Monday, April 27, 2015

Kyrgyzstan maintains rate as inflation slows

    Kyrgyzstan's central bank maintained its policy rate at 11.0 percent, saying inflation had slowed down but the country remains "affected by external factors."
    The National Bank of the Kyrgyz Republic, which has raised its rate by 500 basis points since July 2014 to curb inflationary pressures from a depreciation of the som currency, said the country's economic growth was still being affected by the slowdown of its major trade partners and its policy was geared toward achieving inflation rates of 5-7 percent in the medium term.
    As of mid-April Kyrgyzstan's inflation rate eased to 7.8 percent from 10.5 percent at the end of 2014 and 8.5 percent in March and a year-high of 11.6 percent in January.
    High economic growth in the first quarter of 7.0 percent was mainly due to output from the Kumtor gold mine, with real Gross Domestic Product excluding Kumtor of 3.4 percent.
    The Kyrgyzstani some began depreciating in August 2014 and hit a year-low of 63.9 to the U.S. dollar in early April but has risen since April 21. Today it was quoted at 61.1, down 3.6 percent since the start of 2015.
    On April 8 the International Monetary Fund (IMF) approved a 3-year, US$92 million extended credit facility to the Kyrgyz Republic to help its government reduce economic vulnerabilities stemming from "a weak regional environment and dependency on gold and remittances."
    The IMF said the Kyrgyz central bank would continue focusing on price stability and limit foreign exchange interventions to "smoothing excessive volatility without resisting exchange rate trends," with a strong communication strategy considered essential to the success of monetary policy.
    The IMF forecast total GDP growth of 1.7 percent this year, down from an estimated 3.6 percent in 2014, with non-gold GDP growth of 2.7 percent in 2015 compared with 4.6 percent in 2014. Inflation is seen averaging 10.7 percent this year, up from an average 7.5 percent  in 2014.

Israel holds rate, warns shekel rise may weigh on exports

    Israel's central bank maintained its benchmark interest rate at 0.10 percent, as expected by most economists, as inflation remains steady at a negative 1.0 percent, the economy continues to "grow at the moderate rate of the past two years" and the shekel has appreciated against the U.S. dollar and the euro during the last month.
    The Bank of Israel (BOI), which cut its rate by 15 basis points in February to counter the negative impact on exports and inflation from an appreciation of the shekel, said the shekel had strengthened by about 3 percent agains the dollar between March 22 and April 24 and 1.3 percent against the euro.
    Today the shekel was quoted at 3.89 to the dollar, largely unchanged from 3.90 at the end of 2014 but weaker than the 3.84 that it hit on Feb. 22.
    Year-to-date, the BOI added there had been an effective appreciation of 3.7 percent in the shekel against the background of accommodative monetary policy in several major economies and a decline in the projected growth rate of world grade and continued appreciation "are liable to weigh on growth of exports and of the tradable sector.
    Data for the first quarter of the year "point to a continuation of the moderate growth rate" of the last two years, the BOI said, adding that goods exports rose by 3.3 percent in March but was down 0.9 percent in the first quarter in U.S. dollar terms when disregarding the impact of work disruptions at Israel Chemicals and "atypical" patterns in the export of aeronautics.
     Israel's consumer price inflation rate remained at a negative 1.0 percent in March - the seventh consecutive month of deflation - with the BOI saying short-term expectations were near, or slightly below, the lower bound of the bank's 1-3 percent target range. Longer-term expectations, however, remain stable around the midpoint of the range.

Angola maintains rate as inflation rises further

    Angola's central bank maintained its benchmark Basic Interest Rate (BNA) at 9.25 percent, citing an increase in inflation, a depreciation of the kwanza's exchange rate and an annual increase of 13.2 percent in the stock of credit to the economy.
    The National Bank of Angola, which raised its rate by 25 basis points on March 30, noted that inflation, as measured by the CPI of the capital of Luanda, was up by an annual 7.87 percent in March, up 0.13 percentage points from February, with food and non-alcoholic beverages the largest contributor to the increase.
    Meanwhile, the stock of credit issued by banks reached 3.41 billion kwanza in March.
    The exchange rate of the kwanza, which has been hit by the fall oil prices and the impact on government revenue, depreciated by an average 1.62 percent in March from the previous month to 108.26 per U.S. dollar, the central bank said.
    The kwanza has been depreciating since September 2014 and was trading at 109.19 to the dollar today, down 6.2 percent since the start of the year.

Central Bank News Link List - Apr 27, 2015: Israel’s Flug tops central bankers with most rate surprises

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.

Sunday, April 26, 2015

This week in monetary policy: Israel, Angola, Kyrgyzstan, Thailand, Sweden, U.S., Brazil, New Zealand, Japan, Fiji, Russia, Moldova and Mexico

    This week (April 27 through May 2) central banks from 13 countries or jurisdictions are scheduled to decide on monetary policy: Israel, Angola, Kyrgyz Republic, Thailand, Sweden, the United States, Brazil, New Zealand, Japan, Fiji, Russia, Moldova and Mexico.
    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 always accessed by clicking on This Week.

APR 27-MAY 2, 2015:
ISRAEL DM UNCH. 27-Apr 0.10% 0.75%
ANGOLA  UNCH. 27-Apr 9.00% 9.25%
KYRGYZSTAN UNCH. 27-Apr 11.00% 6.00%
THAILAND EM CUT 29-Apr 1.75% 2.00%
SWEDEN DM CUT 29-Apr -0.25% 0.75%
UNITED STATES DM UNCH. 29-Apr 0.25% 0.25%
BRAZIL EM RAISE 29-Apr 12.75% 11.00%
NEW ZEALAND DM UNCH. 30-Apr 3.50% 3.00%
JAPAN DM UNCH. 30-Apr                  N/A                  N/A
FIJI UNCH. 30-Apr 0.50% 0.50%
RUSSIA EM CUT 30-Apr 14.00% 7.50%
MOLDOVA UNCH. 30-Apr 13.50% 3.50%
MEXICO EM UNCH. 30-Apr 3.00% 3.50%

Saturday, April 25, 2015

Ukraine holds rate, expects stable FX to lead to easing

    Ukraine's central bank maintained its benchmark discount rate at 30.0 percent, citing the need to "reinforce positive trends in the money market," but added that stability to the hryvnia's exchange rate should pave the way for rate cuts.
    The National Bank of Ukraine (NBU), which has raised its rate by 16 percentage points this year and by 23.50 points since April last year, said inflation in coming months will be affected by the opposing forces of higher administered prices and further rises in consumer prices against the disinflationary forces of a waning impact of exchange rate depreciation, tight monetary and fiscal policy and the elimination of inefficient energy subsidies.
    "Further efforts to sustain stability in the foreign exchange market, which will help dispel adverse inflation and depreciation expectations, are crucial for putting inflation on a downward path," the NBU said in a statement from Friday.
    Ukraine's consumer price inflation rate jumped to 45.8 percent in March from 34.5 percent in February, with the central bank attributing this to "substantial hryvnia exchange rate depreciation in late February 2015, and feverish consumer demand fueled by worsening expectations."
    However, the NBU said a package of its measures, including rate increases and tighter administrative restrictions, helped stabilize the foreign exchange market and strengthen the hryvnia's exchange rate.
    The real effective exchange rate of the hryvnia fell by 19.2 percent in 2014 and but in February this year the currency tumbled, hitting a low of 33.7 to the U.S. dollar on Feb. 26. before bouncing back and stabilizing between 21 and 23 to the dollar, helped by the central bank's latest rate increase on March 3 of 1,050 basis points.
    On Friday the hryvnia was trading at 22.9 to the dollar, down 31 percent since the start of the year.

Thursday, April 23, 2015

Egypt holds rate as low oil counters upside inflation risks

    Egypt's central bank maintained its key policy rates, including the benchmark overnight deposit rate at 8.75 percent, as expected, saying upside risks to inflation are largely mitigated by contained imported inflation linked to lower oil prices.
    The Central Bank of Egypt (CBE), which surprised financial markets by cutting its rate by 50 basis points in January, added that investments in mega projects, such as the Suez Canal, were expected to boost economic growth, softening growth in emerging markets and the challenges facing the euro area could pose downside risks to domestic economic activity.
    Eqypt's consumer price inflation rate rose to 11.51 percent in March - a five-month high - from 10.56 percent in February mainly due to higher administered prices, particularly of tobacco, along with supply bottlenecks in the distribution of butane cylinders and an increase in volatile food prices.

Global lending dips in Q4 as China and Russia hit - BIS

    Global cross-border lending dropped by $5 billion in the fourth quarter of 2014 as claims on borrowers in emerging markets, especially China and Russia, plunged by $80 billion while lending to advanced economies, such as the United Kingdom and the euro area, continued to recover, according to the Bank for International Settlements (BIS).
    Lending by major international banks to China contracted by $51 billion by the end of December 2014 from the end of September, but outstanding claims on Chinese residents totaled $1 trillion, far exceeding those of other emerging market borrowers such as Brazil, with total claims of $308 billion, India of $196 billion and Turkey of $194 billion.
    The surge in lending to China over the past few years has been driven primarily by short-term leading to banks - much of it in U.S. dollars - but authorities are now attempting to carry out a delicate balancing act of tightening credit conditions without disrupting economic growth.
    The contraction in lending to China in the fourth quarter of last year comes after an increase of almost 40 percent between the end of September 2013 and September 2014. But from the second to the third quarter of 2014 claims rose only by 3 percent.
    With the U.S. Federal Reserve likely to raise rates in coming months, there is concern that borrowers in emerging markets will face strains from higher debt repayments of loans in U.S dollars.
     Although the dollar share of cross-border lending has declined for China to 39 percent at the end of 2014 from 54 percent at the end of 2008, it remains very high for other countries. At the end of 2014, dollar-denominated loans amounted to 78 percent of cross-border claims to Brazil, 74 percent of claims on India, 68 percent for Indonesia and 70 percent for Taiwan.
    International lending to advanced economies continues to expand as their banking systems recover after the global financial crises, with claims on advanced economies up by $27 billion in the fourth quarter from the third quarter, helped by a 5 percent year-on-year rise in loans to the euro area and the U.K. and steady lending to the U.S.
    Within the euro area, there are marked differences as loans to France rose by 12 percent annually, claims on Germany rose 8 percent and claims to Italy were up by 6 percent. Meanwhile, claims on Cyprus fell 8 percent, while annual claims on Portugal and Spain fell 4 percent and loans to Greece contracted by 3 percent.
    Cross-border claims on Japan also continued to expand at a very rapid pace, growing at annual rate of 16 percent as of the end of 2014, with most of the growth in lending directed towards banks. The share of international claims on Japanese banks rose to 75 percent by the end of last year from 53 percent at the end of 2007.

    Click to read the BIS international banking statistics at end-December 2014.

Wednesday, April 22, 2015

Central Bank News Link List - Apr 22, 2015: Pound jumps as BOE minority sees rate decision ‘finely balanced’

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.

Turkey holds rate, stance helps inflation, caution needed

     Turkey's central bank maintained its key policy rates, including the one-week repurchase rate at 7.50 percent, repeating its statement from March that its "ongoing cautious monetary policy" is having a favorable impact on inflation but "uncertainty in global markets and elevated food prices necessitates maintaining the cautious stance in monetary policy."
     But the Central Bank of the Republic of Turkey (CBRT), which has cut its rate 75 basis points this year as it slowly unwinds a 550 point emergency rate hike in January 2014, added that a "measured cut" in the foreign exchange lending rate and "a measured hike" in the rate on banks' Turkish lira required reserves will support financial stability.
    The CBRT said the rates applied to banks one-week borrowings from the central bank had been cut by 50 basis points to 4.0 percent for U.S. dollars and to 2.0 percent for euro borrowings. In addition, rates applied on banks' lira required reserves was raised by 50 points.
    The CBRT's decision was largely expected after it provided advance notice on April 14 of its plan to lower the rate charged for foreign currency loans and increase the payments to lenders for their required reserves.
    Turkey's consumer price inflation rate rose slightly to 7.61 percent in March from 7.55 percent the previous month while the core inflation rate fell to 7.5 percent from 8.1 percent.

Tuesday, April 21, 2015

Central Bank News Link List - Apr 21, 2015: Poloz signals end to Canada rate cuts on U.S. growth risk

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.