Botswana's central bank cut its Bank Rate by 50 basis points to 9.0 percent, its first rate cut since December 2010, to reignite economic growth while the medium-term inflation outlook is positive.
The Bank of Botswana (BoB) said economic growth is below potential and unemployment is high and forecasts suggest that a more accommodative policy stance would be consistent with the achievement of the bank's 3-6 percent medium-term inflation objective.
In the short term, however, the BoB said inflation is expected to remain above the bank's target range due to transitory factors.
But weak domestic demand and forecast low external inflationary pressures means the "underlying trend is forecast to be downwards, and this means that inflation is anticipated to converge to the medium-term objective range in the second half of 2013," the BoB said.
In March Botswana's inflation rate rose to 7.6 percent, up from 7.5 percent in February, but down from 8.0 percent in March 2012.
Tuesday, April 30, 2013
Thailand to take action to curb rising baht
Thailand's central bank is worried over the rapid rise in the value of its bath currency and will take action - as yet unspecified - together with the Thai finance ministry when needed.
The Bank of Thailand (BOT) said the rise in the baht was "largely attributable to foreign investors' confidence in the strength of the Thai economy" and this had spurred businesses into raising their productivity, the BOT said in a statement following a regular macroeconomic briefing of its Monetary Policy Committee where exchange rate developments were discussed.
However, the rise in the baht has also had a negative impact on Thai exporters, particularly small and medium-sized firms, the BOT said, adding that "despite the exchange rate appreciation, the committee expects the Thai economy to remain resilient."
"The MPC expressed concern over recent volatility and rapid appreciation of the baht, which, at times, have not been justified by economic fundamentals," the BOT said, adding:
"The committee therefore agreed on the need for a timely implementation of appropriate policy mix as warranted by circumstances, in close coordination with the Ministry of Finance and other agencies.
The Thai bath rose by close to 7 percent against the U.S. dollar early this year but then declined early last week following speculation in foreign exchange markets that the BOT would intervene.
The Bank of Thailand (BOT) said the rise in the baht was "largely attributable to foreign investors' confidence in the strength of the Thai economy" and this had spurred businesses into raising their productivity, the BOT said in a statement following a regular macroeconomic briefing of its Monetary Policy Committee where exchange rate developments were discussed.
However, the rise in the baht has also had a negative impact on Thai exporters, particularly small and medium-sized firms, the BOT said, adding that "despite the exchange rate appreciation, the committee expects the Thai economy to remain resilient."
"The MPC expressed concern over recent volatility and rapid appreciation of the baht, which, at times, have not been justified by economic fundamentals," the BOT said, adding:
"The committee therefore agreed on the need for a timely implementation of appropriate policy mix as warranted by circumstances, in close coordination with the Ministry of Finance and other agencies.
The Thai bath rose by close to 7 percent against the U.S. dollar early this year but then declined early last week following speculation in foreign exchange markets that the BOT would intervene.
Central Bank News Link List - Apr 30, 2013: UTCC expects Bank of Thailand policy rate cut
Here's today's Central Bank News link list, click through if you missed the previous link list. The list comprises news about central banks that is not covered by Central Bank News. The list is updated during the day with the latest developments so readers don't miss any important news.
- UTCC expects (Bank of Thailand) policy rate cut (Bangkok Post)
- Euro zone inflation fall, record jobless point to ECB rate cut (Reuters)
- Federal Reserve will likely keep interest rates low (AP)
- Yellen has the right of first refusal at Fed, Meyer says (Bloomberg)
- Swiss central bank post $11.95 billion 1Q profit (AP)
- BOK (Korea) freezes key rate in 4-3 vote: minutes (Yonhap)
- Buzz over 50-basis-point (India) rate cut grows louder (Business Standard)
- Decision on euro zone banks review within two months: Bundesbank (Reuters)
- Carstens says slower inflation may pave way to Mexico rate cut (Bloomberg)
- Singapore central bank says inflation could ease to 3-year low (malaysian insider)
- Flood of easy money putting this region (Southeast Asia) at risk (CNBC)
- Peru central bank loosens rules for loans in soles (Reuters)
- The Fed's favorite measure of inflation continues to fall: QE is here to stay (Forbes)
- How Elvira Nabiullina can improve Russia's central bank (Bloomberg view)
- Blaming Europe's central bank (NYT)
- Special Report: Kuroda's calculus - How the Bank of Japan staged its big bang (Reuters)
- Mozambique's central bank lowers 2013 growth forecast to 7% (Bloomberg)
- German regulators oppose Fed rule on foreign bank oversight (Bloomberg)
- The Fed broadens its reach (Bloomberg view)
- www.CentralBankNews.info
Monday, April 29, 2013
Angola holds key rate steady, cuts liquidity rate 25 bps
Angola's central bank kept its main policy rate, the BNA rate, steady at 10 percent but cut the rate on its standing liquidity absorption facility to 1.0 percent from 1.25 percent.
The National Bank of Angola (BNA), which last cut its BNA rate by 25 basis points in January after a similar cut in 2012, did not give a reason for cutting the standing liquidity rate.
Angola's inflation rate rose slightly to 9.11 percent in March from 9.04 percent in February with the largest price change seen in the category for food and non-alcoholic beverages, rising by 0.84 percent in the month and accounting for 58.24 percent of the change in the overall inflation rate.
The BNA said credit to the economy rose by 1.34 percent, the average exchange rate of the Kwanza to the U.S. dollar was stable at 95.98 at the end March while the central bank sold $1,445 million of foreign exchange to the market during March for a total $4,252 million in the first quarter of 2013.
www.CentralBankNews.info
The National Bank of Angola (BNA), which last cut its BNA rate by 25 basis points in January after a similar cut in 2012, did not give a reason for cutting the standing liquidity rate.
Angola's inflation rate rose slightly to 9.11 percent in March from 9.04 percent in February with the largest price change seen in the category for food and non-alcoholic beverages, rising by 0.84 percent in the month and accounting for 58.24 percent of the change in the overall inflation rate.
The BNA said credit to the economy rose by 1.34 percent, the average exchange rate of the Kwanza to the U.S. dollar was stable at 95.98 at the end March while the central bank sold $1,445 million of foreign exchange to the market during March for a total $4,252 million in the first quarter of 2013.
www.CentralBankNews.info
Central Bank News Link List - Apr 29, 2013: Asian officials must respond early to overheating risk, IMF says
Here's today's Central Bank News link list, click through if you missed the previous link list. The list comprises news about central banks that is not covered by Central Bank News. The list is updated during the day with the latest developments so readers don't miss any important news.
- Asian officials must respond early to overheating risk, IMF says (Bloomberg)
- Lower rate won't stem capital flow: BOT (Thailand) (The Nation)
- Ebbing inflation means more easy money (Bloomberg)
- Still stuck on central-bank life support (Reuters)
- Polish rates are still too high - Finance Minister Rostowki (dow jones)
- Economists trim Brazil interest rate bets for 2014 - survey (dow jones)
- Riksbank minutes highlight concern over household debt levels (WSJ)
- Pre-crises loans hinder Europe bank lending (IFR/Reuters)
- Outgoing Bank of England boss leaves lasting legacy: David Ignatius (pennlive)
- Analysis: Chinese strong talk on yuan reform masks policy quandary (Reuters)
- India's rate cuts blunted adds reserve-ratio pressure (Bloomberg)
- Berlin confident top court will uphold euro rescue ruling (Reuters)
- Namibia: No room for interest rate change (allafrica)
- Mauritius finance minister: 2013 inflation seen below central bank forecast (Reuters)
- Central Banks' outdated independence - opinion (allafrica)
- www.CentralBankNews.info
Saturday, April 27, 2013
Monetary Policy Week in Review – Apr 27, 2013: One central bank cuts, pressure grows on Europe's politicians
Last week nine central banks took policy decisions, with Hungary continuing its rate-cutting spree and the other eight banks (Namibia, New Zealand, Philippines, Fiji, Japan, Mexico, Colombia and Trinidad & Tobago) keeping rates unchanged as pressure mounted on euro zone policy makers to get serious about reforms and speed up growth.
A quiet exasperation over the lack of action by Europe’s policy makers turned into more forceful criticism during the annual meeting of the International Monetary Fund in Washington D.C. with signs that the dogged belief in austerity as a growth strategy is starting to break down.
The other theme dominating central banking last week was the continuing fallout from Japan’s aggressive policy easing, which has lead to a weaker yen and upward pressure on other currencies as some of the Bank of Japan’s money looks for higher yield outside the country.
The Bank of Korea’s governor expressed his concern over the impact of the weaker yen on the competitiveness of his country’s industry; the Bank of Thailand is considering how to reduce the upward pressure on the bath; the Reserve Bank of New Zealand said upward pressure on the overvalued kiwi dollar was growing and the Bank of Israel said money was flowing into its bonds.
Last year’s warning by Mervyn King, the outgoing governor of the Bank of England, that 2013 could feature “actively managed exchange rates as an alternative to the use of domestic monetary policy” was prescient and slightly ominous.
Through the first 17 weeks of this year, the overwhelming majority of the world’s central banks have kept their rates on hold: 78 percent of the 156 policy decisions taken so far by the 90 central banks followed by Central Bank News have lead to unchanged rates, slightly up from 77 percent after 16 weeks.
Globally, 19 percent of policy decisions this year have lead to rate cuts - largely by central banks in emerging economies – unchanged from last week.
Rate rises are still rare – there have only been six so far this year – but this number is likely to rise in the second half of the year as global growth slowly strengthens and inflationary pressures rise, especially in Southeast Asia.
The only real sinkhole in global growth remains Europe and policy makers from around the world appear to be losing their patience with the euro zone's lack of progress in solving its problems.
Through the barrage of statements and communiqués from the IMF and G20 meetings, it is clear that global policy makers have decided that Europe’s experiment with harsh austerity has gone far enough. Recession, popular dissatisfaction and growing unemployment bear witness to the strategy’s failure.
There was a remarkable confluence of criticism of austerity last week: The validity of the academic work used to underpin pro-austerity policies was questioned; the IMF stressed that fiscal tightening should only occur at a pace that economic recovery can handle – underlining the shift away from its traditional position as an advocate of austerity - while African finance ministers insisted euro zone politicians “work harder and faster” so growth in their own economies isn’t undermined.
The bottom line is that the fragile global economic recovery may falter without growth in Europe and this year it’s economy is set to contract for the second year in a row.
And the criticism, all too often shouted through the streets of Athens, Madrid, Rome and Lisbon, is finally being heard by a growing number of top policy makers.
Christine Lagarde, IMF managing director, talked of "adjustment fatigue" and growing tensions over the fairness of public policy, while European Commission President Jose Manuel Barroso said the combination of lower spending and higher taxes may have hit the limits of public acceptance and was now contributing to the recession.
But so far the austerity camp seems unbowed and one its leading proponents, German Chancellor Angela Merkel, even had the audacity to up the ante, saying the European Central Bank would have to raise interest rates if its policy was based purely on German conditions.
Although Germany is doing better than many of its euro zone brethren, it’s economy is hardly in need of cooling. The German economy shrank by 0.6 percent in the fourth quarter of 2012 from the third quarter and is forecast to grow a mere 0.5 percent in 2013, it's inflation rate fell to 1.4 percent in March, below the ECB's target, and the unemployment rate is 5.4 percent.
LAST WEEK’S
(WEEK 17) MONETARY POLICY DECISIONS:
| COUNTRY | MSCI | NEW RATE | OLD RATE | 1 YEAR AGO |
| HUNGARY | EM | 4.75% | 5.00% | 7.00% |
| NAMIBIA | 5.50% | 5.50% | 6.00% | |
| NEW ZEALAND | DM | 2.50% | 2.50% | 2.50% |
| PHILIPPINES | EM | 3.50% | 3.50% | 4.00% |
| FIJI | 0.50% | 0.50% | 0.50% | |
| JAPAN | DM | 0.00% | 0.00% | 0.10% |
| TRINIDAD & TOBAGO | 2.75% | 2.75% | 3.00% | |
| MEXICO | EM | 4.00% | 4.00% | 4.50% |
| COLOMBIA | EM | 3.25% | 3.25% | 5.25% |
Next week (week 18) features seven central bank policy decisions, including
heavyweights the United States, the European Central Bank and India, plus Angola, the Czech Republic, Romania and Uganda.
| COUNTRY | MSCI | DATE | RATE | 1 YEAR AGO |
| ANGOLA | 29-Apr | 10.00% | 10.25% | |
| UNITED STATES | DM | 1-May | 0.25% | 0.25% |
| EURO AREA | DM | 2-May | 0.75% | 1.00% |
| CZECH REPUBLIC | EM | 2-May | 0.05% | 0.75% |
| ROMANIA | FM | 2-May | 5.25% | 5.25% |
| UGANDA | 3-May | 12.00% | 20.00% | |
| INDIA | EM | 3-May | 7.50% | 8.00% |
Friday, April 26, 2013
Trinidad & Tobago holds rate, sees subdued recovery
The Central Bank of Trinidad and Tobago held its benchmark repo rate steady at 2.75 percent, saying the current accommodative policy stance was appropriate as the recovery of the economy is likely to be subdued with inflationary pressures contained.
The central bank, which cut rates by 25 basis points in 2012, said headline inflation rose to an annual rate of 6.9 percent in March from 5.9 percent in February but on a monthly basis the headline inflation rate for the two consecutive months slowed to 0.2 percent from 0.3 percent in February.
Core inflation, which excludes food, inched up to 2.2 percent in March from February's 2.1 percent while growth in private sector credit remained relatively slow in February, with credit to the private sector up by 2.1 percent from 1.9 percent in the previous month.
"While economic activity is expected to pick up gradually over the course of 2013, the recovery is likely to be subdued," the bank said, adding that "continued stability in core inflation suggests that underlying inflationary pressures remain well contained."
www.CentralBankNews.info
The central bank, which cut rates by 25 basis points in 2012, said headline inflation rose to an annual rate of 6.9 percent in March from 5.9 percent in February but on a monthly basis the headline inflation rate for the two consecutive months slowed to 0.2 percent from 0.3 percent in February.
Core inflation, which excludes food, inched up to 2.2 percent in March from February's 2.1 percent while growth in private sector credit remained relatively slow in February, with credit to the private sector up by 2.1 percent from 1.9 percent in the previous month.
"While economic activity is expected to pick up gradually over the course of 2013, the recovery is likely to be subdued," the bank said, adding that "continued stability in core inflation suggests that underlying inflationary pressures remain well contained."
www.CentralBankNews.info
Colombia holds rate steady at 3.25% after seven cuts
Colombia's central bank held its benchmark interest rate steady at 3.25 percent, as expected, saying the economy continues to grow below its potential and inflation is below 3.0 percent but it is "particularly difficult to interpret current trends in economic activity and its projection."
But recent rate cuts and proposed fiscal policy measures should help raise economic growth toward the country's productive capacity and this will help inflation move closer to the central bank's target.
"In this context, the balance of risk assessment indicates the need to maintain the policy interest rate at 3.25%, while waiting for more information," the central bank said.
The Central Bank of Colombia central bank has cut rates seven times by a total of 200 basis points since July last year, most recently by 50 basis points in March.
Economic activity in the first quarter of this year has slowed from 2012, the central bank said, with household consumption growing at a slower rate along with a deterioration in industry.
But the recent behaviour of some components of aggregate spending and fewer working days in the first quarter compared with last year has made it difficult to interpret current trends, the bank said.
"However, economic growth is expected to increase throughout the year in reaction prior monetary policy actions and programs recently announced by the national government," the bank said.
But recent rate cuts and proposed fiscal policy measures should help raise economic growth toward the country's productive capacity and this will help inflation move closer to the central bank's target.
"In this context, the balance of risk assessment indicates the need to maintain the policy interest rate at 3.25%, while waiting for more information," the central bank said.
The Central Bank of Colombia central bank has cut rates seven times by a total of 200 basis points since July last year, most recently by 50 basis points in March.
Economic activity in the first quarter of this year has slowed from 2012, the central bank said, with household consumption growing at a slower rate along with a deterioration in industry.
But the recent behaviour of some components of aggregate spending and fewer working days in the first quarter compared with last year has made it difficult to interpret current trends, the bank said.
"However, economic growth is expected to increase throughout the year in reaction prior monetary policy actions and programs recently announced by the national government," the bank said.
Fiji holds policy rate steady, demand continues to improve
The Reserve Bank of Fiji maintained its accommodative monetary policy stance and held its Overnight Policy Rate (OPR) steady at 0.5 percent, saying domestic demand and the labour market was continuing to improve and there are signs of rising investment activity.
But the Reserve Bank, which last cut its rate by 100 basis points in November 2011 to support economic growth, said the performance of various sectors was still mixed with a notable decline in gold production due to lower quality ore being extracted and greater focus on capital work.
The number of visitor arrivals to Fiji also fell by 7.9 percent in January from the same month last year, led by lower visitors from Australia, New Zealand, China and Europe.
Consumer spending was trending upwards and growth in new consumption lending more than doubled to $132.5 million in the first three months of this year compared with first quarter 2012.
Consumer prices rose by an annual 3.3 percent in March due to higher food prices, while foreign reserves were around $1,458.8 million as of April 26, sufficient to cover 4.2 months of imports of goods and non-factor services, the central bank said in its Economic Review.
www.CentralBankNews.info
But the Reserve Bank, which last cut its rate by 100 basis points in November 2011 to support economic growth, said the performance of various sectors was still mixed with a notable decline in gold production due to lower quality ore being extracted and greater focus on capital work.
The number of visitor arrivals to Fiji also fell by 7.9 percent in January from the same month last year, led by lower visitors from Australia, New Zealand, China and Europe.
Consumer spending was trending upwards and growth in new consumption lending more than doubled to $132.5 million in the first three months of this year compared with first quarter 2012.
Consumer prices rose by an annual 3.3 percent in March due to higher food prices, while foreign reserves were around $1,458.8 million as of April 26, sufficient to cover 4.2 months of imports of goods and non-factor services, the central bank said in its Economic Review.
www.CentralBankNews.info
Central Bank News Link List - Apr 26, 2013: Europe should weaken its currency: Bini Smaghi
Here's today's Central Bank News link list, click through if you missed the previous link list. The list comprises news about central banks that is not covered by Central Bank News. The list is updated during the day with the latest developments so readers don't miss any important news.
- Europe should weaken its currency: Bini Smaghi (CNBC)
- ECB's Asmussen says very low interest rates come with costs (Bloomberg)
- Bank of Korea head concerned over yen's slide (Bernama)
- There is a case for RBI to cut interest rate: Rajan (zee news)
- Colombian central bank is expected to keep key rate in check (WSJ)
- Lending slumps, gaps widen in euro zone: ECB data (Reuters)
- Banks to repay ECB 2.3 bln euros of crises loans (Reuters)
- Brazil central bank says to be "especially vigilant" - minutes (Reuters)
- IMF, ECB square off in Europe austerity debate (Reuters)
- Chile central bank considered standing pat in April - minutes (WSJ)
- Swiss central bank keeps some gold in UK, Canada (AP)
- Fed zeroes in on vulnerability to rate rise (WSJ)
- Philippine central bank seeks additional capital (The Nation)
- Bank of Korea told by former policy maker to resist rate cut (Bloomberg)
- www.CentralBankNews.info
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