The past week in monetary policy saw interest rate decisions by nine central banks around the world, with three central banks cutting rates and six keeping rates unchanged.
The markets were overwhelmingly focused on the European Central Bank (ECB), following recent statements by its president, Mario Draghi, and the U.S. Federal Reserve. Although both central banks failed to present new stimulus measures, they began the critical task of preparing markets for measures that are likely to be launched if economic conditions deteriorate.
There was initial disappointment that the ECB didn’t kick off any new bond purchasing programs but what many observers fail to recognize is that central banks have to be very cautious rolling out new measures as they are in unchartered terrain. Raising or lowering interest rates in response to business cycles is one thing, restoring investors’ faith in governments is a different matter.
LAST WEEK’S MONETARY POLICY DECISIONS:
COUNTRY
|
NEW RATE
|
OLD RATE
|
RATE 1 YR AGO
|
INDIA
|
8.00%
|
8.00%
|
8.00%
|
UNITED
STATES
|
0.25%
|
0.25%
|
0.25%
|
UNITED
KINGDOM
|
0.50%
|
0.50%
|
0.50%
|
EURO
ZONE
|
0.75%
|
0.75%
|
1.50%
|
CZECH
REPUBLIC
|
0.50%
|
0.50%
|
0.75%
|
ROMANIA
|
5.25%
|
5.25%
|
6.25%
|
UGANDA
|
17.00%
|
19.00%
|
14.00%
|
KAZAKHSTAN
|
5.50%
|
6.00%
|
N/A
|
DOMINICAN
REP.
|
5.50%
|
6.00%
|
6.75%
|
NEXT WEEK:
Next week interest rates look to remain unchanged across the world.
The central bank calendar starts off with the Reserve Bank of Australia, with only a few economists looking for a rate cut following cuts in May and June. The Bank of Korea is also likely to keep rates on hold following its surprise cut last month while the Bank of Japan is not expected to announce new stimulus measures and neither Indonesia, Sri Lanka or Peru are expected to cut rates.
The central bank calendar starts off with the Reserve Bank of Australia, with only a few economists looking for a rate cut following cuts in May and June. The Bank of Korea is also likely to keep rates on hold following its surprise cut last month while the Bank of Japan is not expected to announce new stimulus measures and neither Indonesia, Sri Lanka or Peru are expected to cut rates.
The outlook for Serbia’s monetary policy is unclear following the resignation of the central bank governor and the passage of new laws that seem to curtail the independence of the National Bank of Serbia.
COUNTRY
|
MEETING
|
CURRENT
RATE
|
RATE 1 YR AGO
|
AUSTRALIA
|
7-Aug
|
3.50%
|
4.75%
|
SRI
LANKA
|
8-Aug
|
7.75%
|
7.00%
|
SOUTH
KOREA
|
9-Aug
|
3.00%
|
3.25%
|
SERBIA
|
9-Aug
|
10.25%
|
11.75%
|
JAPAN
|
9-Aug
|
0.10%
|
0.10%
|
INDONESIA
|
9-Aug
|
5.75%
|
6.75%
|
PERU
|
9-Aug
|
4.25%
|
4.25%
|
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