Mexico holds rate, on alert for inflation from tax reform

    Mexico's central bank held its policy rate steady at 3.50 percent, as expected, but said it would remain alert to any impact on inflation from the government's tax reform.
    The Bank of Mexico, which has cut its target for overnight rates three times this year for a total reduction of 100 basis points, also said it would be "vigilant" to the inflationary effects of economic activity and the relative monetary stance of Mexico versus the United States in order to achieve its 3.0 percent inflation target.
    Mexico's headline inflation rate eased to 3.36 percent in October from 3.39 percent in September but picked up to 3.51 percent in early November on a seasonal rise in electricity prices.
    The central bank said inflation was still showing a positive trend and core inflation was near historically low levels of around 2.5 percent. But inflation expectations for the end of 2014 have risen slightly due to the potential impact of changes to taxes, but remain below 4 percent.
    The central bank added that expectations of economic agents for 2015 show that any increase in inflation will be "transient, moderate and will not lead to second order effects."

Central Bank News Link List - Dec 6, 2013: Fed's Plosser: Time to 'gracefully exit' QE3

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.

• Fed's Plosser: Time to 'gracefully exit' QE3 (MarketWatch)
• German central bank  raises economic growth forecast (WSJ)
• Bank of Canada Senior Deputy Macklem to leave in May (Bloomberg)
• Chile, Colombia, Peru central banks ready for Fed taper - Peru (Reuters)
• POLL-Central Bank of Sri Lanka seen keeping rates steady on Monday (Reuters)
• Indonesia central bank urges exporters to sell dollars amid weak rupiah (Reuters)
• Central banks warn of bitcoin risks (WSJ) 
• Brazil analysts on Copom's next move; Tightening cycle near end (MNI)
• Russian central bank to act to curb growth in consumer lending (Reuters)
• Vietnam central bank to keep forex rate stable (Reuters)
• Ukraine central bank reserves deplete faster than expected in Nov (KyivPost)
• Special report: How Fed policy enriches private equity, if not workers (Reuters)
• Women rise at BOE from counting banknotes to supervising banks (Bloomberg)
• Central bank details risks to Ireland's banks (WSJ)
• Blow to Irish central bank as seventh regulator leaves (Independent)
• RBNZ commitment to inflation target considered crucial (TVNZ)
• Zambia's central bank to commence implementation of banking gauge (Xinhua)
• Tonga's banks urged to lend more (Matangi)
• www.CentralBankNews.info

Egypt sees limited risks to inflation from weak economy

    Egypt's central bank, which earlier today cut its key interest rates for the third time in a row, said there are limited risks to higher inflation in the future due to "the pronounced downside risks to domestic GDP combined with the persistently negative output gap since 2011."
    The Central Bank of Egypt (CBE), which cut its benchmark overnight deposit rate by another 50 basis points to 8.25 percent for a total reduction this year of 100 points, stressed the downside risks to Egypt's economy from the challenges facing the euro area and softening growth in emerging markets.
   "Given that the downside risks to the GDP outlook outweigh the upside risks to the inflation outlook, the MPC decided to cut they key CBE rates," the central bank said.
    Egypt's headline inflation rate rose to 10.4 percent in October from September's 10.15 percent, driven by higher prices of domestic food due to supply bottlenecks in the distribution channel despite lower international food prices, in addition to the effects of the Eid festivities.
    The central bank cautioned that inflation could even rise further in November and December despite the expected seasonal slowdown in monthly rates and an unlikely rise in international food prices.

Global Monetary Policy Rates – Nov, 2013: Global average falls further to 5.47% as 12 central banks cut rates, 3 raise

    Global interest rates fell further in November as 12 central banks cut their policy rates, most notably the European Central Bank (ECB), Chile, Peru and Thailand, while three banks - Brazil, Indonesia and Pakistan - raised rates to curb inflation.
    The Global Monetary Policy Rate (GMPR) – the average policy rate of the 90 central banks tracked by Central Bank News – fell to 5.47 percent at the end of November from 5.52 percent in October and 2012's average rate of 6.2 percent, continuing the trend of declining official interests since November 2011.
    During the month of November policy rates were cut by a total of 545 basis points while rates were raised by 125 points for a net decline of 420 points, the second largest monthly fall this year after January’s net drop of 476 points.
    In addition to the ECB, which cut its rate for the second time this year to 0.25 percent, the following central banks cut rates in November: Albania, Angola, Armenia, Chile, Congo, Hungary, Latvia, Peru, Romania, Serbia and Thailand.
    Through the first 11 months of this year, 41 central banks have reduced their policy rates on net basis compared with only eight banks that have raised their rates.
    This year’s top rate cutters remain Sierra Leone, Belarus and Mongolia but Hungary has been moving up the ranking all year and is now the fourth most aggressive rate cutter this year following its 16th consecutive rate cut in November.
    Among the eight central banks that have raised rates this year, Gambia was the most aggressive with a total rate rise of 600 basis points while Brazil and Indonesia occupy the second and third spots with total rate increases of 275 and 175 basis points, respectively.

                                    GLOBAL MONETARY POLICY RATES (GMPR) 

                   (Changes in November 2013 and year-to-date, in basis points)

COUNTRY	MSCI	NOVEMBER	YTD CHANGE
RATE CUTS:
SIERRA LEONE			-800
BELARUS			-650
MONGOLIA			-275
HUNGARY	EM	-20	-255
KENYA	FM		-250
LATVIA		-125	-225
VIETNAM	FM		-200
POLAND	EM		-175
BOTSWANA			-150
GEORGIA			-150
MOZAMBIQUE			-125
ROMANIA	FM	-25	-125
SERBIA	FM	-50	-125
ANGOLA		-50	-100
COLOMBIA	EM		-100
CONGO DEM. REP.		-100	-100
MEXICO	EM		-100
MOLDOVA			-100
SRI LANKA	FM		-100
TAJIKISTAN			-100
TURKEY	EM		-100
UKRAINE	FM		-100
ALBANIA		-25	-75
ISRAEL	DM		-75
AUSTRALIA	DM		-50
CHILE	EM	-25	-50
EGYPT	EM		-50
EURO AREA	DM	-25	-50
JAMAICA			-50
JORDAN	FM		-50
RWANDA			-50
THAILAND	EM	-25	-50
WEST AFRICAN STATES			-50
AZERBAIJAN			-25
INDIA	EM		-25
MACEDONIA			-25
MAURITIUS	FM		-25
PERU	EM	-25	-25
SOUTH KOREA	EM		-25
BULGARIA	FM		-1
ARGENTINA	FM		0
ARMENIA		-50	0
SUM:		-545	-5156
RATE RISES:
TUNISIA	FM		25
PAKISTAN	FM	50	50
ZAMBIA			50
GHANA			100
DOMINICAN REPUBLIC			125
INDONESIA	EM	25	175
BRAZIL	EM	50	275
GAMBIA			600
SUM:		125	1400
NET CHANGE:		420	-3756

    www.CentralBankNews.info

Central Bank News Link List - Dec 5, 2013: Brazil leaves door open for smaller interest rate hikes

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.

• Brazil leaves door open for smaller interest rate hikes (Reuters)
• Fed's Lockhart calls for setting timetable for tapering QE (Bloomberg)
• China central bank warns banks against use of bitcoin (The Star)
• South Korea central bank: Q4 growth of 0.8% or more achievable (Reuters)
• No limit to negative rates as Rohde defends Danish euro peg (Bloomberg)
• Serb central bank governor sees more dinar weakness by end 2013 (Bloomberg)
• Romania braces for 'shock' on bad loans after central bank probe (Bloomberg)
• www.CentralBankNews.info