Albania's central bank maintained its key interest rate at 2.50 percent, but said "the monetary stimulus may increase further, in the event the economic and monetary developments will shift the balance of inflation risks downside."
The Bank of Albania, which has cut its rate by 50 basis points so far this year, issued the following statement by its governor, Ardian Fullani:
"Today, on 30 July 2014, the Supervisory Council of the Bank of Albania reviewed and approved the Monetary Policy Statement of the Bank of Albania on the first half of 2014. Based on Albania's latest monetary and economic developments and discussions on their outlook, the Supervisory Council of the Bank of Albania decided to keep the key interest rate unchanged, at 2.50%. The Supervisory Council deems that the inflationary pressures from the real and financial sectors of the economy are weak and will remain so. Under these conditions, the monetary policy will remain stimulating, hence providing the adequate monetary conditions for inflation to return to the target over the medium term.
Wednesday, July 30, 2014
Fed trims QE by another $10 bln, repeats rate to stay low
The Federal Reserve, the central bank of the United States, will reduce its purchases of assets by another $10 billion to a total of $25 billion beginning in August and repeated its guidance that it "likely will be appropriate to maintain the current target range for the federal funds rate for a considerable time after the asset purchase program ends."
The Fed acknowledged that economic activity in the U.S. had rebounded in the second quarter and the labor market had improved, but added that "a range of labor market indicates suggests that there remains significant underutilization of labour resources," a clear sign that it believes it will take some time before it has met its objective of fostering maximum employment.
In a statement following a meeting of the Fed's policy-setting body, the Federal Open Market Committee also repeated its view from June that spending by households appears to be rising moderately and business fixed investment is advancing while the recovery in the housing sector remains slow.
The Fed has held its benchmark federal funds rate at 0 to 0.25 percent since the global financial crises in December 2008 and has bought a range of Treasury bonds and housing market debt since early 2009 to stimulate growth by holding down long-term rates.
The Fed acknowledged that economic activity in the U.S. had rebounded in the second quarter and the labor market had improved, but added that "a range of labor market indicates suggests that there remains significant underutilization of labour resources," a clear sign that it believes it will take some time before it has met its objective of fostering maximum employment.
In a statement following a meeting of the Fed's policy-setting body, the Federal Open Market Committee also repeated its view from June that spending by households appears to be rising moderately and business fixed investment is advancing while the recovery in the housing sector remains slow.
The Fed has held its benchmark federal funds rate at 0 to 0.25 percent since the global financial crises in December 2008 and has bought a range of Treasury bonds and housing market debt since early 2009 to stimulate growth by holding down long-term rates.
Azerbaijan cuts repo rate 75 bps, reserve requirement
Azerbaijan's central bank cut its benchmark refinancing rate by 75 basis points to 3.50 percent, its second rate cut this year, and also cut the ceiling on its interest rate corridor by 100 basis points to 5.0 percent and lowered the lower limit to 0.1 percent from 0.5 percent.
The Central Bank of the Republic of Azerbaijan (CBA), which has now cut its key rate by 125 basis points this year, also cut the reserve requirements on all bank deposits to 2.0 percent from 3.0 percent. It last cut the rate on April 30.
The CBA said the rate cut came against a back drop of a low level of inflation, the growth of money supply along with demand factors that affect economic growth.
Azerbaijan's headline inflation rate fell to 1.6 percent in June, the sixth consecutive month of declining inflation. The CBA has forecast 2014 inflation between 1.0 and 5.0 percent, with 2.4 percent the most likely. The central bank targets inflation of 5.0 to 6.0 percent.
The CBA said Azerbaijan's economy expanded by 2.1 percent in the first half of the year, including 7 percent growth in the non-oil sector.
Data shows that Azerbaijan's Gross Domestic Product expanded by an annual 2.5 percent in the first quarter of this year, down from a 5.8 percent rate in the fourth quarter of last year.
www.CentralBankNews.info
The Central Bank of the Republic of Azerbaijan (CBA), which has now cut its key rate by 125 basis points this year, also cut the reserve requirements on all bank deposits to 2.0 percent from 3.0 percent. It last cut the rate on April 30.
The CBA said the rate cut came against a back drop of a low level of inflation, the growth of money supply along with demand factors that affect economic growth.
Azerbaijan's headline inflation rate fell to 1.6 percent in June, the sixth consecutive month of declining inflation. The CBA has forecast 2014 inflation between 1.0 and 5.0 percent, with 2.4 percent the most likely. The central bank targets inflation of 5.0 to 6.0 percent.
The CBA said Azerbaijan's economy expanded by 2.1 percent in the first half of the year, including 7 percent growth in the non-oil sector.
Data shows that Azerbaijan's Gross Domestic Product expanded by an annual 2.5 percent in the first quarter of this year, down from a 5.8 percent rate in the fourth quarter of last year.
www.CentralBankNews.info
Central Bank News Link List - July 30, 2014 - Fed decision-day guide: QE tapering to inflation debate
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 decision-day guide: QE tapering to inflation debate (Bloomberg)
- Banks in euro zone ease credit standards on business loans (WSJ)
- First BoE member to vote for interest rate hike in August-Reuters poll
- Brazil real intervention out of sync with slowdown, IMF says (Bloomberg)
- Russia’s central bank supports sanctions targets (AP)
- Greenspan says stocks to see ‘significant correction’ (Bloomberg)
- New Zealand dollar vulnerable to intervention, UBS says (Bloomberg)
- Brazil bank lending in June rose at slowest pace in a decade (Reuters)
- ECB balance sheet shrinks in week to July 25 (Reuters)
- German central bank chief: higher wages justified (AP)
- Nigeria clampdown on money changers seen spurring naira gain (Bloomberg)
- Albania’s central bank says nearly $7 mln cash stolen, 2 employees arrested (AP)
Tuesday, July 29, 2014
Central Bank News Link List - July 29, 2014 - IMF warns of potential risks to global growth
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.
- IMF warns of potential risks to global growth (Reuters)
- Fuss sees US rates on hold for a year as Fisher urges increase (Bloomberg)
- Broadbent says global growth creating drag on U.K. recovery (Bloomberg)
- Fed meeting may give clues on interest rates (USA Today)
- Uzbek central bank keeps refinancing rate at 10% (Trend)
- IMF says UK interest rates should stay low for now (Reuters)
- Analysts: Central bank data confirm low FX turnover (MNI)
- Philippine central bank may tighten again to tackle inflation (Reuters)
- Brazil economists cut 2014 growth call for 9th straight week (Bloomberg)
- Bank of Ghana reverses ban on direct dollar imports by local banks (Reuters)
- August too early for rate cut by India central bank (Business Standard)
- Krugman joined by exporters in criticizing Riksbank (Bloomberg)
- New BOE deputy is a potential guide on interest rates (WSJ)
Monday, July 28, 2014
Angola cuts rate 50 bps, inflation seen declining further
Angola's central bank cut its basic interest rate, the BNA rate, by 50 basis points to 8.75 percent to stimulate further credit to the economy as it expects the downward trend in inflation to continue.
It is the first rate cut by the National Bank of Angola (BNA) since November 2013 and the central bank also reduced the rate on its standing lending facility by 25 basis points to 9.75 percent while the rate for absorbing liquidity was maintained at 1.75 percent.
In May the BNA raised the liquidity absorption rate for the second time this year for a total increase of 50 basis points while it cut the lending facility rate by 25 points.
Angola's inflation rate eased to 6.89 percent in June, continuing its decline since October 2010 when it topped 16 percent. Since August 2012 inflation has been below 10 percent, a long-standing aim of the central bank.
Earlier this month the International Monetary Fund (IMF) forecast that Angola's inflation rate would rise to 7.5 percent by the end of the year due to the one-off effects on new tariffs on imports before continuing the downtrend through 2015 and beyond.
The growth of Angola's economy is expected to ease to 3.9 percent this year as the expansion in agriculture slows from last year and due to a temporary drop in oil production in the first half.
It is the first rate cut by the National Bank of Angola (BNA) since November 2013 and the central bank also reduced the rate on its standing lending facility by 25 basis points to 9.75 percent while the rate for absorbing liquidity was maintained at 1.75 percent.
In May the BNA raised the liquidity absorption rate for the second time this year for a total increase of 50 basis points while it cut the lending facility rate by 25 points.
Angola's inflation rate eased to 6.89 percent in June, continuing its decline since October 2010 when it topped 16 percent. Since August 2012 inflation has been below 10 percent, a long-standing aim of the central bank.
Earlier this month the International Monetary Fund (IMF) forecast that Angola's inflation rate would rise to 7.5 percent by the end of the year due to the one-off effects on new tariffs on imports before continuing the downtrend through 2015 and beyond.
The growth of Angola's economy is expected to ease to 3.9 percent this year as the expansion in agriculture slows from last year and due to a temporary drop in oil production in the first half.
Israel cuts rate 25 bps on low inflation, high FX rate, Gaza
Israel's central bank cut its benchmark interest rate by 25 basis points to 0.50 percent due to inflation falling below its target, further strength in the shekel's exchange rate and to counter an expected hit to economic activity from nearly three weeks of fighting in Gaza.
The Bank of Israel (BOI) has now cut its rate twice this year by a total of 50 basis points and repeated its guidance that the "path of the interest rate in the future depends on developments in the inflation environment, growth in Israel and the global economy, the monetary policies of major central banks, and developments in the exchange rate of the shekel."
Israel's inflation rate fell to 0.5 percent in June, below the lower bound of the BOI's target of 1.0 to 3.0 percent, and inflation expectations have also fallen, including expectations for the next 12 months based on banks' internal rates that have fallen to 1.0 percent, the central bank said.
The central bank still doesn't have any data on how Israel's economy is reacting to the conflict in Gaza, but the BOI said similar events in the past had a moderate impact on the economy with Gross Domestic Product contracting by about 0.5 percent.
The recovery from previous events was generally rapid, but the impact on the tourism industry is likely to last longer, the central bank said.
The Bank of Israel (BOI) has now cut its rate twice this year by a total of 50 basis points and repeated its guidance that the "path of the interest rate in the future depends on developments in the inflation environment, growth in Israel and the global economy, the monetary policies of major central banks, and developments in the exchange rate of the shekel."
Israel's inflation rate fell to 0.5 percent in June, below the lower bound of the BOI's target of 1.0 to 3.0 percent, and inflation expectations have also fallen, including expectations for the next 12 months based on banks' internal rates that have fallen to 1.0 percent, the central bank said.
The central bank still doesn't have any data on how Israel's economy is reacting to the conflict in Gaza, but the BOI said similar events in the past had a moderate impact on the economy with Gross Domestic Product contracting by about 0.5 percent.
The recovery from previous events was generally rapid, but the impact on the tourism industry is likely to last longer, the central bank said.
This week in monetary policy: Israel, Angola, United States, Albania, Fiji, Philippines, Czech Republic and Colombia
This week (July 28 - August 1) eight central banks will decide on monetary policy, including the countries of Israel, Angola, United States, Albania, Fiji, the Philippines, the Czech Republic and Colombia.
Following table includes name of the country, its MSCI classification, the date the policy decision will be announced, the current policy rate, and the rate one year ago.
| COUNTRY | MSCI | DATE | CURRENT RATE | 1 YEAR AGO |
| ISRAEL | DM | 28-Jul | 0.75% | 1.25% |
| ANGOLA | 28-Jul | 9.25% | 10.00% | |
| UNITED STATES | DM | 30-Jul | 0.25% | 0.25% |
| ALBANIA | 30-Jul | 2.50% | 3.50% | |
| FIJI | 31-Jul | 0.50% | 0.50% | |
| PHILIPPINES | EM | 31-Jul | 3.50% | 3.50% |
| CZECH REPUBLIC | EM | 31-Jul | 0.05% | 0.05% |
| COLOMBIA | EM | 31-Jul | 4.00% | 3.25% |
Monetary Policy Week in Review – Jul 21-25, 2014: Central banks continue to prepare for shift in Fed policy
Central banks are continuing to position themselves to weather the fallout from the coming shift in U.S. monetary policy, with Hungary, Nigeria and Russia’s last week citing the need to maintain tight policy in light of the risks they will face from higher U.S. interest rates.
The strong reaction of global financial markets to news last summer that the Fed was likely to start wrapping up five years of quantitative easing – an episode now known as “taper tantrum” – is still seared in the memory of policymakers who are eager to avoid a repeat.
With the Fed’s third round of asset purchases set to conclude in November and the first rate rise expected in mid-2015, emerging market central banks want to ensure that they can offer attractive rates of return that reflect their inflation rates and the risk of exchange rate depreciation.
Russia’s central bank, which last week surprised markets by raising its rate by 50 basis points, pointed to the growing likelihood of an acceleration in inflation from what it described as “negative trends,” including “adjustments in the monetary policy of foreign central banks and the potential impact of those factors on the national currency exchange rate.”
Nigeria’s central bank, which maintained rates as expected, referred to “pressure points” that include the implications of the Fed’s tapering of quantitative easing on capital inflows and reserves.
Hungary’s central bank, which said a two-year cycle of rate cuts had now come to an end, cited the need for “a cautious approach” to policy due to the uncertainty about the future global financial environment.
New Zealand’s central bank also called for a pause after four consecutive rate rises to assess the impact of its tighter policy on the economy. But this move was widely expected due to the continued strength of its currency despite lower commodity prices.
Meanwhile, policymakers are continuing to digest and discuss the implications of last month’s annual report by the Bank for International Settlements (BIS), which called attention to the growing risks from the build-up of debt, not only in advanced economies but also in emerging markets.
The latest occasion was on Thursday, when Olivier Blanchard, economic counsellor and head of research at the International Monetary Fund (IMF), said he was less worried about the consequence of excessive risk taking in a low-yield environment than the BIS.
Speaking to the press in connection with the update to the World Economic Outlook, Blanchard agreed that valuations in some financial markets were fairly optimistic but argued that because the leverage of some “principal actors” was not high, the impact of a fall in stock prices “would not be catastrophic in the sense of leading to bankruptcies of financial actors.”
Naturally, that sounds comforting. The only problem is that economic history never repeats itself.
While leverage by major banks and investors worsened the 2007-2009 financial crises, the financial industry has changed since then and major flows of capital across borders are now in the form of portfolio flows rather than banking sector flows.
“It does not follow that future bouts of market disruptions must follow the same mechanism as in the past,” the new economic adviser to the BIS, Hyun Song Shin, told central bankers at the BIS annual meeting on June 29 in Basel, Switzerland.
Long-term investors may now respond to the same forces that leveraged players reacted to in the past.
There is a higher proportion of investors with short-term time horizons in emerging market debt instruments that can amplify any shocks when global conditions deteriorate, said Shin, who has coined this “the second phase of global liquidity.”
Through the first 30 weeks of the year, the 90 central banks followed by Central Bank News have raised their policy rates 30 times, or 10.6 percent of all decisions, up from 9.3 percent of decisions by the end of the first half and 8.7 percent at the end of the first quarter.
Meanwhile, central banks have cut rates 37 times this year, or 13.1 percent of all decisions, up from 12.1 percent at the end of June and 11.9 percent at the end of the first quarter.
Central banks are thus continuing to push down policy rates to support economic activity but the trend toward higher rates is unmistakable.
Boosted by this week’s two rate rises, the global monetary policy rate (GMPR), the average nominal rate of the 90 central banks, rose to 5.55 percent from 5.53 percent at the end of June and 5.53 percent at the end of the first quarter and 5.41 percent end-2013.
The strong reaction of global financial markets to news last summer that the Fed was likely to start wrapping up five years of quantitative easing – an episode now known as “taper tantrum” – is still seared in the memory of policymakers who are eager to avoid a repeat.
With the Fed’s third round of asset purchases set to conclude in November and the first rate rise expected in mid-2015, emerging market central banks want to ensure that they can offer attractive rates of return that reflect their inflation rates and the risk of exchange rate depreciation.
Russia’s central bank, which last week surprised markets by raising its rate by 50 basis points, pointed to the growing likelihood of an acceleration in inflation from what it described as “negative trends,” including “adjustments in the monetary policy of foreign central banks and the potential impact of those factors on the national currency exchange rate.”
Nigeria’s central bank, which maintained rates as expected, referred to “pressure points” that include the implications of the Fed’s tapering of quantitative easing on capital inflows and reserves.
Hungary’s central bank, which said a two-year cycle of rate cuts had now come to an end, cited the need for “a cautious approach” to policy due to the uncertainty about the future global financial environment.
New Zealand’s central bank also called for a pause after four consecutive rate rises to assess the impact of its tighter policy on the economy. But this move was widely expected due to the continued strength of its currency despite lower commodity prices.
Meanwhile, policymakers are continuing to digest and discuss the implications of last month’s annual report by the Bank for International Settlements (BIS), which called attention to the growing risks from the build-up of debt, not only in advanced economies but also in emerging markets.
The latest occasion was on Thursday, when Olivier Blanchard, economic counsellor and head of research at the International Monetary Fund (IMF), said he was less worried about the consequence of excessive risk taking in a low-yield environment than the BIS.
Speaking to the press in connection with the update to the World Economic Outlook, Blanchard agreed that valuations in some financial markets were fairly optimistic but argued that because the leverage of some “principal actors” was not high, the impact of a fall in stock prices “would not be catastrophic in the sense of leading to bankruptcies of financial actors.”
Naturally, that sounds comforting. The only problem is that economic history never repeats itself.
While leverage by major banks and investors worsened the 2007-2009 financial crises, the financial industry has changed since then and major flows of capital across borders are now in the form of portfolio flows rather than banking sector flows.
“It does not follow that future bouts of market disruptions must follow the same mechanism as in the past,” the new economic adviser to the BIS, Hyun Song Shin, told central bankers at the BIS annual meeting on June 29 in Basel, Switzerland.
Long-term investors may now respond to the same forces that leveraged players reacted to in the past.
There is a higher proportion of investors with short-term time horizons in emerging market debt instruments that can amplify any shocks when global conditions deteriorate, said Shin, who has coined this “the second phase of global liquidity.”
Through the first 30 weeks of the year, the 90 central banks followed by Central Bank News have raised their policy rates 30 times, or 10.6 percent of all decisions, up from 9.3 percent of decisions by the end of the first half and 8.7 percent at the end of the first quarter.
Meanwhile, central banks have cut rates 37 times this year, or 13.1 percent of all decisions, up from 12.1 percent at the end of June and 11.9 percent at the end of the first quarter.
Central banks are thus continuing to push down policy rates to support economic activity but the trend toward higher rates is unmistakable.
Boosted by this week’s two rate rises, the global monetary policy rate (GMPR), the average nominal rate of the 90 central banks, rose to 5.55 percent from 5.53 percent at the end of June and 5.53 percent at the end of the first quarter and 5.41 percent end-2013.
LIST OF LAST
WEEK’S CENTRAL BANK DECISIONS:
- Bangladesh maintains policy rate
- Hungary cuts rate 20 bps but ends 2-year easing cycle
- Nigeria maintains rate to support stable naira FX rate
- New Zealand raises rate for 4th time but will now pause
- Russia raises rate 50 bps and will raise more if needed
- Trinidad holds rate, to manage inflation expectations
OTHER STORIES
LIST LAST WEEK:
TABLE WITH
LAST WEEK’S MONETARY POLICY DECISIONS:
| COUNTRY | MSCI | NEW RATE | OLD RATE | 1 YEAR AGO |
| NIGERIA | FM | 12.00% | 12.00% | 12.00% |
| HUNGARY | EM | 2.10% | 2.30% | 4.00% |
| NEW ZEALAND | DM | 3.50% | 3.25% | 2.50% |
| RUSSIA | EM | 8.00% | 7.50% | 8.25% |
| TRINIDAD AND TOBAGO | 2.75% | 2.75% | 2.75% | |
| BANGLADESH | FM | 7.75% | 7.75% | 7.75% |
This week (Week
31) eight central banks will decide on monetary policy, comprising the
countries of Israel, Angola, United States, Albania, Fiji, the Philippines, the
Czech Republic and Colombia.
TABLE WITH
THIS WEEK’S MONETARY POLICY DECISIONS:
| COUNTRY | MSCI | DATE | CURRENT RATE | 1 YEAR AGO |
| ISRAEL | DM | 28-Jul | 0.75% | 1.25% |
| ANGOLA | 28-Jul | 9.25% | 10.00% | |
| UNITED STATES | DM | 30-Jul | 0.25% | 0.25% |
| ALBANIA | 30-Jul | 2.50% | 3.50% | |
| FIJI | 31-Jul | 0.50% | 0.50% | |
| PHILIPPINES | EM | 31-Jul | 3.50% | 3.50% |
| CZECH REPUBLIC | EM | 31-Jul | 0.05% | 0.05% |
| COLOMBIA | EM | 31-Jul | 4.00% | 3.25% |
Saturday, July 26, 2014
Central Bank News Link List - July 26, 2014 - Bangladesh Bank keeps policy rates unchanged
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.
- Bangladesh Bank keeps policy rates unchanged (The Daily Star)
- Uribe: Colombia’s neutral interest rate has probably fallen (Bloomberg)
- ECB deputy puts faith in easing measures (WSJ)
- Central banks in Russia to Kazakhstan boost gold reserves (Bloomberg)
- IMF offl: Must be on alert, but not alarm, on financial stability (MNI)
- Argentine cenbank buying spree continues w. $100 mln(Buenos Aires Herald)
Friday, July 25, 2014
Trinidad holds rate, to manage inflation expectations
Trinidad and Tobago's central bank maintained its benchmark repo rate at 2.75 percent to support the economy, but said it was "giving greater considerations to managing inflationary expectations in calibrating its monetary policy instruments" as the pace of economic activity strengthens.
The Central Bank of Trinidad and Tobago, which has kept its rate steady since September 2012, said core inflation was relatively stable in the first half of the year, but "rising consumer demand, higher government spending and second round effects from the recent increase in cement prices could help accelerate inflationary pressure later in the year."
Trinidad's headline inflation rate slowed to 3.0 percent in June from 3.08 percent in May while core inflation was 2.5 percent and food inflation eased for the third consecutive month to 3.5 percent.
Trinidad's corporate sector is cautiously optimistic in its outlook, with the central banks survey in the second quarter showing almost 80 percent of firms expecting to raise production in the next six months and more firms were confident that the local economy would improve over the next 12 months compared with the previous survey.
The Central Bank of Trinidad and Tobago, which has kept its rate steady since September 2012, said core inflation was relatively stable in the first half of the year, but "rising consumer demand, higher government spending and second round effects from the recent increase in cement prices could help accelerate inflationary pressure later in the year."
Trinidad's headline inflation rate slowed to 3.0 percent in June from 3.08 percent in May while core inflation was 2.5 percent and food inflation eased for the third consecutive month to 3.5 percent.
Trinidad's corporate sector is cautiously optimistic in its outlook, with the central banks survey in the second quarter showing almost 80 percent of firms expecting to raise production in the next six months and more firms were confident that the local economy would improve over the next 12 months compared with the previous survey.
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