Monetary Policy Week in Review – Jun 24-28, 2013: 8 banks hold rates, 1 cuts, markets adjust to coming Fed exit

    This week 10 central banks took policy decisions with only Hungary cutting rates while global financial markets continued to adjust to an earlier-than-expected exit from quantitative easing by the U.S. Federal Reserve.

     Eight central banks kept their policy rates on hold (Israel, Armenia, Taiwan, the Czech Republic, Fiji, Colombia, Angola and Trinidad and Tobago) as a measure of calm returned to markets after a frenetic month that witnessed a major shift of capital away from emerging markets and other assets perceived as risky.

    The National Bank of Hungary, which cut rates for the 11th time in a row, was the latest central bank to adjust its policy stance to the volatility in global markets from an expected tightening in U.S. monetary policy, saying it may have to slow down its pace of future easing due to the shift in “markets perception of risks.”

    Uruguay’s central bank offered further details of its decision from earlier this month to target money supply rather than interest rate to control above-target inflation. The Central Bank of Uruguay will target an 8.0 percent growth in money supply for the quarter ending in June 2015, a contraction from the current 12.5-13.0 percent expansion in the quarter ending September 2013.

    While Uruguay’s central bank maintained its inflation target of 6.0 percent, it widened the tolerance band to 3-7 percent from July 2014 from 4-6 percent.

    Through the first 26 weeks of this year, central bank policy rates have been cut 63 times, or 24.9 percent of the 253 policy decisions taken by the 90 central banks followed by Central Bank News, slightly down from 25.5 percent last week.

LAST WEEK’S (WEEK 26) MONETARY POLICY DECISIONS:

COUNTRY	MSCI	NEW RATE	OLD RATE	1 YEAR AGO
ISRAEL	DM	1.25%	1.25%	2.25%
ARMENIA		8.00%	8.00%	8.00%
HUNGARY	EM	4.25%	4.50%	7.00%
TAIWAN	EM	1.88%	1.88%	1.88%
CZECH REPUBLIC	EM	0.05%	0.05%	0.50%
FIJI		0.50%	0.50%	0.50%
COLOMBIA	EM	3.25%	3.25%	5.25%
URUGUAY		N/A	9.25%	9.25%
ANGOLA		10.00%	10.00%	10.25%
TRINIDAD & TOBAGO		2.75%	2.75%	3.00%

    NEXT WEEK (week 27) features six scheduled central bank policy meetings, including Romania, Australia, Sweden, Poland, the United Kingdom and the euro area.

COUNTRY	MSCI	DATE	RATE	1 YEAR AGO
ROMANIA	FM	1-Jul	5.25%	5.25%
AUSTRALIA	DM	2-Jul	2.75%	3.50%
SWEDEN	DM	3-Jul	1.00%	1.50%
POLAND	EM	3-Jul	2.75%	4.75%
UNITED KINGDOM	DM	4-Jul	0.50%	0.50%
EURO AREA	DM	4-Jul	0.50%	1.00%

 
 www.CentralBankNews.info

Central Bank News Link List - Jun 28, 2013: Czech, Colombia, Angola, Armenia, T&T, Fiji hold rates

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.

• Czech central bank holds rate steady, ready for FX intervention (Czech National Bank)
• Colombia holds rate, inflation likely to hit target range (Colombia Central Bank)
• Uruguay targets 8 pct rise in money supply by mid-2015 (Central Bank of Uruguay)
• Fiji central bank holds rate, sees stable inflation, year-end at 3.0 pct (Reserve Bank of Fiji)
• Trinidad & Tobago holds rate, inflation contained (Central Bank of Trinidad & Tobago)
• Armenia holds rate to anchor inflation (Central Bank of the Republic of Armenia)
• Angola holds rate steady, cuts reserve requirement (National Bank of Angola)
• Fed officials intensify effort to curb surge in interest rates (Bloomberg)
• ECB monetary policy exit is very far away, Council's Knot says (Bloomberg)
• China central bank to ensure reasonable lending, liquidity (Reuters)
• Brazil central bank ups inflation, lowers GDP forecast (Reuters)
• Sri Lanka central bank sells dollars to stabilize currency (Arab News)
• Vietnam dong falls 0.6 pct after central bank lowers mid-point by 1 pct (Reuters)
• India central bank further tightens gold import rules (Reuters)
• G-20 to consider monetary tapering (WSJ)
• www.CentralBankNews.info

Taiwan holds rate, global outlook moved by market turmoil

    Taiwan's central bank held its key interest rates steady, including the benchmark discount rate at 1.875 percent, in light of global economic uncertainty, modest domestic economic recovery and reduced inflationary pressures.
    The Central Bank of the Republic of China (Taiwan), which has held the discount rate steady since June 2011, said it expected the rate decision to "help prices and overall economic stability" and the global economy was recovering at different speeds.
    The central bank added the global economic outlook was being affected by the turmoil in global financial markets from the U.S. preparing to exit quantitative easing, liquidity issues on the Chinese mainland "together with a large number of international short-term capital movement."
    The domestic economy contracted by 0.69 percent in the first quarter from the fourth, for annual growth of only 1.67 percent due to weak external demand and conservative private consumption with the comptroller head office forecasting growth of 2.40 percent this year, down from the bank's December forecast of 3.15 percent.
    Taiwan's inflation rate eased to 0.74 percent in May from 1.05 percent due to stable raw materials and weak consumption with the comptroller forecasting inflation of 1.14 percent in the second half of the year, down from 1.23 percent.

    www.CentralBankNews.info

Central Bank News Link List - Jun 27, 2013: Europe strikes deal to push cost of bank failure on investors

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 strikes deal to push cost of bank failure on investors (Reuters)
• Bank of England calls for assessment of interest rate rises on borrowers (The Guardian)
• Lagarde: World can withstand Fed withdrawal (Washington Post)
• BOE's Tucker: Rates to rise only when UK hits escape velocity (WSJ)
• Irish central bank probes whether tapes show rule-breaking (Reuters)
• Ruble drops second day as central bank eases currency defense (Bloomberg)
• Did China's central bank blink? (WSJ)
• www.CentralBankNews.info

Central Bank News Link List - Jun 26, 2013: Fed communication went through 'rocky' patch: official

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.

• Fed communication went through 'rocky' patch: official (Reuters)
• China's central bank calms markets, but tighter policy looms (Reuters)
• ECB policy makers say accommodative monetary policy to stay (Bloomberg)
• BoE warns banks of risk of sharp global interest rate rise (Reuters)
• Global central bankers still long way off from tightening monetary policy (Bloomberg)
• Banks must disclose debt reliance from 2015 in Basel plan (Bloomberg)
• Czech central bank set to debate currency role for policy (Bloomberg)
• BoE's King signs off, condemns banks for lobbying (Reuters)
• No policy change at BoE as new chief takes helm - Reuters poll (Reuters)
• BOE Miles: QE unwind could be gradual and smooth (MNI)
• Brazil central bank scraps reserve requirement to support currency (Reuters)
• Sri Lanka central bank reduces statutory reserve requirement by 2 percent (Colombo Page)
• Russia central bank raises corridor for currency basket - report (WSJ)
• Argentine central bank has lost 17% of reserves since the 'dollar clamp" (Mercopress)
• Analysis - Canada's new central bank chief: a corporate comeback kid? (Reuters)
• BSP to keep interest rates low (Business Inquirer)
• www.CentralBankNews.info

Hungary cuts rate 11th time but caution now warranted

    Hungary's central bank cut its base rate for the 11th time in a row, as expected, and expects to continue to reduce rates due to moderate inflationary pressure but the bank signaled it may have to slow down the pace of easing as volatile financial markets may force it to be become more cautious.
    The National Bank of Hungary cut its rate by another 25 basis points to 4.25 percent, increasing the total reduction in rates since August to 275 basis points, with rates cut by 150 basis points in 2013 alone.
    The central bank's monetary council said there was still "a significant degree of spare capacity in the economy, inflationary pressures are likely to remain moderate in the medium term, and therefore the 3 percent target can be me with looser monetary conditions."
    "However, the global financial environment has been volatile recently," the bank said, adding "a sustained and market shift in perception of the risks associated with the economy may influence room for manoeuvre in monetary policy. The council judges that as long as the outlook for inflation and the real economy justifies it, interest rates can be reduced further; however, increased caution in warranted in the volatile and rapidly changing global environment."

Central Bank News Link List - Jun 25, 2013: China's central bank PBOC addresses cash crunch

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.

• China's central bank PBOC addresses cash crunch (MarketWatch)
• China shares slide; central bank relaxes grip on money market (Reuters)
• ECB exit from accommodative policy still far off: Coeure (Reuters)
• Israel may need to amend central bank law for Frenkel: Official (Bloomberg)
• Hungary to cut rate as Fed plan raises risk, survey shows (Bloomberg)
• BRICS seek to limit fallout of U.S. stimulus withdrawal (Reuters)
• G20 task force to study Libor reform (Reuters)
• World's bankers meet, pressing for clarity on regulatory change (Reuters)
• Cash hard to raise as Fed jars credit markets (Reuters)
• Two Fed presidents emphasize stimulus to persist after QE taper (Bloomberg)
• Dallas Fed's Richard Fisher warns of "feral hogs" in the financial markets (Dallas News)
• www.CentralBankNews.info