Thursday, October 2, 2014

ECB holds rate, ready for more unconventional measures

     The European Central Bank (ECB) maintained its benchmark repurchase rate at a historic low of 0.05 percent and confirmed its guidance that it is committed to using additional unconventional instruments if it becomes necessary to address the risk of too prolonged period of low inflation.
    The ECB, which has cut its repo rate by 20 basis points this year,  also repeated that the risks surrounding the economic outlook remain on the downside with the outlook for 2015 for a moderate economic recovery with domestic demand supported by monetary policy measures, improved financial conditions, progress in fiscal consolidation, structural reforms and lower energy prices.
    At the same time, ECB President Mario Draghi said at a press conference in Naples, Italy, that the recovery will continue to be dampened by high unemployment, under-used capacity, negative loan growth from banks to the private sector and debt repayments by the public and private sectors.
    In addition to cutting its repo rate to technically zero and pushing the deposit rate deeper into negative territory of minus 0.20 percent, the ECB on Sept. 4 also decided to embark on a form of quantitative easing by purchasing asset-backed securities (ABS) and euro-denominated covered bonds, only four months after launching targeted longer-term refinancing operations (LTROs).

Wednesday, October 1, 2014

Central Bank News Link List - Oct 2, 2014 - ECB’s Draghi: Monetary policy alone can’t restore confidence

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.



Central Bank News Link List - Oct 1, 2014 - Draghi’s first asset purchases seen modest as ECB meets

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.

          www.CentralBankNews.info


Rwanda maintains rate on easing inflation pressures

    Rwanda's central bank left its benchmark repo rate steady at 6.00 percent to continue stimulating  economic activity while inflationary pressures have eased further due to the coordination of monetary and fiscal policies, limited inflationary pressure from trading partners, stable oil prices and a decline in domestic food prices.
    The National Bank of Rwanda (BNR), which cut its repo rate by 50 basis points in June, said the country's economy is expected to improve and reach the 6.0 percent projected growth for 2014.
    The BNR issued the following statement:

"The Financial Stability Committee (FSC) of the National Bank of Rwanda observed that the financial sector is stable and sound and pledged commitment to continually strengthen the supervisory functions, ensure the finalization of the main laws and risk based supervision for the payment systems.
The Monitory Policy Committee (MPC) on the other hand decided to maintain the current accommodative monetary policy stance so as to continue sustaining economic recovery. These decisions were based on the following observations;

Iceland holds rate, new data complicates policy stance

    Iceland's central bank maintained its benchmark seven-day lending rate at 6.0 percent but struck a surprisingly hawkish tone by saying "robust near-term growth in domestic demand and growing tension in the labour market could generate increased inflationary pressures, however, and necessitate an increase in the bank's nominal interest rates."
    However, the Central Bank of Iceland, which has held rates steady since November 2012, also said its monetary stance had tightened more than expected due to rapid disinflation and declining inflation expectations and new national accounting standards had cast a measure of uncertainty over the interpretation of data, "temporarily complicating the assessment of the appropriate monetary stance."
    Iceland's consumer prices eased by 0.12 percent from August to an annual rate of 1.8 percent in September, with an annual deflation rate of 0.2 percent over the last three months.
    Inflation has now been below the central bank's 2.5 percent target for the last eight months and the outlook for the coming months is for lower inflation than projected in August, the bank said.
    In August the central bank estimated average 2014 inflation of 2.4 percent based on estimated third quarter inflation of 2.3 percent and fourth quarter inflation of 2.6 percent. For 2015 inflation was projected to rise to 2.8 percent and 2.9 percent in 2016.
    "Inflation expectations have moved towards the target in the recent term, while long-term expectations remain somewhat above it," the bank said, adding that foreign exchange inflows have continued but its intervention in the currency market has helped stabilize the krona currency.

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.