Saturday, February 28, 2015

China cuts rate 25 bps after inflation falls to historic lows

     China's central bank cut its benchmark lending and deposit rates by a further 25 basis points to counter the dampening impact on economic activity from the rise in real interest rates after economic restructuring and the sharp fall in international commodity prices pushed down consumer price inflation to what it described as "historic lows".
     The People's Bank of China (PBOC), which last cut its lending rate by 40 basis points on Nov. 22, 2014, cut the one-year lending rate to 5.35 percent from 5.60 percent while the one-year deposit rate was cut to 2.5 percent from 2.75 percent.
    In addition, the PBOC continued the process of allowing prices to become more market-oriented by raising the maximum that financial institutions can offer for deposits to 1.3 times the benchmark deposit rate from 1.2 times. In November the PBOC raised the limit from a previous 1.1 times.
    The central bank described the higher deposit rate limit as an "important step" in its market-oriented reform the would help expand the floating range of interest rates on deposits, allow financial institutions further room to set their prices independently, improve the level of financial services along and improve the role of market interest rates in allocating resources.
    China's consumer price inflation rate fell to 0.8 percent in January from 1.5 percent in December. The last time China's inflation rate was that low was in November 2009 when inflation rose to 0.6 percent and then 1.9 percent the following month after nine months of steady deflation.
    The larger-than-expected fall in consumer price inflation, along with an annual 4.3 percent fall in January producer prices that illustrates overcapacity among China's factories, fueled expectations that the PBOC would cut its rates.
     On Feb. 10 the bank made it clear that was ready to fight any further economic weakening due to weakening external demand.
    China's Gross Domestic Product expanded by only 1.5 percent in the fourth quarter of 2014 from the third quarter for annual growth of 7.3 percent. Full-year 2014 growth was 7.4 percent, down from 2013's 7.8 percent, below the government's 7.5 percent target and the weakest growth in 24 years.
    On Feb. 4 the PBOC cut its reserve requirement on big banks by 50 basis points to 19.50 percent, freeing up 600 billion yuan that was held as reserves, and economists are looking for further cuts.


Friday, February 27, 2015

Angola maintains rates as pace of credit rise eases

    Angola's central bank maintained its policy rates, including the benchmark Basic Interest Rate (BNA) at 9.0 percent, citing a slight decline January inflation along with a lower expansion of credit and a 1.27 percent average depreciation in the kwanza's exchange rate in January from December.
    The National Bank of Angola (BNA), which last changed its policy rate in October 2014 when it raised the rate by 25 basis points, noted the annual inflation rate in January declined by 0.04 percentage points to 7.44 percent from December.
    The stock of credit to the economy rose by an annual 14 percent in January to 3.394 billion kwanza, down from an increase of 17.14 percent in December.
    The kwanza started depreciating against the U.S. dollar in September 2014 and has continued to ease this year, like most other currencies. The BNA said the average exchange rate of the kwanza to the dollar amounted to 104.171 in January.
    Today the kwanza was quoted at 106.35 to the dollar, down 3.3 percent this year.
    Angola's Gross Domestic expanded by 4.4 percent in 2014 from 2013 according to preliminary estimates from the BNA, but the oil-dependent economy is expected to slow down this year due to the fall in oil prices.
    Last month Angola'sgovernment slashed $14 billion from planned spending.
    Oil accounts for around half of Angola's economic output, 80 percent of tax revenues and 90 percent of export earnings, according to press reports.

Central Bank News Link List - Feb 27, 2015: Fischer says odds greatest for rate rise in June, September

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.

2015 Global Central Bank Calendar - updated with Fiji, Albania

    Following is the 2015 calendar for meetings by central bank committees that decide monetary policy.
    The table includes scheduled meetings for more than 35 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.
   The calendar is updated regularly to reflect the latest information as some central banks have yet to release their meeting schedule for 2015. Other central banks only release tentative schedules and then finalize their calendar as the meeting nears.
    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.

                      Central Bank News - 2015 Global Central Bank Calendar

3-Mar     AUD Australia Reserve Bank of Australia
4-Mar     BRL Brazil Central Bank of Brazil
4-Mar     CAD Canada Bank of Canada
4-Mar     PLN Poland National Bank of Poland
4-Mar     ALL Albania  Bank of Albania
5-Mar     EUR Euro area European Central Bank
5-Mar     GBP United Kingdom Bank of England
5-Mar     MYR Malaysia Central Bank of Malaysia
11-Mar     THB Thailand Bank of Thailand
12-Mar     KRW Korea Bank of Korea
12-Mar     NZD New Zealand Reserve Bank of New Zealand
12-Mar     PEN Peru Central Reserve Bank of Peru
12-Mar     RSD Serbia National Bank of Serbia
13-Mar     RUB Russia Bank of Russia
17-Mar     JPY Japan Bank of Japan
17-Mar     TRY Turkey Central Bank of Republic of Turkey
17-Mar     IDR Indonesia Bank Indonesia
18-Mar     USD United States Federal Reserve
19-Mar     NOK Norway Norges Bank
18-Mar     ISK Iceland Central Bank of Iceland
19-Mar     CHF Switzerland Swiss National Bank
19-Mar     CLP Chile Central Bank of Chile
23-Mar     ILS Israel Bank of Israel
24-Mar     MAD Morocco Bank of Morocco 
24-Mar     HUF Hungary Central Bank of Hungary
24-Mar     NGN Nigeria Central Bank of Nigeria
25-Mar     GEL Georgia National Bank of Georgia
25-Mar     UAH  Ukraine National Bank of Ukraine
26-Mar     PHP Philippines Central Bank of Philippines
26-Mar     MXN Mexico Banco de Mexico
26-Mar     ZAR South Africa South African Reserve Bank
26-Mar     CZK Czech Republic Czech National Bank
26-Mar     FJD Fiji Reserve Bank of Fiji
26-Mar     MDL Moldova National Bank of Moldova
27-Mar     XCD Eastern Caribbean Eastern Caribbean Central Bank
27-Mar     TTD Trinidad and Tobago Central Bank of Trinidad and Tobago
30-Mar     KGS Kyrgyzstan National Bank of the Kyrgyz Republic

Thursday, February 26, 2015

Kenya holds rate, monitors FX rate and inflation

    Kenya's central bank maintained its benchmark Central Bank Rate (CBR) at 8.50 percent, noting it was keeping a close eye on any impact on the shilling's exchange rate and domestic inflation from possible volatility in global foreign exchange markets in response to the divergent path of monetary policy in major advanced economies.
    The Central Bank of Kenya (CBK), which has kept its benchmark rate steady since May 2013, said the favorable impact of lower oil prices helped support price stability, confidence in the country's economy remains strong and the shilling has continued to benefit from strong investor confidence that was boosted by the International Monetary Fund's (IMF) approval of a precautionary facility.
    On. Feb. 2 the IMF's executive board approved a stand-by arrangement that amounted to a total of US$688 million that will allow the country's government access to funds to cushion any external shocks to the economy while economic reforms are being carried out.
    The CBK said its stock of usable foreign exchange reserves amounted to US$7.224.19 billion as of Feb. 26, down from $7.424.7 billion at the end of December, but still a level that provides a "robust cushion" along with the IMF facility against any shocks that could trigger excess exchange rate volatility.
    The shilling started depreciating against the dollar in October 2013 and was close to hitting 92 to the dollar - a level not seen since November 2011 - in late January before it reversed course. Today the shilling was quoted at 91.5 to the dollar, down about one percent since the start of the year.
    Kenya's inflation rate rose slightly to 5.6 percent in February from 5.5 percent in January, a rise the central bank had expected.

Egypt holds rate, low oil counters supply bottlenecks

    Egypt's central bank maintained its key policy rates, noting that upside risks to inflation from domestic supply shocks are lessened by the impact of lower oil prices on import prices, including the downward revision in international food prices.
    The Central Bank of Egypt (CBE), which cut rates by 50 basis points in January, maintained its overnight deposit rate at 8.75 percent, the overnight lending rate at 9.75 percent, the rate on its main operation at 9.25 percent and the discount rate at 9.25 percent.
    Egypt's consumer price inflation - which jumped to 11.04 percent in July 2014 after a government cut in fuel subsidies - continued its downward trend in January, declining to 9.7 percent from 10.13 percent in December.
    But the CBE noted that on a monthly basis, inflation rose by 0.99 percent due to adjustments in administered prices and supply bottlenecks from the distribution of butane cylinders.
    The CBE noted that Egypt's economic output "jumped significantly" in the first quarter of the 2014/15 financial year - the third calendar quarter - with Gross Domestic Product up by an annual 6.8 percent, the highest annual growth rate since the fourth quarter of 2007/08.
    It attributed higher output to continuous growth in manufacturing and an expansion of tourism after several quarters of contraction. Investment improved for the third consecutive quarter.
    However, the CBE repeated that the challenges facing the euro area and softer growth in emerging markets could pose downside risks to economic growth despite the contribution from the expansion of the Suez Canal.

Moldova maintains rate, still sees inflation above limit

    Moldova's central bank maintained its key rate, including the base rate at 13.5 percent, with its policy stance still determined by the forces of inflationary pressures stemming from a depreciation of the leu currency and the economic weakness of its main trading partners.
    The National Bank of Moldova, which raised its rate by 500 basis points at an extraordinary board meeting on Feb. 17, repeated it still expects consumer price inflation to temporarily breach the upper limit of its target range due to the impact of currency depreciation on import prices and utility tariffs.
    The National Bank targets inflation at a midpoint of 5.0 percent, within a lower limit of 3.5 percent and an upper limit of 6.5 percent, and said its decision to hold its rate steady was aimed an anchoring inflation expectations, which it fears will rise, at that level.
    The headline inflation rate in Moldova - a former Soviet state located between Romania to the east and Ukraine to the north, south and east - was steady at 4.7 percent in January and has remained within the central bank's target range since February 2012.
    In January, the central bank forecast an average inflation rate of 5.8 percent this year and 6.1 percent in 2016.
    After tumbling by by 16.5 percent against the U.S. dollar in 2014, the leu continued to drop until Feb. 10 when it fell to over 19.0 to the dollar, down over 30 percent since the start of 2014 and down 18 percent this year alone.
    But since Feb. 10 the leu has stabilized and risen slightly, hitting 18.4 to the dollar today, in response to rate hikes, low liquidity of foreign exchange and a new prime minister.
    Remittances from foreign workers to Moldova was down by an annual 29.2 percent in January, slightly better than a 30 percent decline in December, while exports and imports in 2014 fell by 3.7 percent and 3.2 percent, respectively, compared with 2013, the bank said.
    However, industrial production and the transport of goods increased by 7.3 percent and 4.0 percent, respectively, in 2014, the central bank said.


Egypt maintains rates, to issue statement later

    Egypt's central bank maintained its key policy rates, including the benchmark overnight deposit rate, and will issue a statement by its Monetary Policy Committee later today.
    The Central Bank of Egypt (CBE) held its overnight deposit rate steady at 8.75 percent, the overnight lending rate at 9.75 percent, the rate on its main operation at 9.25 percent and the discount rate at 9.25 percent.
    The CBE surprised most economists last month by cutting its rates by 50 basis points as it considered the upside risks to inflation to be contained by lower oil and food prices while there were risks to the country's economic growth from the challenges facing the euro area and softer growth in emerging market economies.
    The CBE raised its rate by 100 basis points in July 2014 following a government cut in fuel subsidies that pushed up fuel prices sharply and thus inflation.
    Egypt's consumer price inflation rate jumped to 11.04 percent in July 2014 but has slowly declined since then, reaching 9.7 percent in January. Core inflation also fell to 7.06 percent in January from 7.69 percent in December.
    The CBE currently aims at "low rates of inflation" but has said it intends to adopt an inflation-targeting policy framework.


Wednesday, February 25, 2015

Central Bank News Link List - Feb 25, 2015: Israeli interest rates could go below zero–c. bank dep. governor

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, February 24, 2015

Central Bank News Link List - Feb 24, 2015: Fed’s Yellen flags rate hikes on ‘meeting-by-meeting’ basis

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.

Hungary holds rate but will consider rate cut in March

    Hungary's central bank maintained its base rate at 2.0 percent but said it will "consider the need for possible further easing of monetary conditions" in March when it reviews the outlook for inflation.
    The National Bank of Hungary (MNB), which ended a two-year easing cycle in July 2014 after cutting the rate by 490 basis points, said data showed a "further shift towards the alternative scenario implying looser monetary policy" and the "probability of second-round effects taking hold in the wake of disinflationary trends in the economy as well as a change in inflation expectations has increased."
    Last month the MNB also referred to its alternative scenario outlined in its December inflation report but underscored today that it was becoming more convinced of the need to ease its monetary policy stance in March to avoid a further fall in inflation expectations and persistent deflation.
    Minutes from the MNB's council meeting in January showed that its members did not yet see any second-round effects of lower oil prices so inflation was likely to move toward the central bank's 3.0 percent in the second half of 2016.
    The central bank's December inflation report included two scenarios that laid out the case for easier policy based on continued low oil prices, a weak inflationary environment and low external demand.
    The central bank said recent data for the price of market services had showed a possible rise in the probability of second-round effects of lower oil prices on the domestic economy and wages.
    Hungary's headline inflation rate fell further to minus 1.4 percent in January from minus 0.9 percent in December, the fifth consecutive month of deflation.
    Many economists had expected the Hungarian central bank to prepare financial markets for a rate cut in March and bond markets are already pricing in a rat cut. A recent poll also showed that the consensus forecast the base rate at the end of this year had failed to 1.6 percent from 2.1 percent during February.