Friday, December 30, 2011

Monetary Policy Week in Review - 31 Dec 2011

The past week in monetary policy saw just three central banks meeting to review monetary policy settings.  Israel held its interest rate at 2.75%, and Taiwan held its interest rate at 1.875% during its quarterly interest rate review, while Uruguay bucked the trend, lifting its interest rate 75 basis points to 8.75% as inflation proved the greater risk.

Following are some of the key quotes from the central banks that reviewed monetary policy settings:
  • Uruguay (increased rate 75bps to 8.75%):  "the inflation rate has accelerated and expectations remain that inflation will be well above the target range, emphasizing the perception that price stability is the main concern in the current macroeconomic context. In order to provide a fee structure consistent with contractionary monetary policy, the Central Bank of Uruguay deemed it convenient in this instance, raise the policy rate."
  • Taiwan (held rate at 1.875%):  "Overall, Taiwan's economy continues to register moderate growth amid global economic uncertainties, while the 2012 price trends still require close monitoring. In addition, interest rates are at low levels. Against this backdrop, the Board judges that the current policy stance is conducive to economic and financial stability and will support economic growth in Taiwan."
  • Israel (held rate at 2.75%): "the decision is consistent with the interest rate policy that is intended to entrench the inflation rate within the price stability target of 1–3 percent inflation a year over the next twelve months, and to support growth while maintaining financial stability. The path of the interest rate in the future depends on developments in the inflation environment, growth in Israel, the global economy, the monetary policies of major central banks, and developments in the exchange rate of the shekel."

There are no major central bank meetings scheduled for next week, please review the 2012 central banking calendar which has just recently been launched.  All the best for the new year.


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