Tuesday, September 30, 2014

Central Bank News Link List - Sep 30, 2014 - Dollar gains bolster Fed’s patience on interest rates

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 cuts rate 25 bps, reserve requirement 200 bps

   Romania's central bank cut its policy rate by a further 25 basis points to 3.0 percent, as expected, to help boost inflation and stimulate domestic demand that has slowed down further.
    The National Bank of Romania (NBR), which has cut its rate by 225 basis points since August 2013,  also cut the minimum reserve requirements on leu-denominated liabilities to 10 percent from 12 percent while it maintained the reserve requirement on foreign currency deposits at 16 percent, both to boost lending and to continue the harmonization with European Union practices.
    To help reduce volatility in Romania's money market, the NBR also narrowed its rate corridor on standing facility to plus/minus 2.75 percentage points from 3.0 percentage points with the lending facility rate cut to 5.75 percent from 6.25 percent while the deposit rate stayed at 0.25 percent.
    "The analysis of the latest macroeconomic data shows the annual inflation rate staying at low levels, on a path lower than previously forecasted," the central bank said, mainly due to changes in agricultural prices and subdued euro area inflation, overlapping with the persistence of the negative output gap and the downward adjustment in inflation expectations.
    "The consolidation over the medium term of the projected inflation path at readings significantly lower than those forecasted previously is still uncertain," the NBR said.

India holds rate, upside risks to inflation ease slightly

    India's central bank maintained its benchmark repo rate at 8.0 percent, as widely expected, but struck a slightly dovish tone by saying the balance of risks to inflation meeting the bank's target were somewhat lower than in early August though they still remain to the upside.
    The Reserve Bank of India (RBI), which raised its repo rate by 75 basis points from September 2013 to January 2014, said the continuing risks around inflation "warrant policy preparedness to contain pressure if the risks materialize" so the "future policy stance will be influenced by the Reserve Bank's projections of inflation relative to the medium term objective."
    At its previous policy report on Aug. 4, the RBI had warned of upside risks to its inflation target that warranted "a heightened state of policy preparedness" to contain any risks if they materialize.
    The RBI's medium-term objective under Governor Raghuram Rajan is to reduce consumer price inflation to 6 percent by January 2016 with a desired decline to 8 percent by January 2015.
    Since June India's headline inflation rate has dropped below 8 percent and fell to 7.8 percent in August from 7.96 percent in July when it was pushed up by higher vegetable prices.
   "The most heartening feature has been the steady decline in inflation excluding food and fuel, by a cumulative 111 basis points since January 2014 to a new low," Rajan said in a statement, adding that softening crude prices and a stable exchange rate had led to a receding of upside risks.

Monday, September 29, 2014

Central Bank News Link List - Sep 29, 2014 - India’s Reserve Bank unlikely to cut policy rate

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 maintains rate, kwanza eases, inflation steady

    Angola's central bank maintained its Basic Interest Rate (BNA) at 8.75 percent, noting a slight rise in August inflation, a depreciation in the kwanza's exchange rate, a strong rise in currency sales and a continued increase in credit to the economy.
    The National Bank of Angola (BNA) cut its BNA rate by 50 basis points on July 28 to boost credit to the economy as it expects the recent downtrend in inflation to continue. The BNA also reduced the rate on its standing lending facility by 25 basis points to 9.75 percent while it maintained the rate for absorbing liquidity at 1.75 percent.
   Angola's inflation rate rose slightly to 6.98 percent in August from July's 6.89 percent with an increase in food and non-alcoholic beverages of 0.25 percentage points accounting for the largest contribution to inflation.
    Angola's inflation rate has been trending downward since October 2010 when it topped 16 percent and since August 2012 inflation has been below 10 percent, one of the central bank's long-standing objectives.
    Earlier this month the International Monetary Fund (IMF) said inflation was projected to reach 7.5 percent by the end of this year, well within the BNA's objective. Inflation was expected to rise due to  one-off effects on new tariffs on imports before continuing the downtrend through 2015 and beyond.

This week in monetary policy: Angola, India, Romania, Iceland, European Central Bank (ECB)

   This week (September 29 through October 3) five central banks are scheduled to decide on monetary policy: Angola, India, Romania, Iceland and the European Central Bank (ECB).
    Following table includes name of the country, its MSCI classification, the date the policy decision will be announced, the current policy rate, and the rate one year ago.


COUNTRY MSCI              DATE  CURRENT  RATE         1 YEAR AGO
ANGOLA 29-Sep 8.75% 9.75%
INDIA EM 30-Sep 8.00% 7.50%
ROMANIA FM 30-Sep 3.25% 4.25%
ICELAND 1-Oct 6.00% 6.00%
EURO AREA DM 2-Oct 0.05% 0.50%

    www.CentralBankNews.info

Sunday, September 28, 2014

Monetary Policy Week in Review – Sep 22-26, 2014: Trinidad joins central banks adjusting policy pre-Fed rise

    Trinidad and Tobago's central bank became the latest to adjust its policy rate last week ahead of the looming change in U.S. monetary policy, raising its repo rate to prevent capital from seeking higher yields abroad, a move that would put pressure on its exchange rate and spark inflation.
    The growing prospect of a hike in U.S. rates by mid-2015 was also the main feature of global financial markets last week, with volatility jumping, stock markets gyrating and the U.S. dollar extending its gains on the back of an upward revision of U.S. second quarter growth figures.
    Major emerging markets, such as Turkey, India and South Africa, were hit by a change in the flow of global liquidity last summer and this January, and Trinidad’s move this week serves as another reminder of how the Fed’s policy stance reaches into every single crevice of global financial markets.

    The Central Bank of Trinidad and Tobago raised its benchmark repo rate by 25 basis points to 3.0 percent, its first change in rates since September 2012, "to pre-empt a potential rise in inflationary pressures and to mitigate higher portfolio outflows."
    The central bank said the Fed’s statement after the Sept. 17 meeting of its Federal Open Market Committee (FOMC) had altered market expectations about the start to higher U.S. rates as its communication suggested a change in policy stance would come sooner than anticipated, with a gradual increase in rates around mid-2015.
    This had resulted in an immediate rise in U.S. Treasury yields that made U.S. dollar assets more attractive relative to Trinidad and Tobago assets.
    "It has become necessary to enhance the appeal of TT dollar assets which have lower returns in relation to U.S. dollar assets, as returns on the latter will be bolstered the Fed's expected monetary policy actions are realized," Trinidad’s central bank said.
     On Sept. 17 the FOMC had confirmed that it expected to conclude its asset purchase program at its next meeting in October and repeated its guidance that rates would be maintained for “a considerable time” after the asset purchase program ends.
    However, the statement also showed an increase in the number of FOMC participants that expect the first rise in the fed funds rate in 2015 to 14 from 12 members in June. In addition, FOMC members'  median estimate for the fed funds rate – illustrated by the now infamous but slightly confusing dot plot chart - rose to 1.375 percent end-2015 from June’s estimate of 1.125 percent.

    In addition to Trinidad and Tobago, Morocco’s central bank also changed its rate last week, cutting it by 25 basis points for the first time since March 2012, to boost growth while domestic inflation - just as global inflation - remains low, reflecting the recent decline in global commodity prices.
    But the other 12 central banks that deliberated monetary policy last week retained their policy rates, with several pointing to the uneven pace of global economic growth, the escalation of geopolitical conflicts and the uncertainty surrounding the timing of Fed interest rate rises.
    Through the first 39 weeks of this year, the 90 central banks followed by Central Bank News have cut their policy rates 49 times, or 13.5 percent of all policy decisions, up from 12 percent at the end of the first half and 12 percent at the end of the first quarter.
    Meanwhile, rates have been raised 37 times, or 10.2 percent of all policy decisions, up from 9.3 percent at the end of June and 8.7 percent at the end of March.
    The Global Monetary Policy Rate (GMPR), the average nominal rate by 90 central banks, remained at 5.54 percent, up from 5.53 percent at the end of June and 5.53 percent end-March.

LIST OF LAST WEEK’S CENTRAL BANK DECISIONS:

TABLE WITH LAST WEEK’S MONETARY POLICY DECISIONS:

COUNTRY MSCI      NEW RATE            OLD RATE         1 YEAR AGO
ISRAEL DM 0.25% 0.25% 1.00%
SRI LANKA  FM 6.50% 6.50% 7.00%
ARMENIA 6.75% 6.75% 8.50%
HUNGARY EM 2.10% 2.10% 3.60%
MOROCCO FM 2.75% 3.00% 3.00%
ALBANIA 2.50% 2.50% 3.50%
GEORGIA 4.00% 4.00% 3.75%
TURKEY EM 8.25% 8.25% 4.50%
FIJI 0.50% 0.50% 0.50%
CZECH REPUBLIC EM 0.05% 0.05% 0.05%
TAIWAN EM 1.88% 1.88% 1.88%
BOTSWANA 7.50% 7.50% 8.00%
COLOMBIA EM 4.50% 4.50% 3.25%
TRINIDAD & TOBAGO 3.00% 2.75% 2.75%


    This week (Week 40) five central banks are scheduled to decide on monetary policy: Angola, India, Romania, Iceland and the European Central Bank (ECB).

TABLE WITH THIS WEEK’S MONETARY POLICY DECISIONS:

COUNTRY MSCI              DATE  CURRENT  RATE         1 YEAR AGO
ANGOLA 29-Sep 8.75% 9.75%
INDIA EM 30-Sep 8.00% 7.50%
ROMANIA FM 30-Sep 3.25% 4.25%
ICELAND 1-Oct 6.00% 6.00%
EURO AREA DM 2-Oct 0.05% 0.50%