ECB Allots EUR 529.5 billion in second round of LTRO

The European Central Bank (ECB) allotted 529.5 billion euros to 800 banks that participated in the ECB's second LTRO (Longer-Term Refinancing Operation).  This compares to December's LTRO, in which 489 billion euros were allotted to 500 banks.  The ECB next meets to review monetary policy settings on the 8th of March.  The ECB last cut its main interest rate by 25 basis points to 1.00% in December last year.  The Euro is down about 2% against the US dollar over the past year, with the EURUSD exchange rate last trading around 1.337.

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Hungary Central Bank Keeps Interest Rate at 7.00%

The Magyar Nemzeti Bank kept its central bank base rate steady at 7.00%.  The Bank said: "The Monetary Council has decided to leave the base rate unchanged. Monetary policy can best contribute to economic growth by maintaining a predictable economic environment, ensuring price stability and preserving the stability of the financial system. High volatility of financial markets over the recent period continues to warrant a cautious policy stance."

Banco Nacional de Angola Holds Interest Rate at 10.25%

The Banco Nacional de Angola (BNA) held its new benchmark monetary policy interest rate unchanged at 10.25%.  The BNA said: "Bearing in mind the pooled analysis of macroeconomic indicators, including recent developments and prospects of the Angolan economy and international, as well as the macroeconomic targets set for 2012 (GDP growth of 12.8% and inflation at 10%), the Committee Monetary Policy BNA decided unanimously to maintain the Base Rate of Interest - rate BNA - at 10.25% and reduce the rate of Interest Standing Lending Facility Liquidity by 0.5 percentage points to 12%"

Bank of Israel Holds Interest Rate at 2.50%

The Bank of Israel held its benchmark interest unchanged at 2.50%.  The Bank said "The decision to leave the interest rate for March 2012 unchanged at 2.5 percent is consistent with an interest rate policy that is intended to entrench the inflation rate within the price stability target of 1–3 percent 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, monetary policies of major central banks, and developments in the exchange rate of the shekel."

National Bank of Tajikistan Drops Rate 80bps to 9.00%

The National Bank of Tajikistan dropped its key refinancing rate by 80 basis points to 9.00% from 9.80% previously.  The Bank last dropped the rate 20bps to 9.80% in December last year, raised it 100bps to 10.00% in October, and raised the interest rate 75bps to 9.00% in March 2011.  Tajikistan recorded full year inflation of 9.3% in 2011, and 9.8% in 2010.  Tajikistan's currency, the Tajikistani Somani (TJS), last traded around 4.76 against the US dollar.

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Forecasting Financial Markets With the GMPRI

In this article we examine the potential application of the Global Monetary Policy Rate Indexes in forecasting  and understanding financial market trends. We look at the developed and emerging rate indexes and key stock indexes; the S&P 500, the Hang Seng, and the US 10 Year government bond yield, and a commodities index. We find some link in movements between the indexes, with a few notable conclusions.

Monetary Policy Week in Review - 25 February 2012

The past week in monetary policy saw two central banks changing their main interest rates; Colombia +25bps to 5.25%, and Belarus -500bps to 38.00%, while two held their rates unchanged; Namibia at 6.00%, and Turkey at 5.75%.  Turkey did however cut some of its other interest rates (see the update for details).  Also making headlines was the People's Bank of China announcing a 50 basis point cut to the Required Reserve Ratio, an important move towards more growth focused policy settings.

National Bank of Belarus Drops Rate 500bps to 38.00%

The National Bank of the Republic of Belarus cut its refinancing rate by 500 basis points to 38.00% from 43.00%, effective 1 March, reversing a string of aggressive rate hikes.  The Bank said [translated]: "in recent months, there is a significant slowdown in inflation. Thus, the consumer price index for December 2011 amounted to 102.3 percent for January 2012 - 101.9 per cent, for two weeks of February - 100,9 percent. As a result, interest rates in real terms on deposits from January 2012 confidently anchored in a positive value at a sufficiently high level. The dynamics of time deposits reflects the increased savings of the population processes in the economy and the growth of confidence in the banking system."

Central Bank of Colombia Hikes Rate 25bps to 5.25%

The Central Bank of Colombia hiked its monetary policy interest rate another 25 basis points to 5.25% from 5.00%.  The Bank said [translated]: "The latest information suggests that in the fourth quarter of 2011 the Colombian economy continued to show strong momentum and that this performance has continued in early 2012. Both exports and imports of capital goods continued to grow at high rates in December. In the same month, the index of industrial confidence remained at high levels and retail sales grew at a good pace. In January, the index of consumer confidence rose for the third consecutive month and reached historically high levels. Credit growth remains high although recent data suggest a slight slowdown. However, the consumer credit behavior suggests that households have significantly higher level of indebtedness. With recent increases in interest rates intervention are expected to approximate market rates more quickly to their average historical levels."

Namibian Central Bank Keeps Rate at 6.00%

The Bank of Namibia kept its benchmark interest rate, the repurchase rate, unchanged at 6.00%, for the 7th consecutive meeting.  Bank of Namibia Governor Ipumbu Shiimi said: "In view of the need to ensure a sustained growth in the domestic economy, the MPC is of the view that a tightening of the monetary policy stance at this stage might be premature and thus detrimental to the growth prospects."

Central Bank of Turkey Keeps Benchmark Rate at 5.75%

The Central Bank of the Republic of Turkey kept its benchmark 1-week repo rate unchanged at 5.75%.  The Bank cut the lending rate 100bps to 11.50% and the interest rate on borrowing facilities for primary dealers 100bps to 11.00%, and lending rate on late liquidity 100bps to 14.50%.  The Bank said: "Recent data releases confirm that the rebalancing between the domestic and external demand is ongoing as envisaged. Final domestic demand is decelerating while the contribution of net external demand to growth is increasing. Accordingly, the rebalancing process and the improvement in the current account deficit will continue in the forthcoming period."

Emerging Markets Monetary Policy Rate Indicator

Adding to the stable of the Global Monetary Policy Rate Index, we introduce the Emerging Markets sub-index; a GDP weighted composite interest rate indicator for 21 emerging markets.  The Index has been built out to January 2000. In addition to the Emerging Markets sub-index, we will also look at the Emerging Markets (EM) + Developed Markets (DM) composite index; providing a virtually global indicator of monetary policy rates. The use of DM and EM indexes are also of interest in terms of spreads and relative movements, as will be explained.

People's Bank of China Cuts RRR 50 basis points

The People's Bank of China (PBOC) announced a 50 basis point reduction in the required reserve ratios (RRR) for deposit taking financial institutions, effective 24th February 2012.  The new required reserve ratios will average 20.50% for large banks, and 18.50% for small banks.  The move is expected to add as much as 400 billion yuan of liquidity to the financial system.  The move marks a shift in the policy bias to loosening, with the PBOC previously being content to use open market operations to adjust liquidity, in contrast to the higher profile RRR.

Monetary Policy Week in Review - 18 February 2012

The past week in monetary policy saw 3 monetary policy interest rate changes; Kazakhstan -50bps to 7.00%, Sweden -25bps to 1.50%, and Ghana +100bps to 13.50%.  Meanwhile the central banks of Pakistan 12.00%, Japan 0.10%, Chile 5.00%, and Georgia 6.50% all held interest rates unchanged.  The other key headline was the Bank of Japan expanding its quantitative easing program by another 10 trillion Yen to 65 trillion. The Reserve Bank of India also made a technical adjustment to one of its old policy rates.

National Bank of Georgia Holds Refinancing Rate at 6.50%

The National Bank of Georgia held its benchmark refinancing interest rate unchanged at 6.50%.  The Bank said: "Despite low inflation the real exchange rate had been appreciating in the end of last year. This is related to the faster nominal appreciation of the national currency vs. currencies of main trade partners. Real appreciation on one hand causes further widening of the trade deficit and on the other causes weakening of the demand."

Central Bank of Chile Holds Rate at 5.00%

The Banco Central de Chile held its monetary policy interest rate unchanged at 5.00%.  The Bank noted: "Domestically, economic activity and domestic demand have tended to outperform forecasts from the latest Monetary Policy Report. The labor market is still tight. Credit market conditions are stable. Y‐o‐y CPI inflation is slightly above the tolerance range, while core inflation measures have normalized.  Inflation expectations remain around the target."

Bank of Ghana Hikes Rate 100bps to 13.50%

The Bank of Ghana raised its key lending rate 100 basis points to 13.50% from 12.50% previously.  Bank of Ghana Governor, Kwesi Amissah-Arthur, said: "The Committee concluded that the balance of risks to inflation is elevated. To contain future inflation pressures and realign interest rates in favour of domestic assets, it is necessary that monetary policy continues to be fine tuned to ensure that inflation expectations remain anchored to keep inflation within the target band."

Swedish Riksbank Cuts Repo Rate 25bps to 1.50%

Sweden's Riksbank cut its benchmark repo rate by another 25 basis points to 1.50% from 1.75%.  The Bank said: "Inflationary pressures in the Swedish economy are low. The economic outlook in Sweden has weakened as a result of developments abroad. In order to stabilise inflation around 2 per cent and resource utilisation in the economy around a normal level, the Executive Board of the Riksbank has decided to cut the repo rate by 0.25 percentage points to 1.50 per cent. The repo rate is expected to remain at this level until some time in 2013."

Global Monetary Policy Rate Index - Developed Markets

Following on from the initial launch of the GMPRI [Global Monetary Policy Index] this research note focuses on the Developed Markets sub-index. The first point to note is that we have developed history for the index back to January 1999 (data file is available at the bottom of this article). While the method of GDP weighting is also discussed, we have overlain a couple of key data series with the index to demonstrate the value of the index in strategy and forecasting.

RBI Makes Technical Adjustment to Bank Rate 350bps to 9.50%

The Reserve Bank of India [RBI] raised its old bank rate 350 basis points to 9.50% as a one-time technical adjustment to align it with the main policy rates (repo rate, and reverse repo rate).  The interest rate (specifically discounting and rediscounting) has largely remained disused since 2003, however it has some application in liquidity management, and consistency between rates is considered desirable.  The RBI last held its main repo rate at 8.50%, and reverse repo rate at 7.50% and cut its cash reserve ratio by 50bps to 5.50% at its January meeting.

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National Bank of Kazakhstan Cut Rate 50bps to 7.00%

The National Bank of Kazakhstan cut its key refinancing rate by 50 basis points to 7.00% from 7.50% as inflationary pressures eased.  NBK Chairman, Grigori Marchenko, said: "If the level of inflation is the same, I think we could lower the refinancing rate again in April."  Kazakhstan's central bank last increased the interest rate in March last year by 50 basis points to 7.50%.

Bank of Japan Increases APP 10 Trillion Yen to 65 Trillion

The Bank of Japan held its interest rate at 0-0.10% and added 10 trillion to it's now 65 trillion yen quantitative easing program.  The Bank noted that this will mean the Asset Purchase Program will increase by about 22 trillion yen by the end of 2012, compared to the current implemented level of about 43 trillion yen. The Bank said: "Japan's economic activity has been more or less flat, mainly due to the effects of a slowdown in overseas economies and the appreciation of the yen.  On the other hand, financial  conditions in Japan have continued to ease.  On the price front, the year-on-year rate of  change in the CPI (all items less fresh food) is around 0 percent."

Pakistan Central Bank Holds Interest Rate at 12.00%

The State Bank of Pakistan maintained its discount rate unchanged at 12.00%.  The Bank said: "In conclusion, despite moderate aggregate demand, pressure on rupee liquidity is likely to continue due to uncertain foreign inflows and substantial government borrowings to finance the fiscal deficit. Moreover, inflationary pressures have not eased significantly. It must be emphasized that sustainable economic recovery over the medium term would call for a sizable increase in both the domestic and foreign private investment in the economy. For this to happen, the business confidence needs to be revived by reducing uncertainties due to energy shortages."

Bulgarian National Bank Sets Base Rate at 0.18%

The Bulgarian National Bank announced on the 31st of January that its base interest rate would be lowered 4 basis points to 0.18% as of 1 February 2012, compared to the previous rate of 0.22%, set in December for January.  The February rate of 0.18% compares to 0.19% in February 2011, 0.24% in February 2010, and 3.92% in February 2009.  Bulgaria reported inflation of 2.8% in December last year.  The Bulgarian economy was unchanged in 3Q11 (0.3% in 2Q11), placing annual GDP growth at 1.3% (2.0% in 2Q11).  Bulgaria's currency, the Bulgarian Lev (BGN), is pegged at 1.95 against the Euro; the USDBGN exchange rate last traded around 1.49.

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Monetary Policy Week in Review - 11 February 2012

The past week in monetary policy saw just one bank lift rates; Jordan +50bps to 5.00%, and two banks cut rates; Belarus -200bps to 43.00%, and Indonesia -25bps to 5.75%.  Meanwhile the banks that held rates unchanged were: Australia 4.25%, UK 0.50%, EU 1.00%, South Korea 3.25%, Serbia 9.50%, Iceland 4.75%, Poland 4.50%, and Peru 4.25%.  Also making news was the Bank of England adding another GBP 50 billion to its quantitative easing program.

Central Reserve Bank of Peru Holds Rate at 4.25%

The Central Reserve Bank of Peru held its key monetary policy reference rate unchanged at 4.25%.  The Bank said: "Some current and advanced indicators of activity show a moderation of growth in the economy. For example, even though sales of electricity continued to grow in January, they showed a lower pace of growth than in December. Moreover, indicators of global economic activity have shown a better-than-expected evolution, but uncertainty in international financial markets persists and growth in 2012 is expected to be lower than in the previous year."

National Bank of Poland Keeps Benchmark Rate at 4.50%

The Narodowy Bank Polski's Monetary Policy Council held its benchmark 7-day interest rate stable at 4.50%.  The Bank said: "In the opinion of the Council, in the medium term inflation will be curbed by the gradually decelerating domestic demand. Decelerating demand growth will be driven by lower economic growth abroad, fiscal tightening in Poland and interest rate increases implemented in the first half of 2011."

Iceland Central Bank Holds Lending Rate at 4.75%

Iceland's Sedlabanki kept its seven-day collateral lending rate steady at 4.75%.  The Bank said: "it will be necessary to withdraw the current degree of monetary accommodation as the recovery progresses and the slack in the economy disappears. The degree to which such normalisation takes place through higher nominal Central Bank rates will depend on future inflation developments. In the absence of an improvement in the inflation outlook, an increase in nominal interest rates will probably be required in the near term in order to bring the monetary policy stance, which is still quite accommodative, to an appropriate level."

National Bank of Serbia Pauses Interest Rate at 9.50%

The National Bank of Serbia held its 2-week repo rate unchanged at 9.50%.  The Bank said: "The key risks to inflation projection stem from the international environment due to the still unresolved crisis in the euro area, as well as from fiscal policy at home. Keeping the budget deficit within the framework earlier agreed with the IMF would serve as an additional safeguard of macroeconomic stability and leave more scope for future relaxation of monetary policy."

Bank of Korea Maintains Interest Rate at 3.25%

The Bank of Korea kept its 7-day repurchase rate at 3.25%.  The Bank said: "In Korea, economic growth has slowed, with domestic demand subdued overall and exports also decreasing. On the employment front, however, the uptrend in the number of persons employed is being sustained, led by the private sector. The Committee anticipates that the domestic economic growth rate will gradually return to its long-term trend level going forward, although viewing downside risks as likely to remain high for some time due mostly to the impact of external risk factors."

European Central Bank Holds Steady at 1.00%

The European Central Bank (ECB) kept its Main refinancing operations rate at 1.00%.  ECB governor, Mario Draghi, said: "Inflation is likely to stay above 2% for several months to come, before declining to below 2%. Available survey indicators confirm some tentative signs of a stabilisation in economic activity at a low level around the turn of the year, but the economic outlook remains subject to high uncertainty and downside risks.... A very thorough analysis of all incoming data and developments over the period ahead is warranted."

Bank of England Expands APP by 50B to 325B

The Bank of England (BoE) held the Bank Rate at 0.50%, and expanded its Asset Purchase Program (Quantitative Easing) target by 50 billion to a new total of GBP 325 billion, after increasing it by 75 billion at its October meeting.  On its asset purchase program, the Bank said: "In the light of its most recent economic projections, the Committee judged that the weak near-term growth outlook and associated downward pressure from economic slack meant that, without further monetary stimulus, it was more likely than not that inflation would undershoot the 2% target in the medium term."

Bank Indonesia Drops Rate 25bps to 5.75%

Indonesia's central bank, Bank Indonesia, cut the BI rate by 25 basis points to 5.75% from 6.00% previously.  The Bank said [translated]: "This decision was made as a further step to boost Indonesia's economic growth amidst decreasing performance of the global economy, with the priority remains on achieving inflation target and exchange rate stability. With this BI rate decision, the lower and upper bounds of interest rate corridor of Bank Indonesia's monetary operation becomes 3.75% for overnight deposit facility (deposit facility rate) and 6.75% for overnight lending facility (lending facility rate), respectively."

National Bank of Belarus Cuts Rate 200bps to 43.00%

The National Bank of the Republic of Belarus cut its refinancing rate by 200 basis points to 43.00% from 45.00%, reversing a string of aggressive rate hikes.  The Bank said [translated]: "In recent months, there are persistent positive trends in the economy and the monetary sphere. Inflationary processes slowed the growth of consumer prices in December 2011 - January 2012 fell to about two percent per month. As a result of increasing the supply of foreign currency on the domestic foreign exchange market has remained stable rate of the Belarusian ruble. There has been steady growth in ruble deposits in banks, first of all, time deposits."

Central Bank of Jordan Raises Rate 50bps to 5.00%

The Central Bank of Jordan raised its key monetary policy interest rates by 50 basis points.  The following rates were affected:  the overnight deposit window rate will go up to 2.75% from 2.25%, the overnight repurchase agreement rate will increase to 4.75% from 4.25%, and the rediscount rate will go up to 5.00% from 4.50%.  The Bank said: "This action aims at supporting monetary stability by curbing expected inflationary pressures and ensuring a competitive return on the JD's denominated assets; which would promote both domestic and foreign investment environment and support sustainable economic growth rates."

RBA Keeps Cash Rate on Hold at 4.25%

The Reserve Bank of Australia (RBA) held the cash rate unchanged at 4.25%.  The RBA said: "At today's meeting, the Board noted that interest rates for borrowers have declined to be close to their medium-term average, as a result of the actions at the Board's previous two meetings. With growth expected to be close to trend and inflation close to target, the Board judged that the setting of monetary policy was appropriate for the moment. Should demand conditions weaken materially, the inflation outlook would provide scope for easier monetary policy."

Introducing the Global Monetary Policy Rate Index

Central Bank News has developed a set of interest rate indexes to track broad trends in monetary policy across the globe. The index is essentially a GDP weighted average interest rate, thus the index can also be used to estimate the cost of capital, assessing monetary policy tightness/looseness, and other economic and financial analysis for the broad groups. There are four indexes: All, Developed, Emerging, and  Lesser Developed & Frontier markets.  The full methodology and components are detailed below.

Central Bank of the Dominican Republic Holds at 6.75%

The Central Bank of the Dominican Republic held its Monetary Policy (Overnight) Rate unchanged at 6.75%, and maintained the Lombard Rate at 9.00%. The Bank said: "Domestically, private credit, economic activity and inflation are performing in line with projections published in the recent Monetary Policy Report. Credit to the private sector continues to expand at a rate close to projected nominal GDP, so preserving the growth of domestic demand. At the same time, forecasts suggest the convergence of y-o-y CPI inflation to its target during the first quarter of 2012, indicating that, even in the midst of an election cycle, price stability and the continuity of macroeconomic policies will be maintained, creating an environment of certainty that facilitates decision-making among private sector economic agents."

Monetary Policy Week in Review - 5 February 2012

The past week in monetary policy saw 5 central banks adjusting interest rates, with increases from: Colombia +25bps to 5.00%, and Sri Lanka +50bps to 7.50%; and decreases from: The Gambia -100bps to 13.00%, Uganda -100bps to 22.00%, and Romania -25bps to 5.50%.  Meanwhile those that held rates unchanged were: Russia 8.00%, Malaysia 3.00%, Kenya 18.00%, the Czech Republic 0.75%, Egypt 9.25%, and Nigeria 12.00%. 

Central Bank of Nigeria Holds Policy Rate at 12.00%

The Central Bank of Nigeria maintained its monetary policy interest rate at 12.00%.  The Bank also held the cash reserve ratio at 8%.  Bank Governor, Lamido Sanusi, said: "We are holding our first meeting of 2012 at a time that is possibly a turning point in the economic history of the country.  The dark clouds in the global horizon remain present.  Forecasts are for slower growth rates in the developed world and emerging markets.  The violence and tragic bombings in northern Nigeria continue to pose a source of concern for investors, and efforts are underway to find a lasting solution.  The recent demonstrations by citizens and opposition parties against fuel subsidy removal have also raised temperatures in the political space"

Central Bank of Egypt Holds Rate at 9.25%

The Central Bank of Egypt held its overnight deposit rate unchanged at 9.25%, and the overnight lending rate at 10.25% and 7-day repo at 9.75%.  The Bank said: "Looking ahead, the current political transformation may continue to have ramifications on both consumption as well as investment decisions, adversely weighing on key sectors within the economy. Moreover, downside risks surrounding the global recovery have mounted on the back of fiscal and banking sector challenges facing the Euro Area and possible spillovers to other regions. These factors, combined, pose downside risks to domestic GDP going forward."

Czech National Bank Holds Interest Rate at 0.75%

The Ceska Narodni Banka held the two-week repurchase rate at 0.75% as expected, and kept the discount rate unchanged at 0.25% and Lombard rate at 1.75%.  The Bank said: "Monetary-policy relevant inflation will be close to the target over the entire forecast horizon. Headline inflation will rise temporarily to just above 3% in 2012 owing to a VAT increase, but will fall back below the target at the start of 2013. Consistent with the forecast is stability of market interest rates in the near future and a modest decline thereafter. The risks to the forecast are balanced."

Central Bank of Kenya Holds Interest Rate at 18.00%

The Central Bank of Kenya kept its benchmark lending rate steady at 18.00%, and held the Cash Reserve Ratio at 5.25%.  The central bank Governor, Njuguna Ndung'u, said: " In view of developments and the need to ensure that inflation declines to levels consistent with the Government's target, the Committee decided to retain the Central Bank Rate at 18.0 percent. This will allow time for the policy measures in place to work out and deliver decisive results on inflation and inflation expectations."

Malaysia Central Bank Holds Policy Rate at 3.00%

The Bank Negara Malaysia kept its Overnight Policy Rate (OPR) steady at 3.00%.  The Bank said: "In the MPC's assessment, the global environment will become more challenging going forward. As Malaysia's economic growth and inflation prospects will be affected by these external developments, the MPC will continue to assess carefully the risks to domestic growth and inflation."

Central Bank of Russia Holds Rate at 8.00%

The Central Bank of Russia held its benchmark refinancing rate unchanged at 8.00%.  The Bank said: "The dynamics of the main macroeconomic indicators in December showed persistent firmness of consumption beside the moderate production growth figures. Further decrease in unemployment rate, high real income growth rate and the continued expansion in consumer credit contributed to the acceleration of retail sales growth. The growth rate of investment in production capacity increased in December. However, industrial production growth rate in year-over-year terms decreased sharply compared to November, which was partly explained by the decline in particular components of the index due to weather-related factors. Production growth rates and economic confidence indicators remained rather low in the recent months."

National Bank of Romania Cuts Rate 25bps to 5.50%

The Banca Nationala a Romaniei cut its key monetary policy interest rate by another 25 basis points to 5.50% from 5.75%.  The Bank said: "Looking at domestic developments, statistical indicators reveal the persistence of negative output gap despite positive dynamics in exports, industrial and farming outputs, the current account deficit staying at sustainable levels, but also a gradual recovery of credit to the private sector. The external environment shows that uncertainties remain regarding the resolution of the Eurozone sovereign debt crisis, with impact on investors' risk aversion, capital flow volatility, as well as on global economic developments."

Central Bank of Sri Lanka Hikes Rate 50bps to 7.50%

The Central Bank of Sri Lanka raised its benchmark repurchase rate by 50 basis points to 7.50% from 7.00%, and reverse repurchase rate to 9.00% from 8.50%, and kept the Statutory Reserve Ratio at 8%.  The Bank said: "Taking into consideration these macroeconomic developments,  the Monetary Board of the Central Bank of Sri Lanka is of the view that the continuous increase in credit extended to the private sector by commercial banks needs to be addressed for two main reasons: First, to  curtail import related credit, thereby reducing the trade deficit and the current account deficit, and second, to effectively ensure that inflation remains at the mid-single digit levels in the second half of 2012 as well, notwithstanding the sharp build up of credit in 2011."

Bank of Uganda Cuts Interest Rate 100bps to 22.00%

The Bank of Uganda cut its new monetary policy interest rate (the central bank rate [CBR]) 100 basis points to 22.00% from 23.00% previously.  The rediscount rate and Bank rate were also reduced by 100 basis points to 26% and 27% respectively.  Bank of Uganda Governor, Emmanuel Tumusiime-Mutebile, said: "Compared to the previous month, the BOU now believes that the prospects for a fall in inflation during the course of 2012 have strengthened.  The BOU is now confident that inflation will be reduced to single digit levels by the end of 2012,"

Central Bank of The Gambia Cut Rate 100bps to 13.00%

The Central Bank of The Gambia cut its rediscount rate by 100 basis points to 13.00% from 14.00% previously, and left the reserve requirement ratio unchanged at 12%.  The Bank said: "Taking the above factors into consideration, including the inflation outlook and the lack of demand pressures from the slowing of the domestic economy, the MPC has decided to reduce the policy rate by 1.0 percentage point to 13 percent. The expectation is that other interest rates, particularly lending rates, would be reduced."