Wednesday, January 18, 2017

Canada holds rate, raises 2017 growth forecast slightly

   Canada' s central bank left its benchmark target for the overnight rate steady at 0.50 percent, as widely expected, and while it raised its forecast for economic growth this year to 2.1 percent from a previous 2.0 percent it said "the current stance of monetary policy is still appropriate."
     The Bank of Canada (BOC), which had maintained its rate since cutting it in July 2015, left its 2018 growth forecast unchanged at 2.1 percent from its previous forecast in October, saying the country's economy is still operating with "material excess capacity" and "significant slack in the labour market."
    While the adjustment of Canada's resource sector to the fall in commodity prices, such as oil, is considered to be largely complete, the BOC said negative wealth and income effects "will persist" but fiscal measures should help support growth this year and the economy should return to full capacity will first happen around the middle of 2018.
    The BOC noted the Canadian dollar had strengthened along with the U.S. dollar, saying this was "exacerbating ongoing competitiveness challenges and muting the outlook for exports."
     The Canadian dollar (CAD), known as the loonie, started falling in 2013 and the fall in crude oil prices in mid-2014 accelerated this decline, with the exchange rate falling to around 1.45 per U.S. dollar in January last year.
     But a rise in oil prices and signs of economic resilience has helped strengthen the loonie since then and it has firmed in the last month. Today CAD was trading at 1.31 to the U.S. dollar, up 2.3 percent from 1.34 at the start of this year and up 5.3 percent since the start of 2016.
     Canada's Gross Domestic Product grew by 0.9 percent in the third quarter, reversing a 0.3 percent contraction in the second quarter. On a year-on-year basis, the economy grew by 1.3 percent in the third quarter, up from 1.1 percent in the second quarter.
     Inflation in Canada has been lower than the BOC forecast in October due to a fall in food prices, but the bank expects inflation to approach its 2.0 percent target in the months ahead and remain around that level while excess capacity is slowly absorbed.
     Canada's headline inflation rate eased to a lower-than-expected 1.2 percent in November from 1.5 percent in December and the BOC lowered its 2016 average estimate to 1.4 percent from October's 1.5 percent. 
     For 2017 the central bank also trimmed its inflation forecast to 1.8 percent from 1.9 percent, despite raising its assumption of oil prices, while the 2018 forecast was unchanged at 1.9 percent.
     To better gauge the underlying trend of inflation, the central bank has adopted three new measures of core inflation instead of CPIX, which excluded eight volatile components, such as fruit, vegetables, oil and gas. The three new measures are CPI-trim, which excludes extreme price changes in a month, CPI-median, a weighted median measure, and CPI-common, which tracks common price movements across the CPI basket.

Monday, January 16, 2017

Central Bank News Link List - Jan 16: IMF boosts US growth forecasts on Trump spending, tax plans

    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, January 15, 2017

UPDATE-2017 calendar for central banks' monetary policy meetings

    (UPDATE - The calendar for 2017 has been updated with monetary policy meetings by the Central Bank of Egypt)

    Following is the 2017 calendar for meetings by central bank committees that decide monetary policy.
    The table includes scheduled meetings for more than 40 of the world's central banks. In the event that meetings by monetary policy committees take place over several days, the date listed below is for the final day when decisions are normally announced.
    Readers are encouraged to regularly check this page for updates.
    The calendar is updated regularly to reflect the latest information as some central banks have yet to release their meeting schedule for 2017.
    Other central banks only release tentative schedules for the year and then finalize the calendar as the meeting nears. Other central banks only announce monetary policy meetings shortly before they are held while some central banks don't announce when a review of monetary policy will be held.

    Work is underway to expand the number of central banks covered, including expanding the existing inflation targets table, and global interest rates table. You may replicate the table in part or in full only if you link to this page.

3-Jan     ARS Argentina Central Bank of Argentina
6-Jan     RON Romania National Bank of Romania
9-Jan     KZT Kazakhstan National Bank of Kazakhstan
10-Jan     ARS Argentina Central Bank of Argentina
10-Jan     HNL Honduras Central Bank of Honduras
11-Jan     PLN Poland National Bank of Poland
11-Jan     BRL Brazil Central Bank of Brazil
12-Jan     RSD Serbia National Bank of Serbia
12-Jan     PEN Peru Central Reserve Bank of Peru
13-Jan     KRW South Korea Bank of Korea
17-Jan     ARS Argentina Central Bank of Argentina
18-Jan     CAD Canada Bank of Canada
19-Jan      IDR Indonesia Bank Indonesia
19-Jan     MYR Malaysia Central Bank of Malaysia
19-Jan     EUR Euro area European Central Bank
19-Jan     CLP Chile Central Bank of Chile
23-Jan     ILS Israel Bank of Israel
23-Jan     GHS Ghana Bank of Ghana
24-Jan     TRY Turkey Central Bank of Republic of Turkey
24-Jan     HUF Hungary Central Bank of Hungary
24-Jan     ZAR South Africa South African Reserve Bank
24-Jan     ARS Argentina Central Bank of Argentina
25-Jan     GEL Georgia National Bank of Georgia
26-Jan     UAH  Ukraine National Bank of Ukraine
26-Jan     MDL Moldova National Bank of Moldova
26-Jan     FJD Fiji Reserve Bank of Fiji
27-Jan     TTD Trinidad and Tobago Central Bank of Trinidad and Tobago
30-Jan     AOA Angola Bank of Angola
31-Jan     JPY Japan Bank of Japan
31-Jan     ARS Argentina Central Bank of Argentina

Saturday, January 14, 2017

This week in monetary policy: Argentina, Canada, Indonesia, Malaysia, euro area and Chile

    This week (January 15 through January 21) central banks from 6 countries or jurisdictions are scheduled to decide on monetary policy: Argentina, Canada, Indonesia, Malaysia, the euro area and Chile.
    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, the rate one year ago, and the country’s MSCI classification.
    The table is updated when the latest decisions are announced and can always accessed by clicking on This Week.

JAN 15 - JAN 21, 2017:
ARGENTINA 17-Jan 24.75% 0 0 36.75%  FM
CANADA 18-Jan 0.50% 0 0 0.50%  DM
INDONESIA 19-Jan 4.75% 0 0 7.25%  EM 
MALAYSIA 19-Jan 3.00% 0 0 3.25%  EM 
EURO AREA 19-Jan 0.00% 0 0 0.05%  DM
CHILE 19-Jan 3.50% 0 0 3.50%  EM 

Thursday, January 12, 2017

South Korea holds rate, to maintain easy policy stance

    South Korea's central bank left its base rate at 1.25 percent for the seventh consecutive month and said it would maintain an easy monetary policy stance because inflationary pressures stemming from demand are unlikely to be high given moderate economic growth.
    The guidance by the Bank of Korea (BOK) of keeping the "stance of monetary accommodation" is new and was not in the monetary board's statement from December last year.
    The BOK, which cut its rate by 25 basis points in June, said the economy had slowed "somewhat" despite an easing of the slump in exports and forecast growth in 2017 in the "mid-2% range."
    South Korea's economy grew by an annual rate of 2.6 percent in the third quarter of last year, down from 3.3 percent in the second quarter.
     Today's statement by the BOK comes after the central bank last month told the parliament there was a chance that growth this year may slow from 2.8 percent expected for 2016 as consumption and construction investment was expected to slow while capital investment and exports were likely to rebound.
    "The trend of recovery in domestic demand activities is expected to be limited, due to deteriorations in economic sentiment for example, but exports will likely improve thanks chiefly to the global economic recovery," the BOK said today.
    Headline inflation in South Korea has been stable at 1.3 percent from October to December while the won has bounced back in the last week after weakening in the last quarter of 2016.
    The won was trading at 1,175 to the U.S. dollar today, up 2.7 percent this year but unchanged since the start of 2016.
    The BOK expects inflation to gradually rise to near its 2.0 percent target by mid-2017 due to higher oil prices while core inflation will remain in the mid- to upper-1 percent range.

Peru holds rate, inflation seen in range by mid-2017

    Peru's central bank maintained its monetary policy rate at 4.25 percent for the 11th month in a row, saying the rate was consistent with its forecast that inflation would converge to its target range by the middle of this year.
    The Central Reserve Bank of Peru (BCRP), which paused in its tightening campaign in March last year after four rate hikes, also said economic growth slowed in the final quarter of last year amid lower public spending but activity in coming quarters should be close to the economy's potential and expectations among businesses remain optimistic.
   Peru's inflation rate eased to 3.23 percent in December from 3.35 percent in November, with the central bank last month in its inflation report raising its estimate for 2016 inflation to 3.3 percent from 3.0 percent due to higher food prices from drought.
    For 2017 BCP forecast 2.3 percent, up from its previous forecast of 2.0 percent, marking the first year since 2013 that inflation would be within the central bank's target range of 1-3 percent.
    In 2013 inflation averaged 2.9 percent but then rose to 3.2 percent in 2014 and 4.4 percent in 2015, partly due to depreciation of the peso from mid-2014 to February 2016.
   Since then the peso has been more stable and was trading at 3.36 to the U.S. dollar today, slightly up from 3.4 at the start of 2016 but steady from 3.35 at the start of this year.
    Peru's economy expanded around its potential rate of 4 percent in 2016 but a drop in public investment in the fourth quarter hit the construction sector. But the new president, who took office in July last year, has promised to boost infrastructure projects.
    The central bank has estimated 4.0 percent growth for 2016 and in December lowered its 2017 forecast to 4.3 percent from 4.5 percent due to lower public spending. For 2018 the central bank expects growth of 4.2 percent.
    In its statement, the central bank said 2017 growth expectations were 4.0 percent.
    In the third quarter of last year Peru's Gross Domestic Product grew by an annual rate of 4.4 percent, up from 3.7 percent in the second quarter and the central bank has estimated fourth quarter growth of 3.2 percent, rising to 4.2 percent in the first quarter of this year.