis points and then cut it by 175 points from May through July, turned slightly more optimistic about the outlook, saying the contribution of domestic demand to growth was increasing and the moderate course of consumer loans and favorable terms of trade may help reduce the current account deficit.
   As in previous months, the CBRT said elevated food prices continued to delay an improvement in the outlook for inflation though lower commodity prices, in particular falling oil prices were expected to contribute to push down inflation next year, in line with the latest quarterly forecast.
    On Oct. 31, the central bank forecast that inflation in 2015 would decline to a midpoint of 6.1 percent, based on a range 4.6 percent and 7.6 percent, from a midpoint of 8.9 percent at the end of this year and then stabilize at the bank's 5.0 percent target in the medium term.
    Headline inflation rose slightly to 8.96 percent in October from 8.86 percent in September.

Wednesday, November 19, 2014

Zambia raises rate 50 bps, sees elevated inflation into '15

    Zambia's central bank raised its policy rate by 50 basis points to 12.50 percent to "ensure the leveling off of inflation pressures over the third quarter is consolidated into lower inflation in 2015."
    The Bank of Zambia, which has now raised its rate by 275 basis points this year, said inflation is forecast to remain at these elevated levels throughout the rest of this year and into 2015, above the inflation target of 7.0 percent set by the finance minister for end-December 2015.
    Zambia's headline inflation rate rose to 7.9 percent in October from 7.8 percent in September.

    The Bank of Zambia issued the following statement:

"The Monetary Policy Committee (MPC) met yesterday, 18th November 2014, to consider developments in the domestic economy over the third quarter of 2014. In its deliberations, the MPC also considered global economic developments and their likely ramifications on the Central Bank’s ability to achieve its core objective of maintaining price stability.

Central Bank News Link List - Nov 19, 2014 - Fed sees limited impact from overseas weakness, market turmoil

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.

Georgia holds rate and revises down inflation forecast

    Georgia's central bank held its benchmark refinancing rate steady at 4.0 percent and revised downwards its inflation forecast but confirmed that it still considers it necessary to slowly exit its accommodative policy stance.
    The National Bank of Georgia (NBG) began tightening its policy in February but since then it has held back from further tightening in light of increased risks that impacted domestic and external demand and slowed the process of inflation reaching its 6.0 percent target.
    The NBG said its latest forecast sees inflation reaching its target by the end of 2015.
    In October Georgia's headline inflation rate eased to 3.4 percent from 4.8 percent in September.

    The National Bank of Georgia issued the following statement:
"The Monetary Policy Committee (MPC) of the National Bank of Georgia (NBG) met on November 19, 2014 and decided to keep the refinancing rate unchanged at 4 percent.

Tuesday, November 18, 2014

BOJ holds target for 80 trln yen boost in monetary base

    The Bank of Japan (BOJ) maintained it recently-revised target for boosting the country's monetary base by an annual pace of about 80 trillion yen and repeated that the country's economy is recovering moderately though it acknowledged weakness on the production side to the drop in demand following the April sale tax hike.
    The BOJ, which on Oct. 30 raised its target for increasing the monetary base by 10-20 trillion yen, also noted that exports from Japan have been "more or less flat" and changed its estimate of inflation, saying annual consumer price inflation is "likely to be at around the current level for the time being," a shift since September when its said consumer price were likely to rise by around 1.25 percent.
     The BOJ issued the following statement:
  1. "At the Monetary Policy Meeting held today, the Policy Board of the Bank of Japan decided, by an 8-1 majority vote, to set the following guideline for money market operations for the intermeeting period:[Note 1]

Chile holds rate, repeats change depends on inflation

    Chile's central bank maintained its monetary policy rate at 3.0 percent, as expected, and confirmed its guidance from last month that future changes would depend on the impact of economic conditions on inflation.
    The Central Bank of Chile, which has cut its rate by 200 basis points since October 2013, most recently last month, to counter an economic slowdown, said domestic demand and employment still point to a sluggish economy but local financing conditions are reflecting the monetary stimulus.
     The central bank admitted that a jump in October inflation was a significant surprise and inflation is likely to remain above the upper limit of its tolerance range for some months due to transitory factors. But expectations for medium-term inflation remain around 3 percent.
    Chile's headline inflation in October rose to 5.7 percent, the highest since January 2009, and up from 4.9 percent in September. The central bank targets annual inflation of 2-4 percent.
    On Oct. 23, Rodrigo Vergara, president of the central bank, said he didn't envisage more rate cuts as the economy was poised to pick up and inflation at a five-year high.
     Chile's economy has been slowing since the fourth quarter of last year, with the annual growth rate falling to a 5-year low of 0.8 percent in the third quarter from 1.9 percent in the third as both fixed investments and domestic demand declined.

Indonesia raises rate 25 bps but welcomes fuel price hike

    Indonesia's central bank raised its benchmark BI rate by 25 basis points to 7.75 percent to ensure that an expected uptick in inflation from the government's 30 percent hike in fuel prices is temporary and that inflation quickly returns to the bank's 2015 target range of 4.0 percent, plus/minus one percentage point.
    Following an extraordinary meeting the day after Indonesian President Joko Widodo announced the sharp reduction in government fuel price subsidies, Bank Indonesia (BI) welcomed the move, saying it would reduce oil imports and thus the current account deficit, while social assistance to the poor will help offset the potential decline in purchasing power and the allocation of funds to infrastructure and productive capacity will ensure sustainable economic growth.
    While the central bank raised the benchmark BI rate 25 basis points in the first rate hike since November 2013, it also widened its interest rate corridor by raising the lending facility rate by 50 points to 8.0 percent and maintaining the deposit rate at 5.75 percent to manage liquidity and support a deepening of financial markets.
    BI, which also raised rates last year in response to a reduction in government fuel subsidies, confirmed its forecast from its regular board meeting last week that economic growth should be in the range of 5.4-5.8 percent next year, adding that it would be higher in the medium-long term.

Monday, November 17, 2014

Central Bank News Link List - Nov 18, 2014 - ECB must weaken euro to aid France and Italy, ex-BOE’s King says

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.

Sri Lanka holds rates, sees inflation at benign levels

    Sri Lanka's central bank maintained its key policy rates, as expected, saying subdued international commodity prices, recent proposals to reduce value added tax and stable inflation expectations "would keep inflation at benign levels in the period ahead."
    The Central Bank of Sri Lanka, which has kept rates steady since October 2013, also said the reduction in market interest rates, including those on medium and long term credit facilities, was expected to reinforce a continued flow of credit to the economy.
    Sri Lanka's headline inflation rate fell to 1.6 percent in October, the lowest since November 2009, from 3.5 percent in September while core inflation eased to 3.6 percent from 3.7 percent, indicating "well contained demand pressures on inflation.
   The central bank said last month that inflation was likely to remain lower than the previously forecast range of 4-5 percent in the period ahead. The central bank targets inflation of 4-6 percent this year and 3-5 percent in 2015 and 2016.
    The central bank held its Standing Deposit Facility Rate (SDFR), which replaced the repo rate as a benchmark in January this year, steady at 6.50 percent along with the Standing Lending Facility Rate (SLFR) at 8.0 percent.

Central Bank News Link List - Nov 17, 2014 - Draghi says ECB measures may entail buying government bonds

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.