Bank of Canada Holds Rate at 1.00%

The Bank of Canada maintained the key lending rate unchanged at 1.00%.  However the central bank noted that the "considerable monetary policy stimulus in place will be eventually withdrawn,". The Bank also noted the strength of the Canadian Dollar: "The persistent strength of the Canadian dollar could create even greater headwinds for the Canadian economy, putting additional downward pressure on inflation through weaker-than-expected net exports and larger declines in import prices,"

Canada reported inflation of 3.3% in April, the same as March, according to Statistics Canada.  The Bank of Canada has an inflation target of 2 percent. Previously the Bank of Canada held the target interest rate unchanged at its April meeting.  The Bank next meets to review monetary policy settings on the 19th of July 2011.

www.CentralBankNews.info

Central Bank of Kenya Lifts Interest Rate 25bps to 6.25%

The Central Bank of Kenya raised the benchmark lending rate by 25 basis points to 6.25% from 6.00% previously.  The central bank also lifted the cash reserve ratio, the percentage of deposits that banks must hold at the central bank, by 25 basis points to 4.75%.  The Bank said: "Having noted the success of its previous monetary policy stance the Committee continues to endorse a tight stance so that inflation expectations are tamed and exchange rate stability enhanced."

Previously the Bank increased the interest rate by 25 basis points in March to 6.00%.  Kenya recorded inflation of 12.95% in May, compared to 12.05% in April and 9.19% in March, according to inflation data from the Kenya National Bureau of Statistics.  The Central Bank of Kenya has an inflation target of 5 percent.

www.CentralBankNews.info

Belarus Central Bank Lifts Interest Rate 200bps to 16.00%

The National Bank of the Republic of Belarus raised its refinancing rate by 200 basis points to 16.00% from 14.00% previously.  The Nacionalny Bank Respubliki Belarus said "The decision was made considering rising consumer prices and high inflationary expectations,".  The Bank also said: "Raising the refinancing rate and the deposit interest rates is aimed at making bank deposits in Belarusian rubles more profitable as well as guarding ruble savings in banks against inflation."

Previously the Bank raised interest rates 100 basis points to 14.00% on the 18th of May.  The Bank also devalued the currency by 36% on the 24th of May, after establishing a dual market structure for trading foreign exchange in April, as the Belarusian economy deals with a credit crisis and currency crisis.  Belarus reported consumer price inflation of 4.5% in April, placing the total for the first four months of the year to 10.9% according to the National Statistic Committee.  Meanwhile the government is forecasting 2011 inflation of as much as 39%.

www.CentralBankNews.info

Colombia Central Bank Raises Rate 25bps to 4.00%

The Central Bank of Colombia increased its benchmark monetary policy interest rate by 25 basis points to 4.00% from 3.75% previously.  The Bank also extended its $20 million dollar per day foreign exchange market purchase plan to 30 September, from an initial expiry date of 17 June.  Central Bank Governor, Jose Dario Uribe, said: "Adjustments toward a less-expansive monetary policy should continue,".

Colombia reported annual inflation of 2.84% in April, compared to 3.19% in March, and a rate of 1.84% in April 2010, this compares to the Bank's inflation target of 3%.  Total gross lending increased 21% to 183.6 trillion pesos ($102 billion) in March 2011.  Goldman Sachs is forecasting 2011 GDP growth at 5.5%, while Morgan Stanley is forecasting 4.9% growth for the Colombian economy.

www.CentralBankNews.info

Central Bank of Russia Raises Overnight Deposit Rate 25bps to 3.50%

The Central Bank of Russia increased its fixed overnight deposit rate by 25 basis points to 3.50% from 3.25%.  The Bank held the benchmark refinancing rate unchanged at 8.25% and the overnight auction-based repurchase rate at 5.50%, while also leaving reserve requirements unchanged.  The Bank said: "This decision was taken keeping in mind the high level of inflationary expectations and risks for sustainable economic growth,". 

Russia reported annual inflation of 9.6% in April, an 18 month high, versus 9.5% in March.  Bank Chairman Sergey Ignatiev is trying to keep inflation between 6% and 7%, meanwhile the Bank said inflation is running at 9.7% as of May 23.  Russian economic growth slowed to 4.1% in the first quarter of 2011, down from 4.5% in the December quarter of 2010; the IMF is expecting 4.5% growth for the full year.

www.CentralBankNews.info

Saudi Arabian Monetary Agency Holds Reverse Repo Rate at 0.25%

The Saudi Arabian Monetary Agency (SAMA) held its overnight reverse repurchase rate at 0.25% and the benchmark repurchase rate at 2.00%.  Saudi Arabia's money supply rose 17.2% YoY in April, and the central bank's foreign assets increased 13.2% YoY.  Lending to the private sector increased to SR802.5 billion in April, from SR798.2 billion in March, and up from SR750.6 billion in April 2010.  Saudi Arabia reported annual inflation of 4.8% in April this year.

SAMA last cut its overnight reverse repo rate by 25 basis points to 0.25% in June 2009.  The Saudi Arabian authorities have plans to spend as much as $400 billion (Dh1.46 billon) on its five-year infrastructure development program, as part of a larger spending program including King Abdullah's recent $130bn social benefits package.  The Saudi Arabian economy grew 3.8% in 2010 according to SAMA.

www.CentralBankNews.info

Monetary Policy Week in Review - 28 May 2011

The past week in monetary policy saw six emerging market central banks announce interest rate decisions. Those that altered interest rate levels were: Israel +25bps to 3.25%, and Nigeria +50bps to 8.00%.  Meanwhile those that held interest rates unchanged were: Pakistan 14.00%, Turkey 6.25%, Georgia 8.00%, and Mexico 4.50%.  The Central Bank of Nigeria also raised its bank cash reserve requirement by 200bps to 4% from 2%.  

Looking at the central banks that held monetary policy settings unchanged, there was a growing sense of a need to balance growth risks with inflation risks.  Indeed some of the messaging in their media releases included points about increasing risks to the global growth outlook, meanwhile inflation risks are seemingly tapering off in most places, particularly as higher policy rates and stabilizing commodity prices take effect. However the actions of Israel and Nigeria show that the inflation threat for emerging markets is certainly not over yet, particularly in those economies that are still growing strong.  Indeed, as we saw last week there are still inflation hot spots in emerging markets like Vietnam, which has undertaken significant policy tightening.

Next week will be relatively quiet on the monetary policy front, but with several central banks announcing policy decisions in the following week.  Central banks scheduled to announce interest rate decisions next week include: the Central Bank of Russia (expected to hold at 8.25%) on the 30th, the Bank of Canada (expected to hold at 1.00%) on the 31st, and the Bank of Thailand (expected to raise its interest rate 25bps to 3.00%) on the 1st of June.

Source: www.CentralBankNews.info

Article source: http://www.centralbanknews.info/2011/05/monetary-policy-week-in-review-28-may.html

Banco de Mexico Holds Interest Rate at 4.50%

The Banco de Mexico maintained its overnight interest rate target unchanged at 4.50%.  On the global outlook the Bank said: "In general, the balance of risks for world growth has shown a certain deterioration, while that of inflation has improved."  Mexico reported annual inflation of 3.4% April (3% in March), and 3.3% in the middle of May, compared to the Bank's inflation target of 3% +/- 1%.  The Mexican economy grew 4.6% year on year in Q1 this year, up 0.5% from the previous quarter, compared to GDP growth of 5.4% in 2010.

www.CentralBankNews.info

Georgia Central Bank Holds Refinancing Rate at 8.00%

The National Bank of Georgia held its benchmark refinancing interest rate unchanged at 8.00% and made no other changes to monetary policy.  Georgia reported annual consumer price inflation of 13.5% in April, above the Bank's inflation target of 6.0%, but slightly lower than 13.9% in March.  The Bank last raised interest rates by 50bps in February.  According IMF statistics, Georgia saw average annual inflation of 4.95% in 2010, with the full year figure at 5.04%, while the Georgian economy grew just 2%.

www.CentralBankNews.info

Central Bank of Turkey Holds 1-week Repo Rate at 6.25%

The Monetary Policy Committee of the Central Bank of the Republic of Turkey maintained the 1-week repo rate unchanged at 6.25%.  The Bank also held the overnight borrowing and lending rates unchanged at 1.50% and 9.00% respectively.  The Bank said: "The high levels of both energy products and other commodities and also developments that weakened foreign demand [for Turkish exports] delayed the improvement in the CAD [current account deficit] to the last quarter of this year,".  Turkey recorded annual consumer price inflation of 4.26% in April, up from 3.99% in March, but below the Bank's full year inflation target of 5.5%.

www.CentralBankNews.info

Central Bank of Nigeria Raises Rate 50bps to 8.00%

The Central Bank of Nigeria increased its monetary policy interest rate by 50 basis points to 8.00% from 7.50% previously.  The Bank also increased bank cash reserve requirement by 200bps to 4% from 2%, while the key borrowing and lending rates were both increased by 50bps to 6.00% and 10.00% respectively.  The Bank said "The committee held that it would be prudent to adopt a stance that is consistent with the need to address inflationary expectations associated with the excessive liquidity and pressure on the foreign exchange market,".  Nigeria reported annual headline inflation of 11.3% in April, compared to 12.8% in March, and above the Bank's inflation target of 10%.

www.CentralBankNews.info

Bank of Israel Lifts Interest Rate 25bps to 3.25%

The Bank of Israel increased its benchmark interest rate by 25 basis points to 3.25% from 3.00% previously.  The Bank noted: "The inflation environment is still above the upper limit of the target inflation range... Inflation expectations for the next 12 months derived from the capital market and the average of the forecasters' expectations are still slightly above the upper limit of the range this month. This, despite several background developments that could be expected to moderate inflation, such as the appreciation of the shekel in recent months and the fall in commodity prices.".  Israel recorded annual inflation of 4.0% in April this year, down from 4.3% in March, but above the Bank's inflation target range of 1-3%, meanwhile house prices increased 14% over the past 12 months.

www.CentralBankNews.info

State Bank of Pakistan Holds Discount Rate at 14.00%

The State Bank of Pakistan held its discount rate unchanged at 14.00% as inflation pressures eased somewhat, and as the Bank waits to analyze next month's annual government budget.  The Bank noted: "The government is mindful of fiscal pressures and has expressed its resolve to address these issues, especially containment of the fiscal deficit. The budget for FY12 is expected to reflect this commitment,".  Pakistan reported annual inflation of 13.04% in April (with prices rising 1.62% month on month), on inflation the Bank commented that "the average CPI inflation for FY11 is likely to remain between 14 and 14.5 percent, which is lower than the central bank's earlier projections,".

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Monetary Policy Week in Review - 21 May 2011

The past week in monetary policy was relatively quiet with only 5 central banks announcing monetary policy decisions, and of those, only 1 adjusting its policy stance.  Vietnam was the only bank to adjust monetary policy settings; increasing its reverse repurchase rate by 100 basis points to 15.00%.  Meanwhile those that held their monetary policy interest rates unchanged were: Serbia (12.50%), Hungary (6.00%), Sri Lanka (7.00%), and Japan (0.10%).  Elsewhere in monetary policy news, the Reserve Bank of Australia, Bank of England, and US Federal Open Market Committee all released the minutes from their recent monetary policy meetings.

As noted the week in monetary policy was quiet, certainly compared to the previous week where 12 central banks announced interest rate decisions and a further two made changes to required reserve ratios.  In terms of themes, the trend of slowing policy tightening in emerging markets continued with Serbia, Hungary, and Sri Lanka holding off on rate increases as global inflation impulses i.e. commodity prices begin to show signs of tapering off, and more importantly; as policy risks increased, making the economic growth outlook less certain.  Vietnam was an outlier in terms of the rapid pace of inflation and overheating that it is seeing.  Meanwhile Japan continues to be somewhat of an outlier as it tackles deep structural economic and fiscal challenges.

Next week the following central banks are scheduled to review monetary policy interest rates: the Bank of Israel (23 May) - which last held its benchmark lending rate unchanged at 3.00%,  the Central Bank of the Republic of Turkey (25 May) - which last held its interest rate at 6.25% and increased reserve requirements, and the Banco de Mexico (27 May) - which last held its interest rate unchanged at 4.50%.


Source: www.CentralBankNews.info

Article source: http://www.centralbanknews.info/2011/05/monetary-policy-week-in-review-21-may.html

Bank of Japan Holds Overnight Interest Rate at 0-0.10%

The Bank of Japan maintained its uncollateralized overnight call rate at a range of 0 to 0.1% by a unanimous vote.  The Bank's assessment of the Japanese economy was pessimistic: "Japan's economy faces strong downward pressure, mainly on the production side, due to the effects of the earthquake disaster."  but also noted the economy "is expected to return to a moderate recovery path from the second half of fiscal 2011 as supply-side constraints ease and production regains traction."  Japan reported core consumer price deflation of -0.1% in March, with core CPI rising 0.2% month on month.

www.CentralBankNews.info

Vietnam Central Bank Hikes Reverse Repo Rate 100bps to 15.00%

The State Bank of Vietnam increased its reverse repurchase interest rate by 100 basis points to 15.00% from 14.00% previously.  The Bank left the refinance rate and discount rate unchanged at 14.00% and 13.00% respectively, after increasing the two interest rates 100bps in April.  Vietnam reported annual inflation of 17.51% in April this year after prices rose 3.32% from March, driven up by strong credit growth and rising food and energy prices.

www.CentralBankNews.info

Sri Lanka Central Bank Holds Rate at 7.00%

The Central Bank of Sri Lanka held the repurchase rate unchanged at 7.00%, and left the reverse repurchase rate at 8.50%, and the reserve ratio at 8%.  The Bank said: "Domestic supply conditions have recovered from the impact of floods in early 2011, and the current weather conditions are favourable for agricultural activity and hydropower generation. The upward trends that were observed in international commodity prices have decelerated, although prices of many commodities still remain high."  Sri Lanka's Colombo Consumer's Price Index (CCPI) rose 9.8% in April 2011, up from 8.6% in March this year. HMAM93Z2RGKS

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Hungary Central Bank Holds Rate at 6.00%

The Magyar Nemzeti Bank maintained its policy rate unchanged at 6.00% despite inflation rising above its target.  The Bank said: "inflation is expected to be significantly above the target in the short term…but may fall back close to 3% by the end of next year even without further policy tightening".  Hungary reported annual inflation of 4.7% in April, up from 4.5% the previous month, meanwhile food inflation rose to 9.4% from 8.6% respectively.  Hungary's Central Bank has a medium term inflation target of 3%.

www.CentralBankNews.info

National Bank of Serbia Holds Rate at 12.50%

The National Bank of Serbia maintained its 2-week repo rate unchanged at 12.50%.  The Bank said: "The Executive Board judges that the key policy rate has reached or is very near a peak of its current cycle," and also went on to say: "Nonetheless, as the inflationary pressures continue, the authorities must be rather cautious in reducing the degree of monetary policy restrictiveness, taking into account all instruments of monetary regulation available."  Serbia reported annual inflation of 14.7% in April, up from 14.1% in March, as prices rose 1.1% month on month (after rising 2.6% month on month in March).

www.CentralBankNews.info

Monetary Policy Week in Review - 14 May 2011

The past week saw monetary policy decisions announced by 12 different central banks around the world.  Those that increased interest rates were: Azerbaijan +25bps to 5.25% Poland +25bps to 4.25% Norway +25bps to 2.25% Peru +25bps to 4.25% and Chile +50bps to 5.00%.  Meanwhile Ghana was the only country that eased policy, cutting rates 50bps to 13.00%.  Those that held rates unchanged were: Indonesia 6.75% South Africa 5.50% Latvia 3.50% and South Korea 3.00%.  Besides interest rate changes two economies lifted reserve requirements: Uruguay lifted its required reserve ratios 300bps to 15%, while China increase its RRR by 50 basis points to an average 21% for large banks.

Thus the theme of emerging market monetary policy tightening continued, as did the theme of the gradual start of developed market monetary policy tightening; or more appropriately, monetary policy normalization.  The rate hikes in Norway and Poland show that policy tightening or normalization is becoming a Euro region-wide phenomenon, as inflation pressures begin to rise due to rising inflation expectations and improving economic conditions.  Meanwhile the outlier of Ghana shows that when commodity prices start to ease it will give central banks the luxury of being able to ease policy somewhat, which will be helpful for economic growth, but of course it depends on how much of an impact the short-medium term commodity price spike will have on broader inflation conditions.

Next week there are monetary policy decisions due from the Magyar Nemzeti Bank of Hungary (16th May), and the Bank of Japan (20th May).  Also the Bank of England will release the meeting minutes from its previous monetary policy decision (18th May),  as will the US Federal Open Market Committee (18th May).

Source: www.CentralBankNews.info

Article source: http://www.centralbanknews.info/2011/05/monetary-policy-week-in-review-14-may.html

Chile Central Bank Increases Rate 50bps to 5.00%

The Banco Central de Chile increased its monetary policy interest rate by 50 basis points to 5.00% from 4.50% previously.  The Bank said: "The Board estimates that additional increases in the monetary policy rate will be necessary, the timing and the magnitude depending on the unfolding of domestic and external macroeconomic conditions. Accordingly, it will continue to use its policies with flexibility so that projected inflation stands at 3% over the policy horizon."  The Bank said core inflation is holding around 3%, which is in the middle of the Bank's 2-4% inflation target.

www.CentralBankNews.info

Central Reserve Bank of Peru Lifts Rate 25bps to 4.25%

The Central Reserve Bank of Peru raised its monetary policy reference rate 25 basis points to 4.25% from 4.00% previously.  The Bank said: "This measure is aimed at offsetting the impact of the rise in the international prices of food and fuels on inflation expectations, in a context of high growth of domestic demand. Future adjustments in the reference rate will depend on new information on the evolution of inflation and its determinants."  Peru reported annual inflation of 3.34% in April, above the Bank's 1-3% inflation target.

www.CentralBankNews.info

Bank of Ghana Cuts Rate 50bps to 13.00%

The Bank of Ghana reduced its key lending rate by 50 basis points to 13.00% from 13.50% previously.  The Bank said: "Price developments over the past four months suggest diminishing inflation expectations following the rise in inflation in January after increases in the domestic price of petrol. The threats to inflation have diminished due to better domestic production of food and weak second round effects of the petroleum price adjustment."  Ghana reported inflation of 9.0% in April, compared to 9.1% in the previous month, while food price inflation eased to 4.2% from 4.7% in the same period.

www.CentralBankNews.info

Bank of Korea Maintains 7-day Repo Rate at 3.00%

The Bank of Korea maintained the 7-day repurchase rate unchanged at 3.00%.  South Korea reported consumer price inflation of 4.2% in April, above the Bank's inflation target of 2%-4% through 2012.  The Bank forecasts inflation of 3.9% and GDP growth of 4.5% during 2011.  The Bank said: "Looking ahead, the Committee, while taking overall account of financial and economic conditions both at home and abroad, will conduct monetary policy with a greater emphasis on ensuring that the basis for price stability is firmly anchored while the economy continues its sound growth."

www.CentralBankNews.info

Norwegian Central Bank Hikes Rate 25bps to 2.25%

The Norges Bank increased its key policy rate by 25 basis points to 2.25% from 2.00% previously.  The Bank said: "The upturn in the Norwegian economy has gained a firm footing. Several other central banks have raised their key rates. The consideration of stabilising activity and inflation somewhat further ahead suggests that the key policy rate should be raised".  The Bank noted that the oil rich Norwegian economy saw underlying inflation of "1¼ – 1½ per cent".

www.CentralBankNews.info

Latvian Central Bank Holds Rate at 3.50%

Latvijas Banka maintained the refinancing rate unchanged at 3.50%.  Latvia reported inflation of 4.5% in April, with the Bank noting: "The rise in inflation at the beginning of the year is determined by supply side factors and administrative decisions, such as the raising of taxes,".  The Bank also said: "Taking into account the gradual recovery of the economy and the fact that the current inflation risk factors are not related to a rise in demand and risks to price stability in the medium term are limited, the Bank of Latvia Council today resolved to leave unchanged the interest rates and the mandatory reserve requirement,"

www.CentralBankNews.info

South African Central Bank Holds Rate at 5.50%

The South African Reserve Bank maintained the repo rate unchanged at 5.50% despite a rise in "cost-push" inflation.  The Bank said: "...the inflation outlook has deteriorated further, mainly as a result of external cost-push factors.  Underlying demand conditions remain relatively restrained, and are not seen to pose a significant risk to the inflation outlook at this stage. However there are elevated risks that these external price shocks could ultimately feed through to more generalised inflation."  South Africa reported inflation of 4.1% in March, up from 3.7% in February this year, with core inflation at 3.4%.

www.CentralBankNews.info

People's Bank of China Raises Reserve Requirements 50bps to 21%

The People's Bank of China raised the required reserve ratio by 50 basis points, bringing the average rate to 21% for large banks (and 19% for smaller banks), effective 18 May 2011.  Earlier in the week Chinese Vice Premier Wang Qishan said "The most pressing problem we are facing right now is the problem of inflation,".  China reported inflation of 5.3% in April, compared to 5.4% in March this year, and above the government's target of 4%.  The move is expected to drain around 370 billion Yuan from the banking system.  The People's Bank of China last raised the required reserve ratio 50bps on the 17th of April, and raised the benchmark interest rate 25bps on the 5th of April this year.

www.CentralBankNews.info

Bank Indonesia Holds Benchmark Interest Rate at 6.75%

Bank Indonesia maintained its benchmark interest rate unchanged at 6.75% but noted inflation risks.  Indonesia reported headline consumer price inflation of 6.16% in April, down slightly from 6.65% in March, and just outside the inflation target of 5% +/-1% in 2011 (which changes to 4.5% +/-1% in 2012).  The Indonesian economy expanded 6.5% on an annual basis in Q1 this year, slightly slower than 6.9% in Q4 2010.

www.CentralBankNews.info

Uruguay Raises Reserve Requirements 300bps

The Banco Central del Uruguay raised reserve requirements for banks on peso deposits by 300 basis points to 15% from 12% and 300 basis points on foreign currency deposits to 18% from 15%.  The Bank said "In light of internal price increases and the international context, we understand that we must take additional measures beyond the benchmark rate,".  Uruguay reported inflation of 8.34% in April, above the government's 3%-7% inflation target range.

www.CentralBankNews.info

National Bank of Poland Lifts Rate 25bps to 4.25%

The Narodowy Bank Polski's Monetary Policy Council raised its benchmark 7-day intervention rate by 25 basis points to 4.25% from 4.00% previously.  The Bank also increased the following rates by 25 basis points: the rediscount rate 4.50%, the Lombard rate 5.75%, and the deposit rate 2.75%.  The Bank said: "The risk of persistently heightened inflation also stems from increased inflation expectations combined with fast growth in commodity prices in the world markets. In order to curb the risk of inflation running above the inflation target in the medium term, the Council decided to increase the NBP's interest rates, continuing the cycle of monetary policy tightening".  Poland reported inflation of 4.3% in March, higher than the Bank's official inflation target of 2.5% +/- 1%.

www.CentralBankNews.info

Azerbaijan Central Bank Lifts Rate 25bps to 5.25%

The Central Bank of Azerbaijan raised its discount rate by 25 basis points to 5.25% from 5.00% previously.  The Bank also announced a 100 basis point increase in the level of mandatory external debt provisioning for banks to 3.00% from 2.00%.  The Bank said: "Taking measures to secure price and financial stability is among the main priorities in the CBA's activity. However, the world has recently seen growing prices on energy sources and foodstuffs".

www.CentralBankNews.info

Monetary Policy Week in Review - 7 May 2011

The week ending the 7th of May saw continued emerging market monetary policy tightening, with developed market central banks holding off from further tightening.  Of the central banks that made decisions on monetary policy settings this week, those that increased were: India +50bps to 7.25%, Philippines +25bps to 4.50%, and Malaysia +25bps to 3.00%.  Meanwhile those that held rates were: Australia 4.75%, Romania 6.25%, United Kingdom 0.50%, European Union 1.25%, and the Czech Republic 0.75%.  In terms of other policy tools Malaysia also increased its required reserve ratio +100bps to 3.00%, meanwhile Angola reduced its required reserves by -500 basis points to 20%.  Overall there were no major surprises, but India did increase by 50bps where as the market was expecting 25bps.

As previously reiterated, the theme of emerging market monetary policy tightening is still running strong at this point.  Another "BRIC" (Brazil, Russia, India, China) economy tightened policy again [India], while the People's Bank of China continued to make headlines, commenting that it will continue to take measures to fight inflation; and those comments could herald a policy move next week to coincide with the release of inflation data.  But overall emerging markets are still tackling surging inflation, even as commodities staged a sell-off late in the week, as their economies generally continue to grow at a strong pace.  But as noted previously emerging market central banks will need to be increasingly careful as they approach the policy risk zone.

Next week there are no major central banks scheduled to review policy, however the Bank of Japan will release its recent monetary policy meeting minutes early next week, and the Bank of England will release its inflation report.  Elsewhere the following central banks are scheduled to review policy: Poland (11 May) currently 4.00% , Norway (12th May) currently 2.00%, South Africa (12th) currently 5.50%, and South Korea (13th May) currently 3.00%.  There is a reasonable chance that most of those banks will increase their monetary policy rates.

Source: www.CentralBankNews.info

Article source: http://www.centralbanknews.info/2011/05/monetary-policy-week-in-review-1-may.html

Czech Central Bank Holds Rate at 0.75%

The Ceska Narodni Banka (CNB) kept the two-week repurchase rate unchanged at 0.75% as inflation remained below target.  The Czech Republic reported annual inflation of 1.7% in March this year, up from 1.8% in February, and above the Bank's official inflation target of 2%.  The Bank also maintained the the discount rate unchanged at 0.25% and the Lombard rate at 1.75%.

www.CentralBankNews.info

European Central Bank Holds Rate Unchanged at 1.25%

The European Central Bank maintained the Main refinancing operations rate at 1.25% and the Marginal lending facility at 2.00% and Deposit facility at 0.50%.  The move marks a temporary pause in its path toward monetary policy normalization which commenced on the 8th of April with a 25bp increase.  The Bank said it continues "to see upward pressure on overall inflation, mainly owing to energy and commodity prices. [and]... that the underlying pace of monetary expansion is still moderate, monetary liquidity remains ample and may facilitate the accommodation of price pressures."  Euro Area annual inflation rose to 2.8% in April, up from 2.7% in March, and above the 2% inflation target.

www.CentralBankNews.info

Bank of England Holds Rate at 0.50%

The Monetary Policy Committee of the Bank of England maintained the official Bank Rate paid on commercial bank reserves unchanged at 0.5%

.  The Bank also "voted to maintain the stock of asset purchases financed by the issuance of central bank reserves at £200 billion".  The Bank will release inflation and output projections on the 11th of May and will release the minutes of this monetary policy meeting on the 18th of May.

www.CentralBankNews.info

Malaysia Central Bank Increases Rate 25bps to 3.00%

The Bank Negara Malaysia increased the Overnight Policy Rate (OPR) by 25 basis points to 3.00% from 2.75% and the floor and ceiling rates of the corridor for the OPR were also raised to 2.75 percent and 3.25 percent respectively.  The Bank also increased the Statutory Reserve Requirement (SRR) Ratio from 2.00% to 3.00%, effective from 16 May 2011.  Malaysia saw inflation of 3% in March, bringing the average to 2.8% for the first quarter of 2011.  On inflation the bank noted "the increase was mainly due to higher food and fuel prices."

www.CentralBankNews.info

Philippine Central Bank Hikes Rate 25bps to 4.50%

The Bangko Sentral ng Pilipinas increased the overnight borrowing rate by 25 basis points to 4.50% from 4.25% and the overnight lending rate to 6.50% from 6.25%.  The Bank noted that its baseline inflation projections suggest that the 3-5% inflation target for 2011 is at risk.  The Bank also said "International oil prices have remained elevated due to strong global demand as well as concerns about supply gaps. Global non-oil markets also continued to tighten,".  The Philippines reported inflation of 4.5% in April, up from 4.3% in March. 

www.CentralBankNews.info

Romania Central Bank Holds Rate at 6.25%

The Banca Nationala a Romaniei held its monetary policy rate unchanged at 6.25% and made no changes to minimum reserve requirements.  The Bank said: "The monetary policy stance is aimed at preserving the prospects for resuming disinflation despite the recent inflationary shocks, with broad monetary conditions remaining adequate for fulfilling the medium-term inflation target,".  Romania reported annual inflation of 8.01% in March, up from 7.6% in April as cost push inflation factors such as rising food and energy prices kept inflation above the 2-4% target band.

www.CentralBankNews.info

Reserve Bank of India Hikes Rate 50bps to 7.25%

The Reserve Bank of India increased its repo rate by 50 basis points to 7.25% from 6.75% and raised the reverse repo rate to 6.25% by the same margin.  The Bank also held the cash reserve ratio at 6.00%, and the Bank Rate at 6.00%, while increasing the savings bank deposit interest rate to 4.00% from 3.50%.  India's key inflation measure, the wholesale price index, increase 8.98% year on year in March, exceeding the Bank's estimate of 8%.

www.CentralBankNews.info

Reserve Bank of Australia Holds Cash Rate at 4.75%

The Reserve Bank of Australia maintained the Cash Rate unchanged at 4.75% and said the "current mildly restrictive stance of monetary policy remained appropriate".  The Bank noted it "expects that, as the temporary price shocks dissipate over the coming quarters, CPI inflation will be close to target over the year ahead."  Australia reported consumer price inflation of 3.3% in Q1 2011, up from 2.7% in the December quarter of 2010.

www.CentralBankNews.info

Angola Central Bank Cuts Reserve Requirements 500bps

The Banco Nacional de Angola reduced its required reserve ratio for commercial banks by 500 basis points to 20% from 25% previously.  The move is intended to increase the amount of liquidity in the system and boost lending.  The measure will come into effect from the 9th of May, and reserves can be kept in Angola's domestic currency (Kwanza) or foreign currency.

www.CentralBankNews.info