Wednesday, May 27, 2015

Central Bank News Link List - May 27, 2015: Don’t expect Bank of Canada to follow the Fed’s lead on 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.




Tuesday, May 26, 2015

Kyrgyzstan pushes number of 2015 rate cutters to 36

    A total of 36 central banks and monetary authorities worldwide have eased their policy stance so far in 2015 while 14 have tightened their policy, with the National Bank of the Kyrgyz Republic joining the rate-cutting spree on May 25 by cutting its policy rate by 150 basis points.
    From July 2014 through January this year, the central bank of Kyrgyzstan raised its policy rate by a total of 500 basis points to curb inflationary pressures from a depreciation of the som currency. But since late April the som's exchange rate has bounced back and inflation has eased steadily after hitting 11.6 percent in January.
    Central Bank News, which already tracks the policy rates of 90 central banks worldwide, recently expanded its list of products to include Global Monetary Policy Changes (GMPC), a country-by-country overview of changes to monetary policy.
    GMPC aims to capture changes to a wide range of monetary policy instruments, such as reserve requirements, bond purchases or exchange rates, in addition to changes to key interest rates. Major central banks have resorted to unconventional monetary policy measures to stimulate economic activity after cutting rates to effectively zero in the wake of the global financial crises.
     GMPC complements Central Bank News’ other products, such as the the Global Interest Rate Monitor (GIRM), which tracks official policy rates, and Global Monetary Policy Highlights (GMPH), which covers key events in monetary policy and includes a summary of rate changes each month.

    Following is an alphabetical list of countries that have changed their monetary policy this year. The list is updated and can be accessed on the Central Bank News website under the heading of "Easier or Tighter?" as soon as central banks announce changes to their policy.

Hungary cuts rate 15 bps, cautious easing may continue

    Hungary's central bank cut its base rate by another 15 basis points to 1.65 percent and said the outlook for inflation points to "loose monetary conditions for an extended period" and it may continue with "cautious easing" as long as it helps it achieve its inflation target.
    The National Bank of Hungary (MNB) restarted its easing cycle in March after putting it on  hold in August 2014, has now cut its rate by 45 basis points this year. The rate cut was largely expected and economists first expect the central bank to put its easing cycle on hold when rates hit 1.5 percent.
    MNB said there is still a risk of second-round effects taking hold in the wake of falling inflation expectations and inflation is first expected to approach levels around its 3.0 percent target toward the end of the forecast period due to moderate inflation pressures and unused capacity in the economy that is likely to have a disinflationary impact.
    Hungary's consumer price inflation rate was minus 0.3 percent in April, up from minus 0.6 percent in March but still the eight consecutive month of deflation.
    The central bank said the pace of economic activity was strengthening, but output remains below potential and the domestic economy is still expected to have a disinflationary impact, albeit to a diminished extent as capacity utilization will only improve gradually due to the protracted recovery of Hungary's export markets.
    "Inflationary pressures are likely to remain moderate for an extended period," the MNB said.

Kyrgyzstan cuts rate 150 bps as inflation falls, som rises

     The central bank of the Kyrgyz Republic cut its policy rate by 150 basis points to 9.50 percent in light of a continuing decline in inflation and a slowdown in domestic and foreign demand.
     The National Bank of the Kyrgyz Republic began raising its rate in July 2014 to curb inflationary pressures from the depreciating som currency and the rate cut is the first move by the central bank to roll back rate cuts totaling 500 basis points from July through January. Since February the central bank had maintained the policy rate at 11.0 percent.
     Inflation in Kygyzstan, which borders Kazakhstan to the north and China to the east, eased to 7.9 percent in April and then to 6.4 percent by mid-May from 10.5 percent at the end of 2014, according to the central bank, which targets inflation of 5.0 to 7.0 percent inflation.
    The kyrgyzstani som began depreciating in August 2014 and hit a 2015-low of 63.9 to the U.S. dollar in early April but since then it has bounced back. Today it was quoted at 58.4 to the dollar, steady from 58.9 at the start of the year.
    The central bank said its economic growth was still subject to external factors, citing uncertainty among its main trade partners that is affecting it through trade and remittance channels.
    High economic growth of 7.0 percent from January through April was mainly driven by an expansion of gold mining at the Kumtor mine. Excluding Kumtor, Gross Domestic Product expanded by an annual 3.7 percent.

Monday, May 25, 2015

Central Bank News Link List - May 26, 2015: G7 finance ministers to discuss recent forex moves – Canada

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.


Israel holds rate, warns further shekel rise to hit exports

    Israel's central bank maintained its benchmark interest rate at 0.10 percent, but said continued appreciation of the shekel's exchange rate "is liable to weigh on growth of exports and of the tradable sector."
    The Bank of Israel (BOI), which cut its rate by 15 basis points in February to counter the negative impact of exports and inflation from the rise in the shekel, noted that the shekel had strengthened by about 1.3 percent against the U.S. dollar since late April though May 22 and year-to-date this amounted to an effective appreciation of 3.7 percent.
    In response to the BOI's statement, the shekel jumped 0.8 percent to around 3.86 to the dollar from 3.89. In 2014 it ended at 3.89 to the dollar.
    Economic data for the first quarter of this year and for April remain mixed, pointing toward continued growth similar to the last two years, the BOI said. Israel's
    Gross Domestic Product is estimated to have expanded by an annual 2.86 percent in the first quarter, slightly down from 2.96 percent in the fourth quarter, with growth led by a 6.5 percent rise in private consumption while fixed capital formation contracted by 7.4 percent and durable goods declined by 11.2 percent.
    Exports of goods, excluding ships, aircraft and diamonds, declined by 4.3 percent in dollar terms in April following a 4.7 percent in the first quarter.
    Israel's consumer price inflation rate was minus 0.5 percent in April, the eight month in a row of deflation, and one-year inflation expectations from various sources are around the lower bound of the BOI's 1.0 percent to 3.0 percent target range.
    "Similar to last month, most private forecasters do not expect a reduction in the Bank of Israel interest rate in the next few months; however, the Telbor curve continues to point to somer probability of such a reduction," the BOI said.

This week in monetary policy: Israel, Angola, Kyrgyzstan, Hungary, Canada, Ukraine, Fiji and Trinidad & Tobago

    This week (May 25 through May 30) central banks from eight countries or jurisdictions are scheduled to decide on monetary policy: Israel, Angola, the Kyrgyz Republic, Hungary, Canada, Ukraine, Fiji and Trinidad & Tobago.
    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.

COUNTRY MSCI  LATEST              DATE   CURRENT  RATE         1 YEAR AGO
ISRAEL DM UNCH. 25-May 0.10% 0.75%
ANGOLA UNCH. 25-May 9.25% 9.25%
KYRGYZSTAN UNCH. 25-May 11.00% 6.00%
HUNGARY EM CUT 26-May 1.80% 2.40%
CANADA DM UNCH. 27-May 0.75% 1.00%
UKRAINE FM UNCH. 28-May 30.00% 9.50%
FIJI UNCH. 28-May 0.50% 0.50%
TRINIDAD & TOBAGO RAISE 29-May 3.75% 2.75%



Saturday, May 23, 2015

Pakistan cuts rates 100 bps as inflation continues to fall

    Pakistan's central bank effectively cut its policy interest rates by 100 basis points and narrowed its rate corridor by 50 points to 200 basis points as inflation continues its downward trajectory and economic conditions improve, including a smaller current account deficit.
    The State Bank of Pakistan (SBP), which earlier this year revised its rate corridor and introduced a SBP target rate for the money market overnight repo rate, said economic growth was expected to accelerate due to the gradual realization of investments in energy and infrastructure projects.
    "Overcoming energy shortages and improving law and order conditions is expected to provide further impetus in reviving investment and higher production," SBP said.
    Pakistan's Gross Domestic Product is estimated to have expanded by 4.2 percent in fiscal 2015, which ends on June 30, up from 4.0 percent in FY14.
    Pakistan's consumer price inflation rate declined to 2.11 percent in April from 2.49 percent the previous month, continuing the drop since 8.2 percent in June last year, reflecting soft international commodity prices, a stable exchange rate, contained government borrowing, moderate aggregate demand and the central bank's "earlier conservative monetary policy stance."
    SBP said inflation expectations also remain subdued but uncertainty about oil prices and possible changes in domestic energy prices are the main risks to its outlook.
    In March the SBP's board of directors approved changes to the bank's rate corridor to enhance the effectiveness of its monetary policy and better manage liquidity in the interbank market. Under its previous regime from 2009, when the SBP established an interest rate corridor, there was no instrument to limit very frequent drops in the repo rate and the money market repo rate also at times exceeded the reverse repo rate, which was the policy rate.
    In order to improve the rate corridor, the SBP set a target rate between the floor and ceiling rates of the corridor and use purchases and sales of government securities along with other open market operations to keep the money market weighted overnight rate close to the target rate.
    Today the ceiling of the rate corridor was reduced by 100 basis points to 7.0 percent from 8.0 percent, with the new SBP target rate, or its main policy rate, set 50 points below this ceiling rate. By narrowing the rate corridor by 50 points to 200 points, the floor rate is set at 5.0 percent.

Friday, May 22, 2015

Central Bank News Link List - May 22, 2015: Yellen sees rate rise in 2015, gradual pace of tightening

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.



Sri Lanka maintain rates as inflation seen at low levels

    Sri Lanka's central bank maintained its benchmark policy rates, with inflation projected to "remain at low levels in the months ahead."
    The Central Bank of Sri Lanka, which cut its policy rates by 50 basis points in April, added that the recent US$ 400 million currency swap agreement with the Reserve Bank India had strengthened reserves and together with expected capital inflows, including tourism and workers' remittances, will improve the country's balance of payments during the year.
    Sri Lanka's consumer price inflation rate was steady at 0.1 percent in April and March, well below the bank's target of 3.0 to 5.0 percent, reflecting a downward revision in energy prices and lower prices of consumer items.
    The International Monetary Fund (IMF) forecasts average inflation this year of 1.7 percent, with inflation ending the year at 3.2 percent, and averaging 3.4 percent in 2016. Gross Domestic Product is projected to expand by 6.5 percent this year and beyond, down from 7.4 percent in 2014 and 7.2 percent in 2013.
    Sri Lanka's GDP expanded by an annual 6.4 percent in the fourth quarter of 2014, down from 7.7 percent in the third quarter.
     The central bank maintained its benchmark Standing Deposit Facility Rate (SDRF) at 6.0 percent and the Standing Lending Facility Rate (SLFR) at 7.50 percent.

Thursday, May 21, 2015

UPDATE-This week in monetary policy: Indonesia, Nigeria, Turkey, South Africa, Japan and Pakistan

     (Following item has been updated to include Pakistan)
    This week (May 18 through May 23) central banks from six countries or jurisdictions are scheduled to decide on monetary policy: Indonesia, Nigeria  Turkey, South Africa, Japan and Pakistan.
    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.

COUNTRY MSCI  LATEST              DATE   CURRENT  RATE         1 YEAR AGO
INDONESIA EM UNCH. 7.50% 7.50% 7.50%
NIGERIA FM UNCH. 13.00% 13.00% 12.00%
TURKEY EM UNCH. 7.50% 7.50% 9.50%
SOUTH AFRICA EM UNCH. 5.75% 5.75% 5.50%
JAPAN DM UNCH.                  N/A                  N/A                  N/A
PAKISTAN FM CUT 23-May 8.00% 10.00%