This week in monetary policy: Kazakhstan, Kyrgyzstan, Armenia, Iceland, Georgia, Moldova, USA, Brazil, Fiji, Philippines, Switzerland, Serbia, Turkey, Ukraine, ECB, Mozambique, Peru, Russia, Uganda & Azerbaijan

    This week - December 8 through December 14 - central banks from 20 countries or jurisdictions are scheduled to decide on monetary policy: Kazakhstan, Kyrgyz Republic, Armenia, Iceland, Georgia, Moldova, United States, Brazil, Fiji, Philippines, Switzerland, Serbia, Turkey, Ukraine, Euro area, Mozambique, Peru, Russia, Uganda and Azerbaijan.

    Following table includes the name of the country, the date of the next policy decision, the current policy rate, 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 accessed by clicking on This Week.

WEEK 50
DEC 8 - DEC 14, 2019:
KAZAKHSTAN	9-Dec	9.25%	0	0	9.25%	FM
KYRGYZSTAN	10-Dec	4.25%	0	-50	4.75%
ARMENIA	10-Dec	5.50%	0	-50	6.00%
ICELAND	11-Dec	3.25%	-25	-125	4.50%
GEORGIA	11-Dec	8.50%	100	150	7.00%
MOLDOVA	11-Dec	7.50%	0	100	6.50%
UNITED STATES	11-Dec	1.75%	-25	-75	2.50%	DM
BRAZIL	11-Dec	5.00%	-50	-150	6.50%	EM
FIJI	12-Dec	0.50%	0	0	0.50%
PHILIPPINES	12-Dec	4.00%	0	-75	4.75%	EM
SWITZERLAND	12-Dec	-0.75%	0	0	-0.75%	DM
SERBIA	12-Dec	2.25%	-25	-75	3.00%	FM
TURKEY	12-Dec	14.00%	-250	-1,000	24.00%	EM
UKRAINE	12-Dec	15.50%	-100	-250	18.00%	FM
EURO AREA	12-Dec	0.00%	0	0	0.00%	DM
MOZAMBIQUE	12-Dec	12.75%	0	-150	14.25%
PERU	12-Dec	2.25%	-25	-50	2.75%	EM
RUSSIA	13-Dec	6.50%	-50	-125	7.75%	EM
UGANDA	13-Dec	9.00%	-100	-100	10.00%
AZERBAIJAN	13-Dec	7.75%	-25	-200	9.75%

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2020 Global Central Bank Monetary Policy Calendar

     Herewith the first draft of the 2020 calendar for meetings by central bank committees that decide monetary policy.
     The following table includes the date for scheduled monetary policy meetings for more than 45 of the world's central banks. In the event that policy meetings take place over several days, the date listed below is for the final day of the meetings when decisions are normally announced.
     Central Bank News will update this calendar several times in coming weeks as some central banks have yet to release their meeting schedule for 2020.
     During the year the calendar is also regularly updated as some monetary policy committees only announce the date for the upcoming meeting a few weeks in advance.
     Readers are therefore encouraged to check the latest version of the calendar here.
     You may replicate the calendar in part of full only if you link to Central Bank News.

DATE	FX CODE	COUNTRY	CENTRAL BANK
JANUARY
8-Jan	RON	Romania	National Bank of Romania
8-Jan	PLN	Poland	National Bank of Poland
9-Jan	ILS	Israel	Bank of Israel
16-Jan	TRY	Turkey	Central Bank of Republic of Turkey
16-Jan	ZAR	South Africa	South African Reserve Bank
17-Jan	KRW	South Korea	Bank of Korea
17-Jan	ZWD	Zimbabwe	Reserve Bank of Zimbabwe
21-Jan	JPY	Japan	Bank of Japan
22-Jan	CAD	Canada	Bank of Canada
22-Jan	MYR	Malaysia	Central Bank of Malaysia
23-Jan	NOK	Norway	Norges Bank
23-Jan	EUR	Euro area	European Central Bank
28-Jan	HUF	Hungary	Central Bank of Hungary
29-Jan	USD	United States	Federal Reserve
29-Jan	CLP	Chile	Central Bank of Chile
30-Jan	UAH	Ukraine	National Bank of Ukraine
31-Jan	BGN	Bulgaria	Bulgarian National Bank

Botswana maintains rate and still sees inflation rising

     Botswana's central bank left its Bank Rate steady at 4.75 percent and reiterated its forecast from October that inflation should remain below the lower bound of its target range in the near term but then bounce back to within its target range of 3-6 percent in the second quarter of 2020.
     The Bank of Botswana (BOB), which cut its rate by 25 basis points in August after keeping rates unchanged for two years, noted inflation decelerated to 2.4 percent in October from 3.0 percent in September and is expected to remain below 3 percent for a few more months due to the comparison with an increase in domestic fuel prices in the fourth quarter of last year.
     "Subdued domestic demand pressures and the modest increase in foreign prices contribute to the positive inflation outlook in the medium term," BOB said.
     Upside risks to this forecast stem from a potential rise in administered prices and government levies or taxes beyond the current forecast while downside risks stem from lower growth in the global economy along with productivity improvements and technological process.
     Botswana's economy has slowed this year due to a weak diamond market, severe drought and slower growth in neighboring countries but is expected to bounce back next year as the diamond market normalizes and copper production comes on stream.
     In the second quarter annual economic growth slowed to 3.1 percent from 4.3 percent in the first quarter, with mining output up by only 1.4 percent in the year to June compared with an increase of 5.6 percent in the same 2018 period mainly due to a planned maintenance shutdown of the Orapa Mine in April.
     Weak output from the diamond industries also affected Botswana's non-mining output, which slowed to growth of 4.2 percent in the 12 month to June compared with 4.8 percent growth in the same period as the trade, hotels and restaurant sectors saw slower growth.
     BOB said the government had lowered its forecast for economic growth this year to 3.6 percent from an earlier 4.3 percent, and to 4.4 percent for 2020 from 4.6 percent.
     Last week the International Monetary Fund forecast Botswana's economy would grow around 3.5 percent this year and 4.2 percent in 2020, with growth hovering around 4 percent thereafter, a rate it said was too low to achieve the country's development objectives and create enough jobs to absorb new entrants to the labour market.

India surprises by holding rate but ready to cut if needed

     India's central bank left its policy repo rate steady at 5.15 percent, surprising financial markets that had expected another rate cut to boost a slowing economy, but said it was still ready to cut if needed and would "continue with an accommodative monetary policy stance as long as it is necessary to revive growth, while ensuring that inflation remains within the target."
     The Reserve Bank of India (RBI), which has cut its key rate five times this year by a total of 135 basis points, said its monetary policy committee felt it was appropriate to pause at this point as past easing and government measures are expected to boost growth while inflation is expected to ease.
     RBI's decision underscores the pause many central banks are now taking following a flurry of rate cuts this year that is expected to revive global growth that has slowed due to a fall in global trade and investments from the uncertainty unleashed by the trade conflict between the U.S. and China.

     RBI was one of the first major central banks to kick off this year's global easing cycle when it cut its rate in February, a point made by RBI Governor Shaktikanta Das who said the central bank had been pre-emptive in easing and rate cuts followed in quick succession in every meeting on monetary policy since then, and it was still ready to cut further if needed.

      "The forward guidance in itself indicates that there is space available for further monetary policy action," Das said, adding there was a "need to optimize the impact of rate reductions" and the key consideration is the timing of further actions as the impact of past rate cuts is monitored.

      "It is in this context that the MPC decided to pause for now and evaluate the developments with a readiness to act, if the unfolding situation so warrants," Das said, adding government measures and past easing by RBI were "gradually expected to further feed into the real economy."

      The impact of RBI's rate cuts to the economy has also been strengthened following a decision in September that makes it mandatory for banks to link certain loans to an external benchmark system with most banks now linking their lending rates to the central bank's policy rate.

      The transmission of the RBI's cumulative 135 basis point reduction in the policy rate this year to various monetary and corporate debt market segments has ranged from 137 basis points in the overnight call money market to 218 points for 3-month commercial paper for non-banking finance firms, RBI said.

     "Monetary transmission has been full and reasonably swift across various money market segments and the private corporate bond market," Das said, adding this augurs well for the transmission to lending rates, going forward.

   RBI's most recent rate cut came in October when it also said it would continue with an accommodative monetary policy stance as long as necessary to revive growth.

      Since then data showed India's gross domestic product growth slowed to 4.5 percent in the third quarter from 5.0 percent in the second quarter, the fifth consecutive quarter of slowing growth and the first time since growth fell below 5 percent since 2013.

      RBI once again lowered its growth forecast for the current financial year, which began on April 1, to 5.0 percent from October's forecast of 6.1 percent. Growth in 2018-19 was 6.8 percent.

      The slowdown has raised the pressure on India's prime minister, Narendra Modi who was elected to a second term in May, to take further steps to boost growth. 

      The government has said it will unveil a series of infrastructure projects as part of a plan to invest 100 trillion rupees and has already cut corporate taxes and sped up privatization of state-run firms.

    India's inflation rate has been accelerating in the last two months - it rose to 4.62 percent in October from 3.99 percent in September - due to a surge in food prices. Food inflation spiked to 6.9 percent in October, a 39-month high, pushed up by a sharp rise in the cost of vegetables due to heavy unseasonal rains.

   This has also pushed up inflation expectations, with the central bank's November survey of households showing a rise of 120 basis points over a 3 month period and 180 points over a one-year horizon "as they adapted to the spike in food prices in recent months," RBI said.

    RBI's forecast for inflation in the second half of 2019-20 was raised to 5.1-4.7 percent from October's forecast of 3.5-3.7 percent, and to 4.0-3.8 percent for the first half of 2020-21, with risks broadly balanced.

     Further ahead, RBI expects inflation to moderate below its midpoint target of 4.0 percent by the second quarter of 2020-21, with the forthcoming government budget also providing better insight into the impact of any measures on growth and inflation.

      India's rupee has been relatively stable this year after falling sharply in 2018 and rose 0.4 percent in response to RBI's policy decision to trade at 71.2 to the U.S. dollar but is still down 1.8 percent since the start of this year.

Chile keeps rate steady, says will hold in coming months

    Chile's central bank left its monetary policy rate steady, a surprise to most economists who had expected another rate cut in response to continuing social unrest, and said it expects to keep its rate at the current level for the next few months following the government's plan to boost spending and the central bank's intervention to curb volatility in the peso.
     The Central Bank of Chile's board unanimously left its rate steady at 1.75 percent after cutting it three times this year by a total of 125 basis points following cuts in June, September and October.
    "In accordance to achieving the inflation target, and in the context of increased fiscal impulse and forex intervention, the Board foresees that the monetary policy rate will be kept at its current level over the coming months," the central bank said.
    Chile's peso and Chilean assets have tumbled since mid-October following the outbreak of massive protests over inequality. The peso jumped 2 percent in response to the central bank's decision to maintain rates to 787.8 per U.S. dollar.
     But compared to the start of this year it is still down 12 percent.
     Prior to the start of protests, which have included the death of more than 20 people and the injury of more than 13,000, the peso was trading around 716 to the dollar and it then fell 16 percent by late November but has begun rising again in recent days.
     Starting on Monday the central bank began selling $200 million each day, and placing another $200 million in the forwards market, in an intervention that is scheduled to run through May 29, 2020 to curb volatility in the exchange rate, which the central bank today deemed as "excessive."
     The central bank was frank in its assessment of the damages from the protests, saying economic activity and demand has been affected negatively and growth expectations for this year and next year have worsened, with growth now significantly worse than expected until mid-October.
     Chile's inflation rate rose to 2.5 percent in October from 2.1 percent in September and the central bank said the markets are now expected inflation will rise to over 3.0 percent by the end of the year, reflecting the sharp appreciation of the peso.
     On the other hand, widening capacity gaps will hold back inflation and the central bank said it was still too early to determine which of these two factors would dominate.
     On Dec. 5 the central bank will release its latest forecast and analysis that supports today's policy decision.

Canada holds rate, signs of global growth stabilizing

     Canada's central bank left its benchmark target for the overnight rate steady at 1.75 percent, as expected, and said future policy decisions would be based on how the adverse impact of trade conflicts affects the country's resilient economy, notably consumer spending and housing.
     The Bank of Canada (BOC), which has kept its rate steady since October 2018 in contrast to this year's rapid pace of global monetary policy easing, added its October forecast for the global economy appeared to be intact and sounded a relatively upbeat tone about the outlook.
     "There is nascent evidence that the global economy is stabilizing, with growth still expected to edge higher over the next couple of years," BOC said, adding the ongoing trade conflicts are still weighing on global economic activity and remain the biggest source of risk to the outlook.
     In October BOC lowered its forecast for 2019 global economic growth to 2.9 percent from 3.0 percent as trade conflicts, most notably between the U.S. and China, has led to a fall in global trade, with the slowdown most pronounced in business investments and the manufacturing sector.
     In response to the global growth slowdown, central banks worldwide have eased their policy and BOC saw growth strengthening modestly in 2021, with a pickup in some emerging market economies more than offsetting slower growth in the United States and China.
     Lower investments and commodity prices have hit Canada's economy and BOC in October also lowered its 2020 forecast for economic growth in Canada for the second time to 1.7 percent from an earlier forecast of 1.9 percent due to the impact on Canadian exports.
     But BOC's forecast for 2019 growth was raised to 1.5 percent from an earlier 1.3 percent and in January it will update its forecast, taking into account fiscal policy following the re-election of Prime Minister Justin Trudeau in October.
    Due to a decline in exports, Canada's economy slowed in the third quarter to 1.3 percent year-on-year from 1.6 percent in the second quarter but BOC said activity was supported by consumer spending, stronger wage growth and housing investment, along with an unexpected increase in investments in transportation and engineering projects.
     "The Bank will be assessing the extent to which this points to renewed momentum in investment," BOC said.
     In the third quarter business investment grew 2.6 percent, the fastest pace since the fourth quarter of 2017 while housing investment rose 3.2 percent, the highest since first quarter 2012.
     Canada's inflation rate has been steady at 1.9 percent in the last three months to October and BOC continues to expect inflation to track close to its 2.0 percent target in the next two years.
     Canada's dollar rose 0.6 percent in response to the BOC's statement to 1.32 to the U.S. dollar to be up 3.0 percent this year.

Namibia maintains rate as economy slows in 2019

     Namibia's central bank left its benchmark repo rate unchanged at 6.50 percent, saying domestic economic activity slowed in the first 10 months of the year, inflation remains low but the stock of international reserves continues to be sufficient to support the currency peg with South Africa.
     The Bank of Namibia (BON), which cut its rate in August by 25 basis points for the first time since August 2017, added the economic slowdown was mainly reflected in mining, manufacturing, construction, wholesale and retail trade, and agriculture.
     "Going forward, the domestic economy is projected to remain weak in 2019," BON said.
     In August the central bank forecast contraction of 1.7 percent this year before returning to growth in 2020. The economy shrank by an estimated 0.1 percent in 2018.
     Namibia's gross domestic product contracted by an annual 2.6 percent in the second quarter of this year, slightly better than a 2.9 percent shrinkage in the first quarter, hit by lower mining and diamond output, while drought has lowered agricultural output.
     Amid strong growth in 2010-2015 fueled by rapid credit growth, Namibia's public debt rose sharply and international reserves fell.
     Although the government is now adjusting its fiscal policy, public debt remains on a rising path and banks' asset quality has deteriorated, according to the International Monetary Fund in September.
     Namibia's economy has been in a slump since the start of 2017, with GDP on an annual basis contracting in the last 9 of 10 quarters. The second quarter of 2018 was the last quarter to show positive annual growth of 0.6.
     "A likely slow recovery, the need for further fiscal adjustment to bring public debt to a sustainable path, persistent inequalities and structural impediments to growth, point to a challenging outlook," IMF said, adding absent structural reforms growth is expected to converge to a long-term level of 3 percent,  which is took low to deliver meaningful improvements in income and reduce unemployment.
     The IMF forecast a 0.2 percent decline in GDP this year and then growth of 1.6 percent in 2020.
     Growth in private sector credit rose marginally to 6.8 percent in the first 10 months of the year from 6.2 percent in the same 2018 period, mainly due to higher uptake of credit in retail, real estate, financial and other services sectors.
     But growth in credit to individuals slowed from last year and in October the annual growth in private sector credit extension was unchanged at 6.4 percent.
     Namibia's inflation rate has been trending lower since 2017 and fell to a 2019-low of 3.0 percent in October, down from 3.3 percent in September, and the recent peak of 5.6 percent in November 2018.
     BON projected average inflation of 3.8 percent in 2019, below IMF's estimate of 4.8 percent.
     Namibia's stock of International reserves was practically unchanged at N$32.5 billion from N$32.3 billion at the previous meeting of its monetary policy committee, enough to cover 4.3 months of imports, a level the central bank said was "sufficient to protect the peg" of the Namibia dollar to the South African rand and meet its international financial obligations.

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This week in monetary policy: Australia, Namibia, Poland, Canada, Chile, India & Botswana

    This week - December 1 through December 7 - central banks from 7 countries or jurisdictions are scheduled to decide on monetary policy: Australia, Namibia, Poland, Canada, Chile, India and Botswana.

    Following table includes the name of the country, the date of the next policy decision, the current policy rate, 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 accessed by clicking on This Week.

WEEK 49
DEC 1 - DEC 7, 2019:
AUSTRALIA	3-Dec	0.75%	0	-75	1.50%	DM
NAMIBIA	4-Dec	6.50%	0	-25	6.75%
POLAND	4-Dec	1.50%	0	0	1.50%	EM
CANADA	4-Dec	1.75%	0	0	1.75%	DM
CHILE	4-Dec	1.75%	-25	-100	2.75%	EM
INDIA	5-Dec	5.15%	-25	-135	6.50%	EM
BOTSWANA	5-Dec	4.75%	0	-25	5.00%

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Dominican Rep. holds rate as past easing boosts demand

     The Central Bank of the Dominican Republic (BCRD) left its monetary policy rate steady at 4.50 percent for the third month, saying domestic demand is continuing to react favorably to the expansive monetary policy measures it has taken since June and energized private credit, which has risen 11 percent so far this year and 12 percent in the last 12 months.
     BCRD cut its policy rate three times in a row by a total of 100 basis points in June, July and August and released more than 34 billion Dominican peso in legal reserves to productive sectors.
     Economic activity has improved with growth of 5.2 percent year-on-year in October following 5.1 percent growth in September for average growth in the first 10 moths of 4.8 percent.
     "The dynamism that economic activity has registered in recent months will contribute to economic growth of around its 5.0 percent potential by the end of the year, " BCRD said, confirming its forecast from September after a monetary policy meeting on Nov. 29.
     Inflation in the Dominican Republic rose to 2.48 percent in October from 2.02 percent in September but remains below BCRD's lower limit of its target range of 4.0 percent, plus/minus 1 percentage point.
     The Dominican peso fell fast between mid-September and mid-October but since then it has firmed slightly. Today it was trading at 52.9 to the U.S. dollar, down 4.7 percent this year.
     The central bank said the exchange rate had been relatively stable, depreciating less than the average Latin American currency and emerging economies due to the strength of macroeconomic fundamentals and the credibility of economic policies.

     www.CentralBankNews.info

Angola holds rate, shrinks footprint in FX market further

    Angola's central bank left its key interest rates unchanged, saying disinflation is continuing despite the implementation of value-added-tax (VAT) and the liberalization of the exchange rate in October.
     The National Bank of Angola (BNA), which has cut its benchmark BNA rate by 100 points this year to 15.50 percent, added its monetary policy stance will remain restrictive through finer liquidity management by open market operations in order to consolidate the floating exchange rate regime and to ensure greater price stability.
    In October BNA's monetary policy committee raised the reserve requirement for kwanza deposits by 500 basis points to 22 percent and set a 10.0 percent interest rate for a new 7-day facility as it completed a transition to a market-determined exchange rate for the kwanza begun in January 2018.
    This included scrapping a 2.0 percent trading band margin that had limited the kwanza's move during currency auctions.
    After taking over the reins of BNA in October 2017 - part of Angola President Joao Laurenco's move to clean up the country's image as corrupt -  Governor Jose Massano began a major overhaul of BNA in January 2018, including ditching a fixed exchange rate regime and adopting the monetary base as a operational variable to better control liquidity.
    Continuing BNA's policy of normalizing and reducing its intervention in the foreign exchange market, the bank today said it would stop purchasing foreign currency from oil companies as of Jan. 2, 2020 and in the future they should sell directly to commercial banks.
     The limit on the foreign exchange position of commercial banks would also be lowered to 2.5 percent from 5.0 percent, with both measures aimed at raising the number of participants in the foreign exchange market and boosting the interbank foreign exchange market.
     Since BNA began liberalizing the foreign exchange market by using auctions to set a reference rate in January last year, the kwanza has lost almost two-third of its value.
     Today the kwanza was trading at 491.2 to the U.S. dollar, down 23 percent since October 1, 37 percent since the start of this year and down 66.2 percent since the pre-January 2018 peg of 166.
     The monetary base expanded by 6.81 percent in October as compared to an 11.68 percent contraction in September, reflecting an increase in bank reserves by 8.24 percent, and bank notes and coins in circulation by 3.86 percent.
     The M2 monetary aggregate, which comprises bank deposits, notes and coins, rose 2.97 percent in October while the stock of credit in local currency expanded 2.6 percent in October from September but on an annual basis credit stock was down 4.62 percent.
     Angola's inflation rate was steady at 16.08 percent in October and September, and in September Massano told Bloomberg inflation was expected to fall below 10 percent by 2022, providing scope for interest rates to fall.

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