Central Bank News Link List - Sep 30, 2015: Carney warns investors they may undervalue ‘huge’ climate risks

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.

• Carney warns investors they may undervalue ‘huge’ climate risks (Bloomberg)
• Loss of central bank traction puts mandates under scrutiny (Reuters)
• Fed’s Evans: Later rate hike better for economy (CNBC)
• Philippines to use interest rate corridor system from Q2 2016 (Reuters)
• Colombia’s c.bank lowers 2015 growth expectation to 2.8% (Colombia Reports)
• IMF warning: Emerging markets could face liquidity crises if interest rates rise (IBT)
• Rwanda central bank holds repo rate, says private sector credit up (Reuters)
• French parliament approves Villeroy de Galhau as BOF governor (MNI)
• Kenya central bank sees tight policy curbing price pressures (Bloomberg)
• Central bank in Denmark loses tool after debt funding needs jumps (Bloomberg)
• Singapore central bank seen likely to ease policy in October: Reuters poll
• Brazilian central bank poll says GDP to shrink 2.8% this year (Business Standard)
• Cenbankers warn against extending bank regulations to shadow banks (Reuters)
• Vietnam central bank cuts interest rates on dollar deposits (Viet Nam News)

        www.CentralBankNews.info

Iceland maintains rates but will raise if inflation rises

    Iceland's central bank left its key interest rates unchanged, including the seven-day deposit rate at 5.50 percent and the seven-day lending rate at 6.25 percent, but warned that it would have to raise rates further if inflation accelerates in the wake of wage settlements.
    The Central Bank of Iceland, which has raised its rates by 100 basis points this year, said how much and when it would hike rates would depend on future developments, such as fiscal policy, while a strong krona and global price developments had provided scope to raise rates slower than previously considered necessary.
    While holding rates steady today, the central bank raised its reserve requirements by 200 basis points to 4.0 percent as of Oct. 21 to "strengthen the Bank's liquidity management, in the wake of substantial foreign currency purchases" in connection with a wind-up of the estates of failed banks and the plan to release or tie up offshore krona.
    Iceland's inflation rate remains below the bank's 2.5 percent target, partly due to the high exchange rate of the krona, helping improve the short-term outlook. In August inflation eased to 1.9 percent from July's 2.2 percent.
    "As before, the outcome of wage settlements and somewhat elevated inflation expectations indicate that inflation will gain momentum in the near future," the bank said, adding this has been offset by falling global goods prices and nearly 4 percent appreciation of the krona since the last rate decision in August despite "sizable foreign currency purchases by the Central Bank."
    In August, when the bank last raised its rate, it also raised its forecast for 2015 inflation to 2.2 percent from May's forecast of 1.9 percent, and the 2016 forecast to 4.3 percent and the 2017 forecast to 4.1 percent.

India cuts rate 50 bps in front-loaded demand stimulus

    India's central bank cut its policy rate by 50 basis points to 6.75 percent in what it described as a "front-loaded policy action" and said it would "continue to be vigilant for signs that monetary policy adjustments are needed to keep the economy on the target disinflationary path."
    The Reserve Bank of India (RBI) has now cut its rate by 125 basis points this year with today's cut expected by financial markets. In August, when the RBI maintained its rate, it had held out the prospect of an easing of policy today pending a decline of inflationary pressures, the outturn of the full monsoon, any policy shift by the U.S. Federal Reserve and transmission of past rate cuts.
    "Since our last review, the bulk of our conditions for further accommodation have been met," RBI Governor Raghuram Rajan said in a statement, adding that inflation has dropped to a nine-month low, as expected.
    India's consumer price inflation rate eased to 3.66 percent in August, the lowest level since November 2014, and Rajan said the RBI's target of 6.0 percent inflation by January 2016 was likely to be achieved.
    "Therefore, the focus should now shift to bringing inflation to around 5 percent by the end of fiscal 2016-17," said Rajan, saying inflation was expected to reach 5.8 percent in January next year a shade below projections. India's fiscal year begins April 1.
    India's inflation rate is likely to move higher from September for a few months due to base effects and Rajan said the pass-through of the recent depreciation of the rupee would have to be carefully monitored although lower oil prices should have an offsetting effect.
    While the RBI will maintain an accommodative policy stance, Rajan said the its focus is the near term will shift to working with the government to ensure that any impediments to banks passing on the bulk of the 125 basis point cut in policy rates are removed.
    So far commercial banks have transmitted the RBI's past rate cuts via commercial paper and corporate bonds by only a limited extent and the median base lending rates have fallen by only 30 basis points despite "extremely easy liquidity conditions," Rajan said.
    Bank deposit rates, however, have been reduced significantly, suggesting further transmission is possible, he added.
    Looking abroad, Rajan said global economic activity had weakened, suggesting that commodity prices will remain contained and low industrial capacity indicates that more domestic demand is needed to substitute for weakening global demand so the domestic investment cycle picks up.

Kyrgyzstan raises rate 200 bps on inflation pressures

    The central bank of Kyrgyzstan raised its policy rate by 200 basis points to 10.00 percent citing unstable financial markets that have raised the pressure on the exchange rate of the som and thus inflationary pressure.
    The National Bank of the Kyrgyz Republic is among the six central banks worldwide that have both raised and cut its policy rate this year. In January the bank raised its rate but then cut the rate in May and July.
    The result is that the rate has been lowered by a net 50 basis points this year following a total increase of 450 basis points last year to help defend the som's exchange rate and lower inflation.
    The som has been depreciating against the U.S. dollar since June and was trading at 69.1 to the dollar today, down 14.8 percent this year and down 28.4 percent since the start of 2014.
    The inflation rate rose to 5.8 percent in August from 5.0 percent in July and accelerated further to 6.2 percent as of Sept. 18, according to the central bank, which targets inflation of 5-7 percent.
    At its last meeting in August, the central bank also said rising instability in foreign financial markets had increased pressure on the domestic currency market and this could raise inflationary pressures. But at that point the central bank said inflation had slowed from the start of the year.
    Annual economic growth in the first eight months of this year of 6.8 percent was mainly driven by the expansion of production at the Kumtor gold mine, the bank said, adding that growth excluding the mine amounted to 4.5 percent.
     The Kumtor gold mine is an open-pit mine near Kyrgyzstan's border with China that is owned by the Canadian firm Centerra. It is the largest gold mine operated in Central Asia by a Western-based company and produced 568 ounces of gold in 2014.
    The central bank added that foreign trade and the inflow of remittances was still slowing down due to the depreciation of the currencies of its main trading partners.

This week in monetary policy: Kyrgyzstan, India, Iceland, Romania and Bulgaria

    This week (September 28 through October 3) central banks from 5 countries or jurisdictions are scheduled to decide on monetary policy: The Kyrgyz Republic, India, Iceland, Romania and Bulgaria.

    Following table includes the name of the country, the date of the next policy decision, the current policy rate, the result of the last policy decision, the change in the policy rate year to date, the rate one year ago, and the country’s MSCI classification.

    The table is updated when the latest decisions are announced and can always accessed by clicking on This Week.

WEEK 40
SEP 28-OCT 3, 2015:
COUNTRY	DATE	RATE	LATEST	YTD	1 YR AGO	MSCI
KYRGYZSTAN	28-Sep	8.00%	0	-250	7.00%
INDIA	29-Sep	7.25%	0	0	8.00%	EM
ICELAND	30-Sep	6.25%	50	100	6.00%
ROMANIA	30-Sep	1.75%	0	-100	3.00%	FM
BULGARIA	30-Sep	0.01%	0	-1	0.04%	FM

  www.CentralBankNews.info

Colombia raises rate 25 bps on rising inflation risks

    Colombia's central bank raised its benchmark intervention rate by 25 basis points to 4.75 percent as the "risk of a lasting increase in inflation and unanchoring of inflation expectations has risen, while the risk of an excessive slowdown in economic activity has not exhibited a noticeable change."
    It is the first rate hike by the Central Bank of Colombia this year following cuts that totaled 125 basis points in 2014.
    The central bank said sharp rises in the prices of goods that are most affected by a depreciation of the peso were continuing to push up inflation and this may affect the cost of goods and services that are indexed, pushing up inflation expectations.
    At the same time, the impact of El Nino has intensified, raising the risk of higher food prices.
    Colombia's inflation rate rose to 4.74 percent in August from 4.46 percent in July and inflation expectations have risen to above 4.0 percent.
    The central bank targets inflation at a midpoint of 3.0 percent within a range of 2-4 percent.
    Colombia's peso has been depreciating in sync with the fall in oil prices since mid-2014 and was trading at 3,072.5 to the U.S. dollar today, down 22.6 percent since the start of the year.
    Colombia's economy has been slowing in response to lower demand from machinery investment and transportation equipment but annual growth in the second quarter of 3.0 percent, up from 2.8 percent in the first quarter, was slightly better than expected by the central bank.
    For the third quarter, the bank's staff maintained its forecast for growth between 1.8 and 3.4 percent, with 2.8 percent the most likely outcome.

Trinidad & Tobago raises rate 25 bps for 7th time in a row

    The Central Bank of Trinidad and Tobago raised its benchmark repurchase rate by 25 basis points for the seventh consecutive time, saying higher interest rates are considered necessary to prevent an outflow of capital that is attracted to higher U.S. dollar assets.
    Trinidad and Tobago's central bank has now raised its rate by a total of 175 basis points since embarking on its tightening campaign in September. This year it has raised the rate by 125 points to 4.50 percent.
    In recent months the interest rate differential between TT dollar and U.S. dollar assets has widened but the central bank said "this comfortable position" could easily reverse.
    "The MPC judged higher domestic interest rates are necessary to mitigate potential capital outflows," the central bank said, adding that its policy stance is still very accommodative in the context of a contracting non-energy sector and moderate inflationary pressures.
    The central bank said it would maintain an aggressive liquidity management program to strengthen the impact of rising interest rates in the financial system, adding that excess liquidity had remained at a comfortable daily average of $3.3 billion over the past three months and the median commercial prime lending rate had risen to 8-1/2 percent as of mid-September from 8-1/4 percent in July.
    The outlook for Trinidad & Tobago's economy has deteriorated, the bank said, adding that provisional estimates show a contraction of close to 2 percent in the first half of this year as continued shortfalls in natural gas production led to a decline in the energy sector by an estimated 3.5 percent in the first half of the year.
    In the first quarter of this year, Trinidad and Tobago's Gross Domestic Product shrank by 1.7 percent from the same 2014 quarter.
   In contrast to expectations, the central bank said inflationary pressures have not materialized, with inflation ion August slowing to 4 percent from 5.6 percent in July.

Sri Lanka holds rate, sees rising FX reserves

    Sri Lanka's central bank left its key interest rates unchanged, including the standing deposit rate at 6.0 percent, saying it expects official reserves to rise during the year.
    The Central Bank of Sri Lanka (CBSL) has maintained its rates since cutting them by 50 basis points in April.
    Last week the International Monetary Fund (IMF) said the country's financial system was stable and the current monetary stance appropriate, but a tightening bias appeared prudent in light of rising core inflation, a resurgence of private credit and signs of receding slack in the economy.
     Sri Lanka's headline inflation rate was an unchanged minus 0.2 percent in August from July but the IMF expects it to end the year around 3.0 percent, while core inflation rose to 4.4 percent in August from 3.5 percent in July due to higher demand for domestic non-tradable goods.
    Earlier this month the central bank allowed the rupee to float freely by not setting daily spot prices, a move the IMF welcomed, adding that exchange rate flexibility would help maintain competitiveness and facilitate an increase in CBSL foreign exchange reserves.

UPDATE-This week in monetary policy: Mexico, Turkey, Hungary, Nigeria, Kenya, Morocco, Georgia, Armenia, South Africa, Philippines, Israel, Norway, Czech Republic, Ukraine, Taiwan, Fiji, Moldova, Sri Lanka, Colombia and Trinidad & Tobago

    (Following item is updated with news that Sri Lanka's central bank will announce its policy review on Friday,  Sept. 25.)

    This week (September 21 through September 26) central banks from 20 countries or jurisdictions are scheduled to decide on monetary policy: Mexico, Turkey, Hungary, Nigeria, Kenya, Morocco, Georgia, Armenia, South Africa, the Philippines, Israel, Norway, the Czech Republic, Ukraine, Taiwan, Fiji, Moldova, Sri Lanka, Colombia and Trinidad & Tobago.

    Following table includes the name of the country, the date of the next policy decision, the current policy rate, the result of the last policy decision, the change in the policy rate year to date, the rate one year ago, and the country’s MSCI classification.

    The table is updated when the latest decisions are announced and can always accessed by clicking on This Week.

WEEK 39
SEP 21-SEP 26, 2015:
COUNTRY	DATE	RATE	LATEST	YTD	1 YR AGO	MSCI
MEXICO	21-Sep	3.00%	0	0	3.00%	EM
TURKEY	22-Sep	7.50%	0	-75	8.25%	EM
HUNGARY	22-Sep	1.35%	0	-75	2.10%	EM
NIGERIA	22-Sep	13.00%	0	0	12.00%	FM
KENYA	22-Sep	11.50%	0	300	8.50%	FM
MOROCCO	22-Sep	2.50%	0	0	2.75%	FM
GEORGIA	23-Sep	7.00%	100	300	4.00%
ARMENIA	23-Sep	10.25%	0	175	6.75%
SOUTH AFRICA	23-Sep	6.00%	0	25	5.75%	EM
PHILIPPINES	24-Sep	4.00%	0	0	4.00%	EM
ISRAEL	24-Sep	0.10%	0	-15	0.25%	DM
NORWAY	24-Sep	0.75%	-25	-50	1.50%	DM
CZECH REPUBLIC	24-Sep	0.05%	0	0	0.05%	EM
UKRAINE	24-Sep	22.00%	-500	1300	12.50%	FM
TAIWAN	24-Sep	1.75%	-12.5	-12.5	1.88%	EM
FIJI	24-Sep	0.50%	0	0	0.50%
MOLDOVA	24-Sep	19.50%	0	1300	3.50%
SRI LANKA	25-Sep	6.00%	0	-50	6.50%	FM
COLOMBIA	25-Sep	4.50%	0	0	4.50%	EM
TRINIDAD & TOBAGO	25-Sep	4.25%	25	100	3.00%

    www.CentralBankNews.info

Taiwan, Norway & Ukraine rate cuts boost global easing

    A triple salvo of rate cuts by Taiwan, Norway and Ukraine on Thursday boosted the number of central banks that have eased policy this year to 45 as the impact of weaker growth in emerging markets threatens economic growth and the prospects of overcoming disinflation.
    Meanwhile, 19 central banks have tightened their policy stance this year, mainly to shore up the value of their currencies and thus curb inflationary pressures.
    Ukraine is among six central banks worldwide that have reversed their policy stance this year as rate hikes along with government measures succeeded in defending its embattled hryvnia currency and lowered the risks of hyper inflation.
    Following is an alphabetical list of countries that have changed their monetary policy this year.
    The list (Global Monetary Policy Changes (GMPC)) is part of Central Bank News' comprehensive cover of the monetary policy of 90 central banks worldwide. 
    GMPC is updated and can be accessed on the Central Bank News website under the heading of "Easier or Tighter?" as soon as central banks announce changes to their policy.
   GMPC complements Central Bank News’ other products, such as the the Global Interest Rate Monitor (GIRM), which tracks official policy rates, and Global Monetary Policy Highlights (GMPH), which covers key events in monetary policy and includes a summary of rate changes each month.

Ukraine cuts rate 500 bps in "quite restrained" move

    Ukraine's central bank slashed its benchmark discount rate by 500 basis points to 22.0 percent to help boost economic growth in light of "a steady reduction in the risks to price stability," but described the cut as "quite restrained" as its also took into account the need to ensure further disinflation.
    The National Bank of Ukraine (NBU) has now cut its rate by a total of 800 basis points after raising the rate by a total of 2,350 points from April 2014 through March this year in response to accelerating inflation from a plunge in the value of its currency, the hryvnia.
    The central bank said its easing should help ensure that it meets its inflation target of 5.0 percent and to support the country's gradual economic recovery that has been observed in the third quarter.
    For 2016 the central bank forecast Gross Domestic Product growth of 2.4 percent and a more detailed forecast will be published in the Oct. 1 inflation report.
    In August Ukraine's inflation rate eased to 52.8 percent, continuing a drop since a year-high of 60.9 percent in April, but the central bank said core inflation was close to zero in July and August, attributing this to a prudent monetary and fiscal policy that made it possible to reduce demand inflation, a stabilization of the currency market and lower inflation  expectations.
    In addition, scheduled increases in administrative prices and salaries will impact inflation that is forecast to end 2016 at 12.0 percent.
    Ukraine's hryvnia plunged by almost 50 percent against the U.S. dollar in 2014 following the outbreak of armed conflict in Eastern Ukraine and the occupation of the Crimean peninsula by pro-Russian forces.
    But a cease-fire agreement in late February, rate hikes by the central bank and administrative measures have helped stabilize the hryvnia, which was trading at 21.6 to the U.S. dollar today, 
up from a low of 33.7 in late February but still down 27 percent this year.

    www.CentralBankNews.info

    
 

Taiwan cuts rate 12.5 bps, first change since June 2011

    Taiwan's central cut its policy rates, including the benchmark discount rate, by 12.50 basis points, to "help maintain price and financial stability and foster economic growth," and said it would "undertake appropriate monetary policy actions so as to fulfill the statutory objectives of central bank operations."
    It is the first change in rates by the Central Bank of the Republic of China (Taiwan) (CBC) since June 2011 and the first rate cut since February 2009.
    In addition to the cut to the discount rate to 1.75 percent, the CBC cut the rate on collateral accommodations to 2.125 percent and the rate on accommodations without collateral to 4.0 percent with effect from Sept. 25.
    But the rate cut was not unexpected following a report from Reuters earlier this week that said the central bank in a report to the legislative session had said it may cut its rate this week.
    The CBC, which said its board was unanimous in its policy decision, confirmed its view that the exchange rate of the Taiwan dollar was in principle determined by financial markets but in the event of "excess volatility and disorderly movements" in the exchange rate, it would "step in to maintain an orderly market."
     In its comment on economic developments, the CBC pointed to the slowing economy in China and the depreciation of the yuan which has created spillover effects that led to a postponement of a rate hike by the U.S. Federal Reserve and volatility in international financial markets.
    "Consequently, uncertainties continue to surround the growth prospects of the global economy," the CBC said, and the global economy had yet to stabilize.
    Inflation in Taiwan has been negative for the last eight months, with an average rate of minus 0.62 percent, mainly due to declines in energy-related prices. In August inflation was minus 0.45 percent and the CBC said excluding prices of fruit, vegetables and energy, the average core inflation rate rose by 0.82 percent.
    Inflation is forecast by the government statistics office to average minus 0.19 percent for 2015 and then rebound to 0.74 percent in 2016, echoing the recent report's finding that the central bank does not expect a risk of deflation despite the decline in consumer prices in recent months.
    The Taiwan dollar has been depreciating since May and fell sharply in response to the CBC's rate cut. It was trading at 33.2 to the U.S. dollar today, down from 32.9 yesterday, and down 4.5 percent since the start of the year.

Georgia raises rate 100 bps, inflation expectations rising

    Georgia's central bank raised its benchmark refinancing rate by a further 100 basis points to 7.0 percent due to rising inflation expectations stemming from currency depreciation and warned that it would "use all the tools at its disposal" to avoid that a rise in inflationary expectations do not turn into higher inflation rates.
    The National Bank of Georgia (NBG), which has now raised its rate by 300 basis points this year, added in a statement from September 23 that further changes would depend on inflation, economic growth and the global and regional economic environment, a change in tone from last month when it said it expected to raise the rate further this year as it continued to normalize its policy stance.
    Georgia's inflation rate rose to 5.4 percent in August from 4.9 percent in July and is currently forecast to temporarily deviate from the bank's 5.0 percent target until the end of 2016.
    The central bank said exchange rate depreciation is still determining the inflation rate due to rising costs of production of intermediate and some imported goods, while a one-off increase in electricity tariffs also had a significant impact on inflation. Meanwhile, weak demand and lower oil prices are helping restrain food prices, the NBG said.
    Georgia's lari started depreciating sharply against the U.S. dollar in late November 2014, and after a rebound in May and June, it again started falling in July. In response to the central bank's decision, the lari firmed to be trading at 3.8 to the dollar today for a depreciation of over 50 percent this year.

    www.CentralBankNews.info

 

Norway cuts rate 25 bps and may cut further on outlook

    Norway's central bank cut its key policy rate by 25 basis points to 0.75 percent, as expected, and said "the current outlook for the Norwegian economy suggests that the key policy rate may be reduced further in the coming year."
    Norges Bank has now cut its rate twice this year by a total of 50 basis points following a cut in June when it also warned that it could cut its rate in the second half of this year due to a deterioration in the economic outlook.
   In today's statement, central bank Governor Oeystein Olsen said the rate cut was decided because growth prospects had weakened and inflation was expected to decline further.
    Norway's economic growth is likely to remain low for longer than expected due to the fall in oil prices in recent months. This will lead to a further decline oil-related investments and lower demand from the petroleum industry in other parts of the economy.
    While the depreciation of the krone currency has pushed up inflation, Olsen said low wage growth is keeping down costs and inflation will then subside as the effects of the lower Norwegian crown unwind.
    Norway's crown currency normally tracks oil prices and it has been steadily depreciating since last summer when oil prices started to decline.
    In response to today's decision by the central bank, the crown plunged to 8.48 to to the U.S. dollar from around 8.27 yesterday to be down 12 percent this year.
    Norway's inflation rate rose to 2.0 percent in August from 1.8 percent in July, below the bank's 2.5 percent target.

Morocco maintains rate, sees 2015 inflation of 1.8%

    Morocco's central bank left its key policy rate steady at 2.50 percent, saying inflation is expected to remain in line with its objective and hit an average of 1.8 percent this year and 1.5 percent over the next six quarters.
    The Bank of Morocco, which has left its rate unchanged this year, added that its decision to maintain its rate also took into consideration "the uncertainties still surround both the national and international outlook."
    Morocco's inflation rate eased to 1.7 percent in August from 2.4 percent in July, mainly reflecting a slower increase in prices of regulated goods, excluding fuel and lubricants.
    Core inflation edged up to 1.5 percent from 1.4 percent, with a slight acceleration in the prices of non tradable goods and a stability in the prices of tradable goods. Industrial producer prices continued to trend downwards, falling 3.7 percent in July, the bank said.

    www.CentralBankNews.info

Hungary to keep loose conditions longer than expected

    Hungary's central bank left its base rate unchanged at 1.35 percent and said it would maintain loose monetary conditions for longer than expected in light of its latest inflation forecast in order to reach its inflation target and support the economy.
    The National Bank of Hungary (MNB), which has cut its rate by 75 basis points this year, also repeated its guidance from last month that the economy still has a degree of unused capacity and inflationary pressures are likely to remain moderated with the negative output gaps only closing gradually over the policy horizon.
    Hungary's inflation rate eased to 0.4 percent in August from 0.6 percent in July and the central bank's council expects inflation to be below its 3.0 percent midpoint target this year and in 2016 and first rise to around 3 percent in the second half of 2017.
    The central bank added that from Sept. 23 its 3-month, fixed-rate deposit rate will become its main policy instrument, replacing the two-week deposit rate.
    Funds under the 3-month facility will be available without limit and while the 2-week facility will remain part of its policy tools, it will only be offered at auctions and with limited quantity.
    Hungary's Gross Domestic Product expanded by 0.5 percent in the second quarter of this year from the first quarter for annual growth of 2.7 percent, down from 3.5 percent in the first quarter.

Nigeria holds rate, cuts CRR 600 bps to boost growth

   Nigeria's central bank left its Monetary Policy Rate (MPR) at 13.0 percent but cut the Cash Reserve Requirement (CRR) by 600 basis points to 25.0 percent, citing "declining output growth, rising unemployment, evolving international economic environment as well as the need to properly position the economy on a sustainable growth path."
    The Central Bank of Nigeria (CBN), which has maintained its rate this year, added that its monetary policy committee had decided to cut the CRR by a vote of 7 to 3 while the committee was unanimous in its vote to maintain the policy rate.
    The CBN recognized the country's economy could slip into recession next year if proactive steps were not taken to revive growth, reiterated "its unwavering commitment to naira exchange rate stability," and said it was optimistic that as harvests progress, pressure on food prices would gradually recede while growth enhancing measures should have a moderating effect on food prices.
    Nigeria's inflation rate rose to 9.3 percent in August from 9.2 percent in both July and June, and above the CBN's upper limit of its 6.0 to 9.0 percent target range.
    The naira was trading at 199.12 to the U.S. dollar today, down only 8.3 percent this year but down 20 percent since the beginning of 2014.
    Nigeria's Gross Domestic Product expanded by 2.57 percent in the second quarter from the first quarter for annual growth of 2.35 percent, down from a rate of 3.96 percent in the first quarter.

Kenya holds rate, inflation risk from market turbulence

    Kenya's central bank held its benchmark Central Bank Rate (CBR) steady at 11.50 percent, saying previous rate hikes were continuing to bring inflation nearer to its 5.0 percent target but "the persistent turbulence in the global financial markets remain a risk to the inflation outlook, and its impact on the exchange rate should be monitored."
    The Central Bank of Kenya (CBK), which has raised its rate by 300 basis points this year, added that it was holding its rate steady to anchor inflation expectations and was "ready to use the instruments at its disposal to maintain overall price stability."
    Last week the International Monetary Fund said the central bank had acted appropriately raising its rates as this will help contain the impact of the shilling's depreciation on inflation and the country's economy remains on track despite headwinds from market volatility and challenges to security.
    In August Kenya's inflation rate eased to 5.84 percent from 6.62 percent in July.

Turkey maintains rate, changes hinge on inflation outlook

    Turkey's central bank left its benchmark one-week repo rate steady at 7.50 percent, as expected, and repeated its guidance that "future monetary policy decisions will be conditional on the improvements in the inflation outlook."
    The Central Bank of the Republic of Turkey (CBRT), which has cut its rate by 75 basis points this year, also repeated its statement from recent months that it will maintain a "cautious monetary policy stance" by keeping a flat yield curve until there is a "significant improvement in the inflation outlook."
    The central bank added that energy prices had a favorable affect in inflation while changes in the exchange rate had delayed an improvement in core inflation indicators, a view the central bank has often stated in recent months.
    Continuing the policy set out last month, the CBRT said it would maintain a "tight liquidity stance" as long as deemed necessary in light of the uncertainty in domestic and global markets on inflation expectations.
    Turkey's consumer price inflation rose to a higher-than-expected 7.14 percent in August from July's 6.81 percent.
    Like many other emerging market currencies, the Turkish lira has been depreciating since the days of the "taper tantrum" in May 2013 and was trading at 3.01 to the U.S. dollar today, down 22.6 percent since the start of this year and down 28.6 percent since the start of 2014.
     In addition to discussing economic and financial developments, the bank said its policy committee had continued to discuss the implementation of its "road map during the normalization of global monetary policies," a strategy that includes measures for how the central bank will adjust it liquidity, foreign exchange and interest rate policy - including changes to the interest rate corridor structure - when the U.S. Federal Reserve starts to tighten its policy stance.

Mexico holds rate despite weak economy, low inflation

    Mexico's central bank left its benchmark target for the overnight interest rate unchanged at 3.0 percent although the economy remains weak and inflation is below the bank's objective.
    But the Bank of Mexico also repeated its view from July that action by the U.S. Federal Reserve could impact the exchange rate, inflation expectations and therefore prices in Mexico.
    Mexico's central bank, which in early July changed its schedule for board meetings so they quickly followed those of the Fed, also repeated that it would remain attentive to inflation and inflation expectations, in particular the transfer of exchange rate movements to consumer prices, the monetary stance between the U.S. and Mexico and the degree of slack in the economy so it is ready to taek action when conditions warrant to ensure that inflation converges to the target of 3.0 percent.
    Mexico's inflation rate dropped further to 2.59 percent in August from 2.74 percent in July and the central bank, known as Banxico, said inflation expectations for 2015 had continued to decline to below 3 percent on average while inflation next year is expected to end the year around 3.4 percent.
    Last month the central bank lowered its growth forecast for this year to 1.75 percent to 2.50 percent from a previous 2.0-3.0 percent while it kept its estimate that inflation would remain below its 3.0 percent target for the rest of the year.
    The peso has been depreciating against the U.S. dollar since May 2014 on concern that a rise in U.S. interest rates will trigger an outflow of funds from emerging markets, such as Mexico. But Banxico has been intervening to support the peso and the central bank's governor, Agustin Carstens, has not ruled out the possibility of raising rates at unscheduled board meetings if conditions warrant.
    Since hitting all-time lows around 17.28 to the dollar on Aug. 25, the peso has rebounded to trade around 16.6 to the dollar today but is still down 11.4 percent this year.
   The central bank noted that that the peso had reversed earlier depreciation in recent weeks, adding that the rise in long-term interest rates had been small but it was possible that volatility in international markets will continue.
    Economic activity in many emerging economies continues to weaken, with China facing problems and Brazil's economy deteriorating, the bank said, adding that the balance of risks for the global economy had deteriorated while those for Mexico had remained unchanged.

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Central Bank News Link List - Sep 21, 2015: Fed's Lockhart favors interest-rate liftoff later this year

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's Lockhart favors interest-rate liftoff later this year (Bloomberg)
• ECB chief economist declares ‘readiness and decisiveness’ to act (Reuters)
• Yellen pause ups pressure on Draghi as global pessimism mounts (Bloomberg)
• Fed officials make case for 2015 liftoff after September hold (Bloomberg)
• Mr. Yen says the era of weak yen may be over (Bloomberg)
• Israeli bonds gain as traders bet on interest-rate cut to record (Bloomberg)
• Nigeria MPC likely to slash CRR, mulls rate adjustment (This Day Live)
• South African Reserve Bank expected to hold repo rate (BDLive)
• BSP likely to maintain interest rates-Standard Chartered (Rappler)
• Fed gives African central banks reprieve to hold interest rates (Bloomberg)
• Taiwan central bank says not at risk of deflation (Reuters)
• Will Taiwan cut interest rates? (Barrons blog)
• IMF says regulation beats monetary policy in warding off bubbles (Dow Jones)
• RBA’s Stevens says investor housing under control, rates about right (SMH)
• Keeping inflation low is key to growth: India’s Rajan (The Hindu)
• Asian policy makers shrug at Fed delay in rate-rise liftoff (Bloomberg)
• Bank of England may cut rates, says chief economist (BBC)
• Governor of Moldova’s central bank, first deputy resign (Reuters)
• BOJ brainstorm stimulus overhaul as options dwindle-sources (Reuters)
• Carney says BOE interest-rate rises may start in early 2016 (Bloomberg)
• Danish central bank chief says market counting on rate hike (Reuters)
• Nabiullina named Euromoney Central Bank Governor of the year 2015 (Euromoney)
• Nigeria’s cenbank injects dollars into banking system-regulator (Reuters)
• Nigerian president rules out further currency devaluation (Bloomberg)
• IMF urges Uzbek authorities to be ready to tighten monetary policy (AKIpress)
• Kazakh central bank sells $144 mln to prop up falling tenge (Reuters)
• Denmark’s central bank warns of house-price speculation risk (Bloomberg)
• IMF welcomes Riksbank’s swap agreement with Ukraine’s central bank (Interfax)
• Central bank rate tightening in Kenya appropriate – IMF (Reuters)
• Sri Lanka should not cut rates, but look at tightening ahead: IMF (Economynext)
• Sweden’s central bank upbeat about inflation (MarketWatch)
• Angolan central bank looks stem currency slump (Reuters)
• Croatia’s conversion of CHF loans to impose major losses-central bank (Reuters)
• Mexico’s Carstens voted in for second term at central bank (Reuters)
• No resolution between BWU and Barbados central bank (Nationnews) 

        www.CentralBankNews.info