Friday, February 17, 2012

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.
Following are some of the key quotes and comments from the central bankers that met to review monetary policy settings over the past week:
  • Bank of Japan (held rate at 0.10%, added to 10T to APP):  "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."
  • Sweden's Riksbank (cut rate -25bps to 1.50%):  "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."
  • Bank of Ghana (hiked rate 100bps to 13.50%):  "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."
  • Banco Central de Chile (held rate at 5.00%):  "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."
  • National Bank of Georgia (held rate at 6.50%):  "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." 
Looking at the central bank calendar, the only major central bank scheduled to meet next week is the Central Bank of Turkey.  Elsewhere the Bank of England will release its recent monetary policy meeting minutes (where it increased its APP by GBP 75B) on Wednesday; likewise the Reserve Bank of Australia will release its most recent monetary policy meeting minutes on Tuesday.
  • TRY - Turkey (Central Bank of Turkey) expected to hold at % on the 21st of Feb

Also during the past week Central Bank News released data, extending back to January 1999, for the Global Monetary Policy Rate Index - Developed Markets.


  1. I don't understand every acronym in this article, in fact none, and then much of the "comprehension" is lost.

    1. Thanks for the feedback - we will be adding a glossary of key terms and acronyms soon... stay tuned!