Sunday, May 27, 2018

This week in monetary policy: Israel, Kenya, Kyrgyzstan, Indonesia, Mauritius, Canada, Fiji, Bulgaria, Gambia & Dominican Rep.

      This week - May 27 through June 2 - central banks from 10 countries or jurisdictions are scheduled to decide on monetary policy: Israel, Kenya, Kyrgyz Republic, Indonesia, Mauritius, Canada, Fiji, Bulgaria, Gambia and Dominican Republic.
      Indonesia's central bank will hold an additional monthly meeting of its board of governors on Wednesday, May 30, triggering speculation that it will raise interest rates for the second time in less than two weeks to shore up the exchange rate of its rupiah and Indonesian assets. 
      On May 17 Bank Indonesia raised its benchmark BI 7-day reverse repo rate by 25 basis points to 4.50 percent - its first rate hike since November 2014 - but this did little to reverse the fortunes of the rupiah which has weakened in the last month.
      Wednesday's meeting by BI's board will be the first to be chaired by Perry Wariyo who took over from Agus Martowardojo on May 24.
      Wednesday also sees the first meeting of the Bank of Mauritius' new monetary policy committee, which includes three new members.
      On May 15 Mauritius' central bank reconstituted its monetary policy committee and postponed a meeting scheduled for May 18 to May 30 "due to administrative matters."
      The new committee will again be chaired by Yandraduth Googoolye, who took over as governor in December 2017, and includes previous members: Renganaden Padayachy, Mahendra Vikramdass Punchoo, Mustag Mohammad Namdarkhan, Streevarsen Narrainen.
      The new committee members are Sanjeev Sobhee  and Lim Chang Kwong Lam Thuon Mine, both appointed by the prime minister,  along with Ms. Pricilla Pattoo, who is appointed by the finance and economic development minister.
      The Bank of Mauritius has for several years been preparing to implement a new monetary policy framework to improve the responsiveness of market interest rates to changes in the policy rate.

      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.

WEEK 22
MAY 27 - JUN 2, 2018:
COUNTRY                   DATE                     RATE                LATEST                    YTD              1 YR AGO      MSCI
ISRAEL28-May0.10%000.10%         DM
KENYA28-May9.50%-50-5010.00%         FM
KYRGYZSTAN28-May5.00%005.00%
INDONESIA *)30-May4.50%25254.75%         EM
MAURITIUS30-May3.50%004.00%         FM
CANADA30-May1.25%000.50%         DM
FIJI31-May0.50%000.50%
BULGARIA31-May0.00%000.00%         FM
GAMBIA31-May15.00%0020.00%
DOMINICAN REP.31-May5.25%005.75%
*) ADDITIONAL MONTHLY MEETING

Saturday, May 26, 2018

Indonesia to hold unscheduled meeting, rupiah rises

      Indonesia's central bank will hold "an additional" monthly meeting of its governors on May 30, igniting speculation that it will raise its key interest rates for the second time this month.
       Bank Indonesia (BI) said in a brief statement on Friday the additional meeting of its board of governors (RDG) would not replace the regular monthly meeting, which is scheduled for June 28.
       "This additional monthly RDG will discuss current economic and monetary conditions and future prospects," BI said.
       On May 17 BI raised its benchmark BI 7-day reverse repo rate by 25 basis points to 4.50 percent its first rate hike since November 2014, "amid the escalating risks in the global financial market and global liquidity downturn." BI's other key rates, the deposit and lending facility rates, were also raised by 25 points.
       BI added on that day that it was "ready to implement stronger measures to maintain macroeconomic stability" and the governor subsequently said he was prepared to raise rates further.
        Since that board meeting, Perry Wariyo has taken over as governor after Agus Martowardojo's 5-year term expired.
       At the press conference in connection with his inauguration on May 24, Wariyo said his priority in the short term was to stabilize the rupiah through interest rates, adding he intended to be more pre-emptive in monetary settings.
       So far BI's main instruments in curbing the rupiah's decline has been raising interest rates combined with the sales of U.S. dollars and the purchase of government bonds from foreign sellers.
       Last week BI also conducted three foreign exchange swap auctions to ensure enough rupiah liquidity following the rate hike and currency market interventions, up from two the previous week and one each week in April.
       Immediately following last weeks' rate hike, the rupiah continued to slide to hit 14,210 on Thursday to the dollar, down 4.5 percent since the start of the year.
       But news on Friday of the unscheduled board meeting led to a bounce in the rupiah, which rose to 14,037 per dollar late that day, down 3.3 percent this year.
       Indonesia's economy has slowed in the last two quarters, with annual growth in the second quarter of 5.06 percent. In its last statement, BI forecast growth this year of 5.1-5.5 percent and in his press conference Warjiyo forecast growth of 5.2 percent.
       He also forecast inflation near the midpoint of the central bank's target range of 3.5 percent, plus/minus 1 percentage point.
       In April Indonesia's inflation rate was steady from March at 3.4 percent.

       www.CentralBankNews.info



Thursday, May 24, 2018

Angola unifies lending and basic rate, cuts reserve ratio

      Angola's central bank unified its marginal lending facility with its basic interest rate as the BNA rate, which it said would now reflect the effective cost of providing liquidity to commercial banks.
      As part of the change, the National Bank of Angola (BNA) lowered the rate on its marginal lending facility by 200 basis points to 18.00 percent, the existing basic interest rate.
      The BNA also lowered the ratio on mandatory reserves in national currency liabilities by 200 basis points to 19.0 percent while the rate on the liquidity absorption facility was kept at zero percent.
      The adoption of a unified rate is the latest move by the central bank to change its monetary operations following the arrival of Jose Massano as BNA governor in October last year.
       In January the BNA replaced its fixed exchange rate regime with a floating exchange rate regime with bands and began auctions to set a reference rate for the kwanza, which subsequently depreciated.
       Against the U.S. dollar, the kwacha has been dropping steadily since the new exchange rate regime began on Jan. 9, with the kwacha today trading at 234.7 today, down 29.3 percent.
       The BNA said the latest change was aimed at improving the effectiveness of its monetary policy instruments and thus contribute to macroeconomic stabilization and a sound financial system.
       In the future, the central bank's monetary policy committee will now meet bi-monthly, with the next meeting scheduled for July 20.
       Angola's inflation rate declined for the sixth consecutive month in April to 20.22 percent and was sharply down from just over 41 percent in December 2016.
       The monetary base, which became an operational variable of monetary policy in November last year, shrunk by 2.48 percent in April for a year-on-year increase of 10.11 percent, BNA said.
       Credit issued in the national currency grew by 0.88 percent in April from March for an annual increase of around 8.73 percent, the BNA said, while it sold a total of 596.33 million euros for accumulated sales this year of 2.842.13 billion euros.
       Gross International reserves declined to $US17.55 billion in April from $17.70 billion in March, enough to finance 7.31 months of imports.
        Earlier this week the International Monetary Fund (IMF) welcomed the reform program adopted by President Joao Lourenco, which took over from Jose Eduardo dos Santos last September, vowing to root out an endemic culture of corruption. Dos Santos had been in power almost 38 years.
        Lourenco's reform program envisages upfront fiscal consolidation, greater exchange rate flexibility, reducing public debt to 60 percent of Gross Domestic Product, improving the public debt profile, settling domestic payments arrears and enhancing anti-money laundering.
        The rise in crude oil prices is giving Angola an opportunity to address its macroeconomic imbalances after the plunge in oil prices in 2014 was met by fiscal tightening and foreign exchange restrictions. In the run-up to the August 2017 elections, the government then embarked on fiscal expansion and a pegged exchange rate that further eroded fiscal and external buffers.
        The IMF welcomed Angola's transition to greater exchange rate flexibility and the new monetary policy framework that is anchored on base money targeting consistent with an inflation objective.
        But it also stressed the need for the central bank to gradually phase out direct foreign exchange sales and to set a clear strategy and timetable for eliminating foreign exchange restrictions.
        The IMF forecast that Angola's economy would expand 2.2 percent this year, up from an estimated 1.0 percent last year, and 2.5 percent in 2019.
       Inflation is seen declining to an average of 27.8 percent this year from 2017's estimated 31.7 percent and then easing further to 17.1 percent in 2019.

      www.CentralBankNews.info

       

Wednesday, May 23, 2018

Turkey raises late lending rate 300 bps to curb inflation

      After weeks of speculation and pressure on the lira's exchange rate, Turkey's central bank raised its its late liquidity lending rate by 300 basis points to 16.50 percent and said it would use all available instruments in pursuit of price stability and continue to maintain a tight policy stance until there is a "significant improvement" in the outlook for inflation.
      The Central Bank of the Republic of Turkey (CBRT) said after an extraordinary meeting of its monetary policy committee that elevated levels of inflation and inflation expectations continue to pose a risk and it had "decided to implement a strong monetary tightening to support price stability."
      The rate hikes comes after top government economic officials on Monday met to discuss measures, including moves by the central bank, to address the pressure on the lira and accelerating inflation amid growing investor discomfort with President Tayyip Erdogan's determination to exercise control over monetary policy after June 24 elections and thus erode central bank independence.
       In response to the sharp rate hike, the lira jumped 6.6 percent to 4.56 to the U.S. dollar from a record low of 4.86. However, the lira is still almost 17 percent below its rate at the start of 2018.
      It is the central bank's second hike of its late liquidity lending rate this year and the rate has now been raised by 375 basis points this year and by 650 points since the start of 2017. 
       The previous increase of the rate on the bank's late liquidity window - used by banks to access funds shortly before local markets' close - came on April 25 when the rate was raised by 75 basis points.
      Keeping some of its power dry, the central bank left its benchmark one-week repurchase rate steady at 8.0 percent along with its other policy rates.
      While the repo rate has been kept steady November 2016, the CBRT has been tightening its policy stance by other means, including the late liquidity lending rate, the rate it pays on local lenders' U.S dollar reserves and required reserve ratios, and raising volume of foreign exchange deposits to boost the value of the lira and slow down inflation.
       On April 30 the central bank said it was moving closer to using a single interest rate as a policy rate, something analysts have long hoped for as the current system with multiple rates has made monetary policy less predictable and transparent,.
      Turkey's headline inflation rate rose to 10.85 percent in April from 10.23 percent in March while core inflation rose to 12.2 percent.
       Last month the central bank raised its 2018 inflation forecast to 8.4 percent from 7.9 percent but retained its 2019 forecast of 6.5 percent and its medium-term outlook for inflation of 5 percent.
       The CBRT's monetary policy committee had been scheduled to meet on June 7.

       www.CentralBankNews.info

UPDATE-This week in monetary policy: Ghana, Hungary, Nigeria, Argentina, Paraguay, South Korea, South Africa, Ukraine, Pakistan & Colombia

    (Following item is updated with Pakistan's central bank, the State Bank of Pakistan (SBP), which will announce its monetary policy for the next two months on Friday, May 25.)

     This week - May 20 through May 26 - central banks from 10 countries or jurisdictions are scheduled to decide on monetary policy: Ghana, Hungary, Nigeria, Argentina, Paraguay, South Korea, South Africa, Ukraine, Pakistan and Colombia.
    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.

WEEK 21
MAY 20 - MAY 26, 2018:
COUNTRY                   DATE                     RATE                LATEST                    YTD              1 YR AGO      MSCI
GHANA21-May17.00%-100-30022.50%         FM
HUNGARY22-May0.90%000.90%         EM
NIGERIA22-May14.00%0014.00%         FM
ARGENTINA22-May40.00%0112526.25%         FM
PARAGUAY22-May5.25%005.50%
SOUTH KOREA24-May1.50%001.25%         EM
SOUTH AFRICA24-May6.50%-25-257.00%         EM
UKRAINE24-May17.00%025012.50%         FM
PAKISTAN25-May6.00%0255.75%         EM
COLOMBIA25-May4.25%-25-506.25%         EM

Monday, May 21, 2018

Ghana cuts rate 100 bps on subdued risks to inflation

      Ghana's central bank lowered its monetary policy rate by a further 100 basis points to 17.0 percent on subdued risks to the inflation outlook and "while global and domestic developments do not yet pose a threat to inflation in the near term, recent changes in global financing conditions and its impact on emerging market asset classes requires some vigilance."
      The Bank of Ghana (BOG) added its was "ready to take the appropriate policy measures to address any potential threats to the disinflation path."
      The BOG has now cut its rate by 300 basis points this year and by 900 basis points since embarking on an easing cycle in November 2016.
      Inflation in the west African nation dropped to 9.6 percent in April, the lowest since December 2012, and within the BOG's target range of 8.0 percent, plus/minus 2 percentage points.
      Underlying inflation pressures have also been contained, with the main core inflation measure, which excludes energy and utility, fell to 10.4 percent in April from 12.6 percent in December.
      Activity in Ghana's economy is supported by firmer prices of exports - oil, gold and cocoa - though BOG's leading indicator suggest a slower pace of growth in the first quarter of this year.
       However, the central bank said it expects a gradual rebound over the medium term, supported by a favorable external environment and policy initiatives to boost growth, the stability of the Cedi's exchange rate, lower interest rates and disinflation.
       "Although private sector credit growth remains below expectations, there are emerging sings of recovery evidence by increased new loan advances and easing credit conditions," BOG said.
       Ghana's economy grew by an annual 8.1 percent in the fourth quarter of last year for 2017 growth of 8.5 percent, the fastest in five years due to higher oil and gas output.
       Higher prices of exports have translated into positive trade and current account balances and Ghana's Gross International Reserves rose to US$8.1 billion as of May 17, up from $6.9 billion on March 20, helped by funds from the recent Eurobond issue that raised US$2 billion, well in excess of the government's initial expectations of raising $750 million.
       Based on the strong external payments position, improved fundamentals and liquidity, BOG said the foreign exchange market had remained strong, with the cedi's effective exchange rate down 0.9 percent over the first four months of the year showing "the cedi remains competitive and broadly aligned with the underlying fundamentals."
    Against the stronger U.S. dollar, the cedi has weakened in the last two months and was trading at 4.6 to the dollar today, down 1.3 percent this year.

Sunday, May 20, 2018

This week in monetary policy: Ghana, Hungary, Nigeria, Argentina, Paraguay, South Korea, South Africa, Ukraine & Colombia

    This week - May 20 through May 26 - central banks from 9 countries or jurisdictions are scheduled to decide on monetary policy: Ghana, Hungary, Nigeria, Argentina, Paraguay, South Korea, South Africa, Ukraine and Colombia.
     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.

WEEK 21
MAY 20 - MAY 26, 2018:
COUNTRY                   DATE                     RATE                LATEST                    YTD              1 YR AGO      MSCI
GHANA21-May18.00%-200-20022.50%         FM
HUNGARY22-May0.90%000.90%         EM
NIGERIA22-May14.00%0014.00%         FM
ARGENTINA22-May40.00%0112526.25%         FM
PARAGUAY22-May5.25%005.50%
SOUTH KOREA24-May1.50%001.25%         EM
SOUTH AFRICA24-May6.50%-25-257.00%         EM
UKRAINE24-May17.00%025012.50%         FM
COLOMBIA25-May4.25%-25-506.25%         EM

Tuesday, May 15, 2018

Armenia maintains rate, still sees gradual tightening

      Armenia's central bank left its benchmark refinancing rate at 6.0 percent - unchanged since February 2017 - and confirmed that it still expects to gradually neutralize the current monetary stimulus to control inflation.
      After cutting its rate 12 times by a total of 450 basis points from August 2015,  the Central Bank of Armenia (CBA) has said since November 2017 that it will be tightening at some point.
      But inflation slowed to 2.4 percent in April from 3.7 percent in March on a seasonal decline in food prices.
      CBA targets inflation at a midpoint of 4.0 percent, plus/minus 1.5 percentage points and expects inflation to remain in the lower part of its target range in coming months as no additional inflationary pressures are expected, inflation expectations have stabilized and global inflation is weak.
      The risks to the inflation outlook are considered balanced and inflation in 12 months is seen within its target range.
      CBA's second quarter inflation report will be published on May 30.
      Relative high economic activity was maintained in the first quarter of this year, supported by high domestic demand but this growth is expected to slow down and stabilize in the second quarter.
      Armenia's dram has eased this month and was trading at 484.6 to the U.S. dollar today, down 0.1 percent this year.
       Last month the CBA added financial stability to its main objective in addition to price stability like many other central banks in the wake of the global financial crises.
       In the last decade it became clear that low inflation and moderate economic growth does not prevent the build-up of highly volatile financial cycles that can trigger economic instability.
     
         www.CentralBankNews.info

Sunday, May 13, 2018

This week in monetary policy: Armenia, Iceland,Thailand, Poland, Zambia, Brazil, Jamaica, Indonesia, Egypt, Mexico & Mauritius

     This week - May 13 through May 19 - central banks from 11 countries or jurisdictions are scheduled to decide on monetary policy: Armenia, Iceland, Thailand, Poland, Zambia, Brazil, Jamaica, Indonesia, Egypt, Mexico and Mauritius.
     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.

WEEK 20
MAY 13 - MAY 19, 2018:
COUNTRY                   DATE                     RATE                LATEST                    YTD              1 YR AGO      MSCI
ARMENIA15-May6.00%006.00%
ICELAND16-May4.25%004.75%
THAILAND16-May1.50%001.50%         EM
POLAND16-May1.50%001.50%         EM
ZAMBIA16-May9.75%-50-5012.50%
BRAZIL16-May6.50%-25-5010.25%         EM
JAMAICA16-May2.75%-25-504.75%
INDONESIA17-May4.25%004.75%         EM
EGYPT17-May16.75%-100-20016.75%         EM
MEXICO17-May7.50%0256.75%         EM
MAURITIUS18-May3.50%004.00%         FM