Sunday, December 15, 2013

Monetary Policy Week in Review – Dec 9-13, 2013: New Zealand, Russia, Iceland to curb inflation, 1 bank cuts

    Last week Botswana's central bank cut rates while 12 banks maintained their rates, waiting with bated breath for the U.S. Federal Reserve to decide when it will start to taper its asset purchases.
    The main takeaway from central banks last week was that inflationary pressures are never from bubbling to the surface despite weak global demand that is keeping a lid of inflation worldwide.
    The Reserve Bank of New Zealand ratcheted up its warning about inflation and is now primed to raise rates in the first half of next year, the Bank of Russia is defying skeptics and proving that it is fully committed to pushing down inflationary expectations while Iceland tightened its previous warnings about rate rises in light of the government’s plan to reduce household debt, a move it said would boost demand and thus inflation.
    But countries that are facing inflationary pressures are exceptions. The global trend is sluggish growth and low inflation, illustrated this week by Botswana, South Korea, Switzerland, Chile and Peru.
    Low inflation is making it possible for central banks to continue to cut their policy rates and through the first 50 weeks of this year, rates have been cut 112 times, 23.0 percent, of the 486 policy decisions taken by the 90 central banks followed by Central Bank News.
    This percentage is slightly lower than the previous week despite Botswana's rate cut and down from 25.3 percent after the first six months of the year, reflecting rate rises by major emerging market central banks, such as Brazil and Indonesia.
   In contrast, central banks worldwide have only raised their policy rates 26 times this year, or 5.4 percent of this year’s policy decisions, up from 4.7 percent after the first half of the year.


COUNTRY MSCI      NEW RATE            OLD RATE         1 YEAR AGO
SRI LANKA FM 6.50% 6.50% 7.50%
BOTSWANA 7.50% 8.00% 9.50%
ICELAND 6.00% 6.00% 6.00%
SOUTH KOREA EM 2.50% 2.50% 2.75%
NEW ZEALAND DM 2.50% 2.50% 2.50%
MOZAMBIQUE 8.25% 8.25% 9.50%
NAMIBIA 5.50% 5.50% 5.50%
PHILIPPINES EM 3.50% 3.50% 3.50%
INDONESIA EM 7.50% 7.50% 5.75%
SWITZERLAND DM 0.25% 0.25% 0.25%
PERU EM 4.00% 4.00% 4.25%
CHILE  EM 4.50% 4.50% 5.00%
RUSSIA EM 5.50% 5.50% 8.25%

    This week (week 51) 11 central banks are scheduled to hold policy meetings, including Sweden, Morocco, Turkey, the Czech Republic, Hungary, India, Serbia, Georgia, Croatia, the United States and Japan.

SWEDEN DM  17-Dec 1.00% 1.00%
MOROCCO EM 17-Dec 3.00% 3.00%
TURKEY EM 17-Dec 4.50% 5.50%
CZECH REPUBLIC EM 17-Dec 0.05% 0.05%
HUNGARY EM 17-Dec 3.20% 5.75%
INDIA EM 18-Dec 7.75% 8.00%
SERBIA FM 17-Dec 10.00% 11.25%
GEORGIA 18-Dec 3.75% 5.25%
CROATIA FM  18-Dec 6.25% 6.25%
UNITED STATES DM  18-Dec 0.25% 0.25%
JAPAN DM 20-Dec                 N/A 0.10%


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