India's central bank left its key repo rate steady at 6.75 percent, as expected, but said it would use any room for further rate cuts, when available, while remaining on the path toward lowering inflation to 5 percent by March 2017.
The Reserve Bank of India (RBI) noted that less than half of this year's rate cut totaling 125 basis points had been transmitted by commercial banks to customers as the median lending rate has only declined by 60 basis points.
RBI Governor Raghuram Rajan said the central bank would shortly finalise its methodology for determine the base rate that is based on the marginal cost of funds that all banks will move to.
"These moves should further help transmission of policy rates into lending rates," Rajan said, adding that the on-going clean-up of banks' balance sheets should also create room for lending.
A rise in India's inflation rate to 5.0 percent in October from July's 3.69 percent was largely anticipated, Rajan said, and inflation is expected to rise further until December before leveling out.
The outlook for India's agricultural sector is subdued while some manufacturing areas are robust but overall weak external demand is holding back growth.
The forecast for growth in the current fiscal 2015-16 fiscal year was unchanged at 7.4 percent, with a mild downside bias, Rajan added.
CentralBankNews.info - A trusted and authoritative source on global monetary policy
Monday, November 30, 2015
Kyrgyzstan holds rate, to intervene more in FX if needed
The central bank of Kyrgyzstan kept its policy rate steady at 10.0 percent and said it was monitoring the situation on the domestic currency markets and would continue to intervene in the foreign exchange market if necessary to smooth out sharp fluctuations.
The comment by the National Bank of the Kyrgyz Republic about interventions is new compared with last month, reflecting a continued depreciation of the som currency this year.
The som started depreciating against the U.S. dollar in June and after a brief rebound in August it has dropped further. On Friday it fell to a low of 75.9 to the dollar but was slightly firmer at 73.4 today though still down 19.7 percent this year.
The central bank is one of six central banks worldwide that have both raised and lowered rates this year, mainly in response to movements in the exchange rate and thus inflation. Kyrgyzstan's central bank has cut its rate by a net 50 basis points this year.
The economy of the Kyrgyz Republic, which borders China to the south and Kazakhstan to the north, is continuing to expand with growth of 4.8 percent in the first 10 months of the, driven by increasing output from the Kumtor gold mine. Excluding Kumtor, Gross Domestic Product rose by 4.0 percent, the central bank said.
Kyrgyzstan's inflation rate eased to 4.9 percent in October from 6.4 percent in September and then to 3.6 percent as of November 20, the bank said, mainly due to low growth in food prices and a fall in fuel prices.
www.CentralBankNews.info
The comment by the National Bank of the Kyrgyz Republic about interventions is new compared with last month, reflecting a continued depreciation of the som currency this year.
The som started depreciating against the U.S. dollar in June and after a brief rebound in August it has dropped further. On Friday it fell to a low of 75.9 to the dollar but was slightly firmer at 73.4 today though still down 19.7 percent this year.
The central bank is one of six central banks worldwide that have both raised and lowered rates this year, mainly in response to movements in the exchange rate and thus inflation. Kyrgyzstan's central bank has cut its rate by a net 50 basis points this year.
The economy of the Kyrgyz Republic, which borders China to the south and Kazakhstan to the north, is continuing to expand with growth of 4.8 percent in the first 10 months of the, driven by increasing output from the Kumtor gold mine. Excluding Kumtor, Gross Domestic Product rose by 4.0 percent, the central bank said.
Kyrgyzstan's inflation rate eased to 4.9 percent in October from 6.4 percent in September and then to 3.6 percent as of November 20, the bank said, mainly due to low growth in food prices and a fall in fuel prices.
www.CentralBankNews.info
Australia maintains rate, but can still cut if needed
Australia's central bank left its benchmark cash rate unchanged at 2.0 percent, as widely expected, and restated that "the outlook for inflation may afford scope for further easing of policy, should that be appropriate to lend support to demand."
But the Reserve Bank of Australia (RBA), which has cut its rate by 50 basis points this year to support growth in light of reduced external demand for its raw materials, also repeated that it had decided to maintain its current rate because "the prospects for an improvement in economic conditions had firmed a little over recent months."
Australia's economy is continuing its "moderate expansion," the RBA said, pointing to a gradual improvement in non-mining sectors along with stronger growth in employment.
The current low level of inflation reflects the spare capacity in the economy and inflation is seen in line with the RBA's 2-3 percent target over the next one to two years, the central bank said.
The rise in house prices in Melbourne and Sydney "has moderated" in recent months, the RBA said, a slight change to last month's statement when it observed that prices had continued to rise though the pace of growth had moderated.
The RBA also repeated its recent statement that the Australian dollar, known as the Aussie, was "adjusting to the significant declines in key commodity prices.
Australia's inflation rate was steady at 1.5 percent in the third and second quarters while growth in the second quarter was only 0.2 percent up from the first quarter for annual growth of 2.0 percent, down from 2.5 percent.
But the Reserve Bank of Australia (RBA), which has cut its rate by 50 basis points this year to support growth in light of reduced external demand for its raw materials, also repeated that it had decided to maintain its current rate because "the prospects for an improvement in economic conditions had firmed a little over recent months."
Australia's economy is continuing its "moderate expansion," the RBA said, pointing to a gradual improvement in non-mining sectors along with stronger growth in employment.
The current low level of inflation reflects the spare capacity in the economy and inflation is seen in line with the RBA's 2-3 percent target over the next one to two years, the central bank said.
The rise in house prices in Melbourne and Sydney "has moderated" in recent months, the RBA said, a slight change to last month's statement when it observed that prices had continued to rise though the pace of growth had moderated.
The RBA also repeated its recent statement that the Australian dollar, known as the Aussie, was "adjusting to the significant declines in key commodity prices.
Australia's inflation rate was steady at 1.5 percent in the third and second quarters while growth in the second quarter was only 0.2 percent up from the first quarter for annual growth of 2.0 percent, down from 2.5 percent.
Dominican Republic holds rate, inflation heading to target
The Central Bank of the Dominican Republic (CBDR) left its policy rate unchanged at 5.0 percent, saying that inflation was gradually converging toward the center of its target range of 4.0 percent, plus/minus 1 percentage points.
The CBDR, which has cut its rate by 125 basis points this year, most recently in May, added that domestic economic activity was "progressing well in the short term," and growth in Gross Domestic Product for this year was projected in the range of 6.5 to 7.0 percent, above the May forecast of around 6.0 percent.
Last week the International Monetary Fund said the country's growth momentum remains strong, with the economy projected to grow by 6.5-7.0 percent this year, propelled by domestic demand as employment recovers and external tailwinds boost disposable income.
The IMF also said the central bank's neutral policy stance is consistent with the objective of price stability but a tighter stance may be needed if stronger-than-anticipated inflation pressures emerge.
The central bank said the country's current account balance is expected to end the year at around 2.0 percent of GDP, the lowest deficit in the last 10 years, and the primary fiscal surplus for 2016 is seen around 0.7 percent of GDP.
"These positive results in the external and fiscal accounts would facilitate the accumulation of reserves and the relative stability of the exchange market," the CBDR said.
Inflation in the Dominican Republic rose to 1.23 percent in October from 0.39 percent in September while core inflation was 1.91 percent, the central bank said.
GDP in the second quarter rose by 2.38 percent from the first quarter for annual growth of 6.2 percent, down from 6.6 percent in the first quarter.
The CBDR, which has cut its rate by 125 basis points this year, most recently in May, added that domestic economic activity was "progressing well in the short term," and growth in Gross Domestic Product for this year was projected in the range of 6.5 to 7.0 percent, above the May forecast of around 6.0 percent.
Last week the International Monetary Fund said the country's growth momentum remains strong, with the economy projected to grow by 6.5-7.0 percent this year, propelled by domestic demand as employment recovers and external tailwinds boost disposable income.
The IMF also said the central bank's neutral policy stance is consistent with the objective of price stability but a tighter stance may be needed if stronger-than-anticipated inflation pressures emerge.
The central bank said the country's current account balance is expected to end the year at around 2.0 percent of GDP, the lowest deficit in the last 10 years, and the primary fiscal surplus for 2016 is seen around 0.7 percent of GDP.
"These positive results in the external and fiscal accounts would facilitate the accumulation of reserves and the relative stability of the exchange market," the CBDR said.
Inflation in the Dominican Republic rose to 1.23 percent in October from 0.39 percent in September while core inflation was 1.91 percent, the central bank said.
GDP in the second quarter rose by 2.38 percent from the first quarter for annual growth of 6.2 percent, down from 6.6 percent in the first quarter.
Sunday, November 29, 2015
This week in monetary policy: Angola, Fiji, Kyrgyzstan, Bulgaria, Australia, India, Canada, Poland and ECB
This week (November 30 through December 5) central banks from 9 countries or
jurisdictions are scheduled to decide on monetary policy: Angola, Fiji, Kyrgyz Republic, Bulgaria, Australia, India, Canada, Poland and the European Central Bank.
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 49 | ||||||
NOV 30-DEC 5, 2015: | ||||||
COUNTRY | DATE | RATE | LATEST | YTD | 1 YR AGO | MSCI |
ANGOLA | 30-Nov | 10.50% | 0 | 150 | 9.00% | |
FIJI | 30-Nov | 0.50% | 0 | 0 | 0.50% | |
KYRGYZSTAN | 30-Nov | 10.00% | 0 | -50 | 10.00% | |
BULGARIA | 30-Nov | 0.01% | 0 | -1 | 0.02% | FM |
AUSTRALIA | 1-Dec | 2.00% | 0 | -50 | 2.50% | DM |
INDIA | 1-Dec | 6.75% | -50 | -125 | 8.00% | EM |
CANADA | 2-Dec | 0.50% | 0 | -50 | 1.00% | DM |
POLAND | 2-Dec | 1.50% | 0 | -50 | 2.00% | EM |
EURO AREA | 3-Dec | 0.05% | 0 | 0 | 0.05% | DM |
Central Bank News Link List - Nov 29, 2015: IMF poised to put Chinese yuan in elite currency basket
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.
- IMF poised to put Chinese yuan in elite currency basket (AFP)
- Bumper weeks as RBA and GDP guide sentiment (SMH)
- ECB discusses two-tiered bank charges, broader bond buys: officials (Reuters)
- Rate cut, more stimulus in store at ECB meet: analysts (AFP)
- India’s RBI unlikely to cut rates further, say experts (Hindustan Times)
- Bank of Canada to keep rates on hold, wait for stronger U.S.: poll (Reuters)
- Other central banks set to act, but Swiss policy cupboard bare (Reuters)
- Turkey moves to reassure on central bank independence (Reuters)
- Russia’s central bank adds yuan to reserve currency basket-sources (Tass)
- Forget Black Friday. It’s Mark Carney’s Super Tuesday! (Guardian)
- Russia to restart loan program 2 weeks after saying it won’t (Bloomberg)
- Egypt’s central bank savior faces tricky balancing act (Reuters)
- Swedish cenbank calls for action as Nordic property market fears grow (Reuters)
- Taiwan central bank expected to maintain rates in December (CNA)
- Hungary’s central bank ‘could fine-tune monetary easing toolkit’ (Reuters)
- Bangladesh likely to leave rates unchanged: report (Daily Star)
- Singapore central bank warns of credit risks for banks as growth slows (Reuters)
- Peru central bank chief sees November inflation above target level (Reuters)
- S.Korea c.bank member sees no need for tightening soon after US hike (Reuters)
- Bank for central African region holds interest rate at 2.45 pct (Reuters)
- Zambia’s kwacha rallies to 2-month high as central bank intervenes (Reuters)
Friday, November 27, 2015
Colombia raises rate 3rd month in a row as inflation rises
Colombia's central bank raised its policy rate for the third month in a row as "inflation expectations have increased and the risk of a slowdown in domestic demand, beyond that which is consistent with the decline registered in national income, has moderated."
The Central Bank of Colombia raised its benchmark intervention rate by a further 25 basis points to 5.50 percent, a move that was largely expected, and has now raised the rate by a total of 100 points this year following increases in September and October.
The central bank's board, which also confirmed its inflation target of 3.0 percent, plus/minus 1 percentage point, noted that inflation in October had exceeded its projections and inflationary expectations had also risen.
Colombia's headline inflation rate rose to 5.89 percent in October from 5.35 percent in September and inflation expectations for one and two years were 4.4 percent and 3.6 percent, respectively, while those reflected in public bonds with maturities of 2, 3 and 5-years are over 4.0 percent, the bank said.
The acceleration in inflation is mainly due to the pass-through to consumer prices from the depreciation of the peso and high food prices while the central bank said data shows that domestic demand, particularly for retail sales, indicates a more "dynamic domestic demand than expected."
Industrial production is also showing a positive trend, the bank said, adding that the monthly indicator of economic activity suggests growth of around 4.0 percent for the third quarter.
The central bank's staff maintained its forecast for 2015 growth of between 2.4 percent and 3.4 percent, with 3.0 percent the most likely outcome. Last month the bank raised its growth forecast.
Colombia's Gross Domestic Product expanded by an annual 3.0 percent in the second quarter, up from 2.8 percent in the first quarter.
The peso started depreciating in July 2014, in line with the decline in crude oil prices, and fell to a low around 3,239 to the U.S. dollar in mid-August. Since then, the peso has firmed slightly, trading at 3,108 today, but still down 23.5 percent since the start of the year.
The Central Bank of Colombia raised its benchmark intervention rate by a further 25 basis points to 5.50 percent, a move that was largely expected, and has now raised the rate by a total of 100 points this year following increases in September and October.
The central bank's board, which also confirmed its inflation target of 3.0 percent, plus/minus 1 percentage point, noted that inflation in October had exceeded its projections and inflationary expectations had also risen.
Colombia's headline inflation rate rose to 5.89 percent in October from 5.35 percent in September and inflation expectations for one and two years were 4.4 percent and 3.6 percent, respectively, while those reflected in public bonds with maturities of 2, 3 and 5-years are over 4.0 percent, the bank said.
The acceleration in inflation is mainly due to the pass-through to consumer prices from the depreciation of the peso and high food prices while the central bank said data shows that domestic demand, particularly for retail sales, indicates a more "dynamic domestic demand than expected."
Industrial production is also showing a positive trend, the bank said, adding that the monthly indicator of economic activity suggests growth of around 4.0 percent for the third quarter.
The central bank's staff maintained its forecast for 2015 growth of between 2.4 percent and 3.4 percent, with 3.0 percent the most likely outcome. Last month the bank raised its growth forecast.
Colombia's Gross Domestic Product expanded by an annual 3.0 percent in the second quarter, up from 2.8 percent in the first quarter.
The peso started depreciating in July 2014, in line with the decline in crude oil prices, and fell to a low around 3,239 to the U.S. dollar in mid-August. Since then, the peso has firmed slightly, trading at 3,108 today, but still down 23.5 percent since the start of the year.
Thursday, November 26, 2015
Moldova holds rate, impact of past hikes still taking effect
Moldova's central bank kept its key policy rates unchanged, including the base rate at 19.5 percent, saying this year's rate increases are still working their way through the economy and today's decision is aimed at anchoring inflation expectations and restoring inflation close to the target.
The National Bank of Moldova (NBM), which has raised its rate by 13 percentage points this year, added that it will continue to offer banks liquidity through 14-day repurchase operations at a fixed rate equal to the base rate plus a margin of 0.25 percentage points.
Moldova's headline inflation rate rose to a 2015-high of 13.2 percent in October from 12.6 percent in September with risks to inflation mainly from a depreciation of the leu currency with the effect that inflation is "temporarily"breaching the bank's upper limit of 6.5 percent.
The NBM, which targets inflation of 5.0 percent plus/minus 1.5 percentage points, expects the pressure on inflation to persistent in future quarters due to unfavorable weather and the comparison with low inflation last year.
Last month the central bank said it first expects inflation to return to its target range by the third quarter of 2017, but omitted this forecast in today's statement.
Moldova, a former Soviet state located between Romania and the Ukraine, has seen its currency depreciate since mid-2011 and tumbled in January this year. But since late September the leu has been relatively stable and was trading at 20.09 to the U.S. dollar today, down 22.4 percent this year.
The National Bank of Moldova (NBM), which has raised its rate by 13 percentage points this year, added that it will continue to offer banks liquidity through 14-day repurchase operations at a fixed rate equal to the base rate plus a margin of 0.25 percentage points.
Moldova's headline inflation rate rose to a 2015-high of 13.2 percent in October from 12.6 percent in September with risks to inflation mainly from a depreciation of the leu currency with the effect that inflation is "temporarily"breaching the bank's upper limit of 6.5 percent.
The NBM, which targets inflation of 5.0 percent plus/minus 1.5 percentage points, expects the pressure on inflation to persistent in future quarters due to unfavorable weather and the comparison with low inflation last year.
Last month the central bank said it first expects inflation to return to its target range by the third quarter of 2017, but omitted this forecast in today's statement.
Moldova, a former Soviet state located between Romania and the Ukraine, has seen its currency depreciate since mid-2011 and tumbled in January this year. But since late September the leu has been relatively stable and was trading at 20.09 to the U.S. dollar today, down 22.4 percent this year.
Wednesday, November 25, 2015
Brazil holds rate, but 2 Copom members want 50 bps hike
Brazil's central bank left its benchmark Selic rate steady at 14.25 percent but two members of the eight-member policy committee Copom voted to raise the rate by 50 basis points, a sign the rate may be raised at the next meeting in January 2016.
The Central Bank of Brazil, which halted its tightening campaign in July after raising the rate by 700 basis points since April 2013, said Copom members Sidnei Correa Marques and Tony Volpon had voted to raise the rate to 14.75 percent while the other six members, including Chairman Alexandre Tombini, voted to retain the rate.
In a brief statement, the central bank said Copom had decided to maintain the rate in light of the "macroeconomic scenario and the outlook for inflation," omitting last month's reference to maintaining the rate for "a sufficiently long period" to reach its inflation goal.
However, in its October statement, the central bank said that it would be "vigilant" in achieving its inflation goal.
Since halting its tightening campaign in July, Brazil's inflation rate has continued to accelerate, hitting 10.28 percent in mid-November - a 12-year high - from 9.93 in October and 9.56 percent in July.
The central bank's Nov. 16 survey of economists showed that they expect inflation to end this year at 10.04 percent before easing to 6.5 percent next year, up from the previous survey of 9.99 percent inflation for this year and 6.47 percent for 2016.
But while inflation has risen, Brazil's economy is in recession with Gross Domestic Product in the second quarter contracting by 1.9 percent following a 0.7 percent fall in the first quarter. On an annual basis, GDP shrank by 2.6 percent, the fifth quarter in a row of declining output.
The central bank targets inflation at a midpoint of 4.50 percent, within a 2.50 percent to 6.50 percent range, and has pledged to reach its inflation goal by late 2016.
Brazil's real has been depreciating since September 2014 but has firmed since late September. Today the real was trading at 3.74 to the U.S. dollar, down 28.9 percent this year.
www.CentralBankNews.info
The Central Bank of Brazil, which halted its tightening campaign in July after raising the rate by 700 basis points since April 2013, said Copom members Sidnei Correa Marques and Tony Volpon had voted to raise the rate to 14.75 percent while the other six members, including Chairman Alexandre Tombini, voted to retain the rate.
In a brief statement, the central bank said Copom had decided to maintain the rate in light of the "macroeconomic scenario and the outlook for inflation," omitting last month's reference to maintaining the rate for "a sufficiently long period" to reach its inflation goal.
However, in its October statement, the central bank said that it would be "vigilant" in achieving its inflation goal.
Since halting its tightening campaign in July, Brazil's inflation rate has continued to accelerate, hitting 10.28 percent in mid-November - a 12-year high - from 9.93 in October and 9.56 percent in July.
The central bank's Nov. 16 survey of economists showed that they expect inflation to end this year at 10.04 percent before easing to 6.5 percent next year, up from the previous survey of 9.99 percent inflation for this year and 6.47 percent for 2016.
But while inflation has risen, Brazil's economy is in recession with Gross Domestic Product in the second quarter contracting by 1.9 percent following a 0.7 percent fall in the first quarter. On an annual basis, GDP shrank by 2.6 percent, the fifth quarter in a row of declining output.
The central bank targets inflation at a midpoint of 4.50 percent, within a 2.50 percent to 6.50 percent range, and has pledged to reach its inflation goal by late 2016.
Brazil's real has been depreciating since September 2014 but has firmed since late September. Today the real was trading at 3.74 to the U.S. dollar, down 28.9 percent this year.
www.CentralBankNews.info
Tuesday, November 24, 2015
Nigeria cuts rate 200 bps, CRR 500 bps to boost growth
Nigeria's central bank cut its Monetary Policy Rate (MPR) by 200 basis points to 11.0 percent and the Cash Reserve Requirement (CRR) by 500 basis points to 20.0 percent in light of "the weakening fundamentals of the economy, particularly the low output growth, rising unemployment and the uncertainty of the global economic environment."
It is the first rate cut by the Central Bank of Nigeria (CBN) this year and 8 of 10 members of the monetary policy committee voted for the rate cut while two voted to keep it steady. Seven members voted to cut the CRR while three voted to retain it.
Eight MPC members also voted to change the interest rate corridor to an assymetric plus 2 percent/minus 7 percent while 2 members wanted to retain the symmetric corridor of plus/minus 2 percentage points around the policy rate.
Concerned about a rise in Nigeria's unemployment rate to 8.2 percent in the second quarter from 7.5 percent in the first quarter, the central bank evaluated various options for funneling credit to growth sectors and emphasized that the liquidity released by a reduction in the reserve requirement "will only be released to the banks that are willing to channel it to employment generating activities in the economy, such as agriculture, infrastructure development, solid minerals and industry."
A drop in Nigeria's inflation rate in October to 9.3 percent from 9.4 percent in September "provided some room for monetary easing to support output in the short to medium term," CBN said.
However, the central bank added that it would continue to monitor developments around the naira's exchange rate, interest rates and consumer prices, underscoring that close coordination between monetary and fiscal policy was imperative to improve growth in a sustainable manner.
The naira tumbled from November last year to March when the central bank imposed foreign currency controls on Africa's leading crude oil producer to preserve foreign reserves.
Since early March, the central bank has adjusted its exchange rate peg several times with the naira quoted at 199 to the U.S. dollar today compared with 182.5 at the end of 2014 for a depreciation this year of 8.3 percent.
Nigeria's official reserves rose to US$30.31 billion as of Nov. 20 from $29.85 billion end-September, the central bank said.
It is the first rate cut by the Central Bank of Nigeria (CBN) this year and 8 of 10 members of the monetary policy committee voted for the rate cut while two voted to keep it steady. Seven members voted to cut the CRR while three voted to retain it.
Eight MPC members also voted to change the interest rate corridor to an assymetric plus 2 percent/minus 7 percent while 2 members wanted to retain the symmetric corridor of plus/minus 2 percentage points around the policy rate.
Concerned about a rise in Nigeria's unemployment rate to 8.2 percent in the second quarter from 7.5 percent in the first quarter, the central bank evaluated various options for funneling credit to growth sectors and emphasized that the liquidity released by a reduction in the reserve requirement "will only be released to the banks that are willing to channel it to employment generating activities in the economy, such as agriculture, infrastructure development, solid minerals and industry."
A drop in Nigeria's inflation rate in October to 9.3 percent from 9.4 percent in September "provided some room for monetary easing to support output in the short to medium term," CBN said.
However, the central bank added that it would continue to monitor developments around the naira's exchange rate, interest rates and consumer prices, underscoring that close coordination between monetary and fiscal policy was imperative to improve growth in a sustainable manner.
The naira tumbled from November last year to March when the central bank imposed foreign currency controls on Africa's leading crude oil producer to preserve foreign reserves.
Since early March, the central bank has adjusted its exchange rate peg several times with the naira quoted at 199 to the U.S. dollar today compared with 182.5 at the end of 2014 for a depreciation this year of 8.3 percent.
Nigeria's official reserves rose to US$30.31 billion as of Nov. 20 from $29.85 billion end-September, the central bank said.
Sri Lanka holds rates, notes rising core inflation, credit
Sri Lanka's central bank maintained its key interest rates, as expected, noting the continued increase in core inflation due to firmer demand and a further rise in credit to the private sector.
The Central Bank of Sri Lanka, which cut rates by 50 basis points in April, also estimated that gross official reserves rose to around US$8.0 billion as of Nov. 3 from $6.8 billion at the end of September, boosted by the inflow of funds from the ninth sovereign bond of $1.5 billion.
Meanwhile, the central bank noted that the Sri Lankan rupee had depreciated by 8.1 percent against the U.S. dollar so far in 2015. The rupee was trading at 142.6 to the dollar today, down 8.06 percent since 131.1 at the end of 2014.
Sri Lanka's headline inflation rate rose to 1.7 percent in October from minus 0.3 percent in September. Negative inflation from July through September reflected the impact of the downward revision of administered prices in the latter part of 2014.
Core inflation, however, rose further to a 2015-high of 4.4 percent in October, "reflecting the firming up of aggregate demand conditions in the economy," the central bank said.
Earlier today the central bank governor, Arjun Mahendran, was quoted as saying there was no need to raise rates at the moment while India is reducing rates and the high growth in credit did not warrant higher rates.
The central bank maintained its Standing Deposit Facility Rate (SDFR) at 6.0 percent and the Standing Lending Facility Rate (SLFR) at 7.50 percent.
The Central Bank of Sri Lanka, which cut rates by 50 basis points in April, also estimated that gross official reserves rose to around US$8.0 billion as of Nov. 3 from $6.8 billion at the end of September, boosted by the inflow of funds from the ninth sovereign bond of $1.5 billion.
Meanwhile, the central bank noted that the Sri Lankan rupee had depreciated by 8.1 percent against the U.S. dollar so far in 2015. The rupee was trading at 142.6 to the dollar today, down 8.06 percent since 131.1 at the end of 2014.
Sri Lanka's headline inflation rate rose to 1.7 percent in October from minus 0.3 percent in September. Negative inflation from July through September reflected the impact of the downward revision of administered prices in the latter part of 2014.
Core inflation, however, rose further to a 2015-high of 4.4 percent in October, "reflecting the firming up of aggregate demand conditions in the economy," the central bank said.
Earlier today the central bank governor, Arjun Mahendran, was quoted as saying there was no need to raise rates at the moment while India is reducing rates and the high growth in credit did not warrant higher rates.
The central bank maintained its Standing Deposit Facility Rate (SDFR) at 6.0 percent and the Standing Lending Facility Rate (SLFR) at 7.50 percent.
Turkey maintains rates, changes conditional on inflation
Turkey's central bank kept its benchmark one-week repo rate steady at 7.50 percent, once again defying fresh calls by the president for lower rates, and repeated its guidance that "future monetary policy decisions will be conditional on the inflation outlook."
The Central Bank of the Republic of Turkey (CBRT) also confirmed its view from October that a tight monetary policy stance will be maintained in light of inflation expectations, the behavior of prices and "the course of other factors" affecting inflation, a likely reference to how the exchange rate of the lira may be affected by an expected change in U.S. monetary policy.
On Nov. 15 Turkish President Tayyip Erdogan, whose party has regained its single-party majority, renewed his call for the central bank to cut rates but investors appeared to shrug off any jitters about the central bank's independence judging from the reaction of the lira.
The lira has been depreciating since the so-called "taper tantrum" in May 2013 but has been relatively stable since late September and firmed slightly since the Nov. 1 elections, helping ease pressure on inflation.
The lira was trading at 2.86 to the U.S. dollar today, up from below 3 in late September, but still down 18 percent since the beginning of the year.
Turkey's headline inflation rate eased to 7.58 percent in October from 7.95 percent in September and the CBRT said energy prices had a favorable effect on inflation while "cumulative exchange rate movements delay the improvement in the core indicators."
Core inflation, which excludes food prices, rose to 9.3 percent in October from 8.7 percent.
Last month the central bank raised its inflation forecasts in its quarterly inflation report, and the central bank president was quoted as saying that it was not totally incorrect that the CBRT may raise rates if the U.S. Federal Reserve does to avoid capital outflows from investors seeking higher yield.
The central bank raised its end-2015 inflation forecast to a midpoint of 7.9 percent from 6.9 percent in its previous report.
For the end of 2016 the CBRT forecast inflation at a midpoint of 6.5 percent, up from 5.5 percent.
The Central Bank of the Republic of Turkey (CBRT) also confirmed its view from October that a tight monetary policy stance will be maintained in light of inflation expectations, the behavior of prices and "the course of other factors" affecting inflation, a likely reference to how the exchange rate of the lira may be affected by an expected change in U.S. monetary policy.
On Nov. 15 Turkish President Tayyip Erdogan, whose party has regained its single-party majority, renewed his call for the central bank to cut rates but investors appeared to shrug off any jitters about the central bank's independence judging from the reaction of the lira.
The lira has been depreciating since the so-called "taper tantrum" in May 2013 but has been relatively stable since late September and firmed slightly since the Nov. 1 elections, helping ease pressure on inflation.
The lira was trading at 2.86 to the U.S. dollar today, up from below 3 in late September, but still down 18 percent since the beginning of the year.
Turkey's headline inflation rate eased to 7.58 percent in October from 7.95 percent in September and the CBRT said energy prices had a favorable effect on inflation while "cumulative exchange rate movements delay the improvement in the core indicators."
Core inflation, which excludes food prices, rose to 9.3 percent in October from 8.7 percent.
Last month the central bank raised its inflation forecasts in its quarterly inflation report, and the central bank president was quoted as saying that it was not totally incorrect that the CBRT may raise rates if the U.S. Federal Reserve does to avoid capital outflows from investors seeking higher yield.
The central bank raised its end-2015 inflation forecast to a midpoint of 7.9 percent from 6.9 percent in its previous report.
For the end of 2016 the CBRT forecast inflation at a midpoint of 6.5 percent, up from 5.5 percent.
Monday, November 23, 2015
Israel holds rate, repeats on hold for considerable time
Israel's central bank left its benchmark interest rate unchanged at 0.10 percent, as expected, and confirmed its recent guidance that "monetary policy will remain accommodative for a considerable time" in view of the inflationary environment, economic growth, the exchange rate of the shekel and the monetary policies of major central banks.
The Bank of Israel (BOI), which cut its rate by 15 basis points in February to counter the negative impact on exports and inflation from a rise in the shekel, first issued the guidance of keeping its policy accommodative for considerable time in its October statement.
The BOI's monetary committee also repeated that the risks to achieving its inflation target of 1- 3 percent and to growth "remain high" and it will examine the need to use "various tools" to reach its objective and will continue to keep a close eye on asset markets, including the housing market.
Israel's consumer price inflation rate fell by minus 0.7 percent in October from minus 0.5 percent in September though the BOI added that the monthly change amounted to plus 0.1 percent compared with expectations for a decline of 0.1 percent.
Excluding energy and the administrative reduction in water and electricity rates, consumer prices rose by an annual rate of 0.9 percent in October, with the reduction in Value Added Tax and lower fuel prices expected to contribute to a drop in consumer price index in November, BOI said.
Expectations for inflation over the next year remain low, the BOI said, and private forecasters expect the BOI to keep the policy rate at the current level in the next few months and then to raise it in about a year.
Over the last month the shekel has traded in a relatively narrow range and was trading at 3.88 to the U.S. dollar today, up 0.5 percent since the start of the year.
The impact on Israel's economy from recent violence "is moderate," the BOI said, with first estimates of Gross Domestic Product in the third quarter showing a return to the rate of growth seen in the past two years.
Growth was helped by an acceleration in public consumption and a recovery in exports, but the BOI cautioned that recent data indicate that the improvement in exports may have been transitory while the picture presented by the labor market continues to be positive.
Israel's GDP expanded by 0.62 percent in the third quarter from the second quarter for annual growth of 2.52 percent, up from 2.13 percent in the first quarter.
The Bank of Israel (BOI), which cut its rate by 15 basis points in February to counter the negative impact on exports and inflation from a rise in the shekel, first issued the guidance of keeping its policy accommodative for considerable time in its October statement.
The BOI's monetary committee also repeated that the risks to achieving its inflation target of 1- 3 percent and to growth "remain high" and it will examine the need to use "various tools" to reach its objective and will continue to keep a close eye on asset markets, including the housing market.
Israel's consumer price inflation rate fell by minus 0.7 percent in October from minus 0.5 percent in September though the BOI added that the monthly change amounted to plus 0.1 percent compared with expectations for a decline of 0.1 percent.
Excluding energy and the administrative reduction in water and electricity rates, consumer prices rose by an annual rate of 0.9 percent in October, with the reduction in Value Added Tax and lower fuel prices expected to contribute to a drop in consumer price index in November, BOI said.
Expectations for inflation over the next year remain low, the BOI said, and private forecasters expect the BOI to keep the policy rate at the current level in the next few months and then to raise it in about a year.
Over the last month the shekel has traded in a relatively narrow range and was trading at 3.88 to the U.S. dollar today, up 0.5 percent since the start of the year.
The impact on Israel's economy from recent violence "is moderate," the BOI said, with first estimates of Gross Domestic Product in the third quarter showing a return to the rate of growth seen in the past two years.
Growth was helped by an acceleration in public consumption and a recovery in exports, but the BOI cautioned that recent data indicate that the improvement in exports may have been transitory while the picture presented by the labor market continues to be positive.
Israel's GDP expanded by 0.62 percent in the third quarter from the second quarter for annual growth of 2.52 percent, up from 2.13 percent in the first quarter.
Sunday, November 22, 2015
UPDATE-This week in monetary policy: Israel, Turkey, Sri Lanka, Nigeria, Brazil, Fiji, Moldova, Colombia and Trinidad & Tobago
(The following item has been updated with the Central Bank of Sri Lanka's monetary policy review on Nov. 24.)
This week (November 23 through August 28) central banks from 9 countries or jurisdictions are scheduled to decide on monetary policy: Israel, Turkey, Sri Lanka, Nigeria, Brazil, Fiji, Moldova, Colombia and Trinidad and Tobago.
This week (November 23 through August 28) central banks from 9 countries or jurisdictions are scheduled to decide on monetary policy: Israel, Turkey, Sri Lanka, Nigeria, Brazil, Fiji, Moldova, Colombia and Trinidad and 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.
www.CentralBankNews.info
WEEK 48 | ||||||
NOV 23-NOV 28, 2015: | ||||||
COUNTRY | DATE | RATE | LATEST | YTD | 1 YR AGO | MSCI |
ISRAEL | 23-Nov | 0.10% | 0 | -15 | 0.25% | DM |
TURKEY | 24-Nov | 7.50% | 0 | -75 | 8.25% | EM |
SRI LANKA | 24-Nov | 6.00% | 0 | -50 | 6.50% | FM |
NIGERIA | 24-Nov | 13.00% | 0 | 0 | 13.00% | FM |
BRAZIL | 25-Nov | 14.25% | 0 | 250 | 11.25% | EM |
FIJI | 26-Nov | 0.50% | 0 | 0 | 0.50% | |
MOLDOVA | 26-Nov | 19.50% | 25 | 1300 | 3.50% | |
COLOMBIA | 27-Nov | 5.25% | 50 | 75 | 4.50% | EM |
TRINIDAD & TOBAGO | 27-Nov | 4.50% | 25 | 125 | 3.00% |
www.CentralBankNews.info
Thursday, November 19, 2015
South Africa raises rate 25 bps on higher risks to inflation
South Africa's central bank raised its benchmark repurchase rate by a further 25 basis points to 6.25 percent to prevent a rise in inflation expectations and more generalised inflation in light of growing downside risks from persistent exchange rate depreciation, higher electricity tariffs and a rise in food prices from drought.
The South African Reserve Bank (SARB) has now raised its rate by 50 basis points this year and said four members of its monetary policy committee had voted to raise the rate while two members had preferred to retain the policy stance.
"Complicating the decision was the deteriorating economic outlook," SARB Governor Lesetja Kganyago said, adding that the risks to the outlook were now considered to be on the downside while they were more of less balanced at the previous meeting in September.
While changes to SARB's forecast for inflation was only minor, Kganyago underlined that the upside risks were now more pronounced and expected to outweigh the possible downside risks from lower global oil prices and a subdued pass-through of changes to the exchange rate.
"While these factors cannot be dealt with directly through monetary policy, the concern of the Committee is that failure to act could cause inflation expectations to become unanchored and generate second-round effects and more generalized inflation," he said.
Despite the rate rise, SARB still considers its policy stance to be accommodative and future actions will continue to focus on anchoring inflation within the bank's 3-6 percent range while remaining sensitive to the fragile state of the country's economy.
The forecast for headline inflation this year was trimmed to 4.6 percent from a previous forecast of 4.7 percent and the forecast for core inflation was unchanged at 5.5 percent.
For 2016 inflation was seen at 6.0 percent, down from 6.2 percent and core inflation at 5.5 percent, up from 5.4 percent. For 2017 headline inflation was forecast at an unchanged 5.8 percent and core inflation at 5.4 percent, up from 5.3 percent.
Headline inflation in October was 4.7 percent, up from 4.6 percent in September.
The forecast for Gross Domestic Product growth in 2015 was trimmed to 1.4 percent from 1.5 percent and 1.5 percent for 2016 from 1.6 percent. For 2017 GDP was forecast to expand by an unchanged 2.1 percent.
In the second quarter of this year, South African's GDP grew by an annual rate of 1.2 percent, down from 2.1 percent in the first quarter.
The Rand has been on a weakening trend since mid-2011 when it was above 7 to the U.S. dollar. The rand has experienced volatile trading in recent years, not only due to expectations about U.S. monetary policy but also domestic factors, such as labor unrest.
Since the last meeting by the central bank's monetary policy committee in September, the rand has depreciated 3 percent against the dollar and today it was trading at 14.12 to the dollar, down 17.8 percent this year alone.
"As before, the extent to which Fed tightening has been priced into the exchange rate remains uncertain," SARB said, adding that volatility and overshooting of the exchange rate is likely ahead of and in the immediate aftermath of any change to U.S. rates.
The South African Reserve Bank (SARB) has now raised its rate by 50 basis points this year and said four members of its monetary policy committee had voted to raise the rate while two members had preferred to retain the policy stance.
"Complicating the decision was the deteriorating economic outlook," SARB Governor Lesetja Kganyago said, adding that the risks to the outlook were now considered to be on the downside while they were more of less balanced at the previous meeting in September.
While changes to SARB's forecast for inflation was only minor, Kganyago underlined that the upside risks were now more pronounced and expected to outweigh the possible downside risks from lower global oil prices and a subdued pass-through of changes to the exchange rate.
"While these factors cannot be dealt with directly through monetary policy, the concern of the Committee is that failure to act could cause inflation expectations to become unanchored and generate second-round effects and more generalized inflation," he said.
Despite the rate rise, SARB still considers its policy stance to be accommodative and future actions will continue to focus on anchoring inflation within the bank's 3-6 percent range while remaining sensitive to the fragile state of the country's economy.
The forecast for headline inflation this year was trimmed to 4.6 percent from a previous forecast of 4.7 percent and the forecast for core inflation was unchanged at 5.5 percent.
For 2016 inflation was seen at 6.0 percent, down from 6.2 percent and core inflation at 5.5 percent, up from 5.4 percent. For 2017 headline inflation was forecast at an unchanged 5.8 percent and core inflation at 5.4 percent, up from 5.3 percent.
Headline inflation in October was 4.7 percent, up from 4.6 percent in September.
The forecast for Gross Domestic Product growth in 2015 was trimmed to 1.4 percent from 1.5 percent and 1.5 percent for 2016 from 1.6 percent. For 2017 GDP was forecast to expand by an unchanged 2.1 percent.
In the second quarter of this year, South African's GDP grew by an annual rate of 1.2 percent, down from 2.1 percent in the first quarter.
The Rand has been on a weakening trend since mid-2011 when it was above 7 to the U.S. dollar. The rand has experienced volatile trading in recent years, not only due to expectations about U.S. monetary policy but also domestic factors, such as labor unrest.
Since the last meeting by the central bank's monetary policy committee in September, the rand has depreciated 3 percent against the dollar and today it was trading at 14.12 to the dollar, down 17.8 percent this year alone.
"As before, the extent to which Fed tightening has been priced into the exchange rate remains uncertain," SARB said, adding that volatility and overshooting of the exchange rate is likely ahead of and in the immediate aftermath of any change to U.S. rates.
Wednesday, November 18, 2015
Japan maintains policy stance, sees moderate recovery
Japan's central kept its monetary policy stance steady, confirming that it will increase the country's monetary base by about 80 trillion yen on an annual basis, and repeated that it expects the economy to continue its moderate recovery despite exports and production being hit by the slowdown in emerging economies.
The Bank of Japan (BOJ), which embarked on Quantitative and Qualitative Easing (QQE) in April 2013 and expanded the target by 10-20 trillion yen in October last year, also repeated that it will continue with QQE with the aim of reaching its target of 2 percent inflation.
Last month the BOJ once again pushed back its expectation for when inflation will reach its target to the second half of fiscal 2016 from the first half of fiscal 2016, which begins April 1.
The BOJ and the government's efforts to boost economic growth and inflation has been dealt a setback by the fall in oil prices and the slowdown in China, with the economy falling into its fourth recession in five years and inflation hitting zero percent in September.
In the third quarter of this year Japan's Gross Domestic Product contracted by 0.2 percent from the second quarter, the same result as in the second quarter. On an annual basis the economy expanded by 1.0 percent, the same rate as in the second quarter.
In last month's semi-annual economic outlook, the BOJ cut its forecast for economic growth in the current 2015 fiscal year to an average of 1.2 percent and to 1.4 percent for fiscal 2016, with growth in fiscal 2017 then expected to fall to only 0.3 percent as consumption is once again is likely to be hit by a planned increase in sales tax on April 1, 2017.
The forecast for inflation in the current fiscal year was cut to 0.1 percent and to 1.4 percent for fiscal 2016.
The Bank of Japan (BOJ), which embarked on Quantitative and Qualitative Easing (QQE) in April 2013 and expanded the target by 10-20 trillion yen in October last year, also repeated that it will continue with QQE with the aim of reaching its target of 2 percent inflation.
Last month the BOJ once again pushed back its expectation for when inflation will reach its target to the second half of fiscal 2016 from the first half of fiscal 2016, which begins April 1.
The BOJ and the government's efforts to boost economic growth and inflation has been dealt a setback by the fall in oil prices and the slowdown in China, with the economy falling into its fourth recession in five years and inflation hitting zero percent in September.
In the third quarter of this year Japan's Gross Domestic Product contracted by 0.2 percent from the second quarter, the same result as in the second quarter. On an annual basis the economy expanded by 1.0 percent, the same rate as in the second quarter.
In last month's semi-annual economic outlook, the BOJ cut its forecast for economic growth in the current 2015 fiscal year to an average of 1.2 percent and to 1.4 percent for fiscal 2016, with growth in fiscal 2017 then expected to fall to only 0.3 percent as consumption is once again is likely to be hit by a planned increase in sales tax on April 1, 2017.
The forecast for inflation in the current fiscal year was cut to 0.1 percent and to 1.4 percent for fiscal 2016.
Tuesday, November 17, 2015
Hungary maintains rate, on hold for extended period
Hungary's central bank left its base rate steady at 1.35 percent, as expected, and repeated its guidance from October that it would maintain the current rate "for an extended period" as long as its current assumptions are consistent with inflation returning to its target.
The National Bank of Hungary (MNB), which ended its easing cycle in July after cuts this year totaling 75 basis points, said the country's economy continues to grow but there is still unused capacity that is having a disinflationary impact and inflation remains below its target.
Hungary's economy expanded by 0.5 percent in the third quarter, the same rate as in the first and second quarters, for annual growth of 2.3 percent, down from 2.7 percent in the second quarter, and below expectations due to slower external demand that hit industrial production.
Domestic demand continues to contribute to growth, the MNB said, but government investment is likely to fall as funding from the European Union drops. But this is expected to be offset by a gradual pick-up in private sector investment and the central bank's Funding for Growth schemes.
Hungary's inflation rate returned to positive territory in October with headline inflation rising to 0.1 percent compared with minus 0.4 percent in September and zero percent in August.
Core inflation - 1.5 percent in October - is expected to rise gradually due to higher wages and demand but the MNB repeated that the persistently low cost environment will contain consumer prices so they will first rise to levels around the inflation target at the end of the forecast horizon.
Last month the bank's deputy governor, Marton Nagy, said the central bank may keep rates at their current level until 2018 or even 2019, and first expects to reach its inflation objective by the end of 2017.
The MNB targets inflation at a midpoint of 3.0 percent, within a range of plus or minus 1 percentage point.
The National Bank of Hungary (MNB), which ended its easing cycle in July after cuts this year totaling 75 basis points, said the country's economy continues to grow but there is still unused capacity that is having a disinflationary impact and inflation remains below its target.
Hungary's economy expanded by 0.5 percent in the third quarter, the same rate as in the first and second quarters, for annual growth of 2.3 percent, down from 2.7 percent in the second quarter, and below expectations due to slower external demand that hit industrial production.
Domestic demand continues to contribute to growth, the MNB said, but government investment is likely to fall as funding from the European Union drops. But this is expected to be offset by a gradual pick-up in private sector investment and the central bank's Funding for Growth schemes.
Hungary's inflation rate returned to positive territory in October with headline inflation rising to 0.1 percent compared with minus 0.4 percent in September and zero percent in August.
Core inflation - 1.5 percent in October - is expected to rise gradually due to higher wages and demand but the MNB repeated that the persistently low cost environment will contain consumer prices so they will first rise to levels around the inflation target at the end of the forecast horizon.
Last month the bank's deputy governor, Marton Nagy, said the central bank may keep rates at their current level until 2018 or even 2019, and first expects to reach its inflation objective by the end of 2017.
The MNB targets inflation at a midpoint of 3.0 percent, within a range of plus or minus 1 percentage point.
Kenya holds rate, stance anchors inflation expectations
Kenya's central bank left its Central Bank Rate (CBR) unchanged at 11.50 percent, as expected, saying the current policy measures "are appropriate to maintain market stability and anchor inflation expectations."
The Central Bank of Kenya (CBK), which has raised its rate by 300 basis points this year, said recent "turbulent conditions" in financial markets had now abated and a decline in 3-month annualized non-food, non-fuel (NFNF) inflation indicated "moderating demand pressures."
Last week CBK Governor Patrick Njoroge said the central bank's tighter policy had helped bring down inflation expectations and inflation was "back in control," raising expectations that the bank would maintain rates today.
On Oct. 13 the central bank placed Imperial Bank Ltd, the country's 19th largest bank, in receivership for a year due to "unsafe and unsound business conditions," worrying some of its depositors while there was also pressure in markets due to the government's borrowing plan.
Two days later the central bank sought to calm market concern, saying the banking system was safe and robust and it was ready to use all instruments to provide adequate liquidity.
Kenya's headline inflation rate rose to 6.72 percent in October from 5.97 percent, but this remained within the government's target range while NFNF inflation rose to 4.8 percent from 4.7 percent due to an increase in some food prices and the comparison to last year.
The government targets inflation in a range of 2.5 percent to 7.5 percent.
But the CBK said 3-month annualized NFNF inflation declined to 2.5 percent in October from 3.4 percent in September, and the foreign exchange market had also been stable since September while the current account deficit had narrowed on lower cost of oil imports and lower consumer imports.
Kenya's shilling began depreciating sharply in March this year but after hitting 106 to the U.S. dollar in early September, it has been firming since early October. Today the shilling was trading at 102.2 to the dollar, down 11.4 percent since the beginning of the year.
The central bank's foreign exchange reserves rose to US$6.777 billion, or 4.3 months of imports, from $6.116 billion at the end of September, with the increase due to purchases of foreign exchange on the market and funds from the government's syndicated loan, the CBK said.
The Central Bank of Kenya (CBK), which has raised its rate by 300 basis points this year, said recent "turbulent conditions" in financial markets had now abated and a decline in 3-month annualized non-food, non-fuel (NFNF) inflation indicated "moderating demand pressures."
Last week CBK Governor Patrick Njoroge said the central bank's tighter policy had helped bring down inflation expectations and inflation was "back in control," raising expectations that the bank would maintain rates today.
On Oct. 13 the central bank placed Imperial Bank Ltd, the country's 19th largest bank, in receivership for a year due to "unsafe and unsound business conditions," worrying some of its depositors while there was also pressure in markets due to the government's borrowing plan.
Two days later the central bank sought to calm market concern, saying the banking system was safe and robust and it was ready to use all instruments to provide adequate liquidity.
Kenya's headline inflation rate rose to 6.72 percent in October from 5.97 percent, but this remained within the government's target range while NFNF inflation rose to 4.8 percent from 4.7 percent due to an increase in some food prices and the comparison to last year.
The government targets inflation in a range of 2.5 percent to 7.5 percent.
But the CBK said 3-month annualized NFNF inflation declined to 2.5 percent in October from 3.4 percent in September, and the foreign exchange market had also been stable since September while the current account deficit had narrowed on lower cost of oil imports and lower consumer imports.
Kenya's shilling began depreciating sharply in March this year but after hitting 106 to the U.S. dollar in early September, it has been firming since early October. Today the shilling was trading at 102.2 to the dollar, down 11.4 percent since the beginning of the year.
The central bank's foreign exchange reserves rose to US$6.777 billion, or 4.3 months of imports, from $6.116 billion at the end of September, with the increase due to purchases of foreign exchange on the market and funds from the government's syndicated loan, the CBK said.
Indonesia holds rate, cuts RR, vigilant in easing policy
Indonesia's central bank maintained its benchmark BI rate at 7.50 percent but lived up to its guidance from last month that it had room to ease its policy by lowering the reserve requirement by 50 basis points to 7.50 percent to "boost bank financing capacity to support escalating economic activity during the third quarter and beyond."
Bank Indonesia (BI), which cut its rate by 25 basis points in February, also repeated its view from October that continued improvement in macroeconomic stability is "making room for monetary policy easing" and that it remains confident that inflation will be at the lower end of its target while the current account deficit is seen at 2 percent of Gross Domestic Product.
However, BI is also acutely aware of the uncertain conditions in global financial markets from the expected increase in U.S. rates along with what it described as "the diversity of monetary policies form ECB, BoJ, and PBoC," and said it would "remain vigilant in easing its monetary policy," tempering any expectations for a series of rate cuts.
The BI's guidance from October had raised expectations among some economists that it would ease its policy stance today while others had expected the BI to keep its policy steady given the concern that the rupiah's exchange rate could weaken in response to a rate cut, dealing a setback to the central bank's efforts to bring down inflation following a jump last year after the government cut fuel subsidies, pushing up fuel prices.
Indonesia's inflation rate immediately jumped to 8.36 percent in December last year and has remained well-above the BI's target of 4.0 percent, plus/minus 1 percentage point this year.
But in October the inflation rate eased to 6.25 percent from 6.83 percent in September, for a year-to-date rate of 2.16, BI said, adding that core inflation eased further to 5.02 percent in October, reflecting appreciation of the rupiah, limited domestic demand and anchored inflation expectations.
Last month the rupiah appreciated after renewed optimism about the economic outlook for the country following new government policy packages, intervention by the BI to stabilize the currency, and what it described as a "dovish announcement" by the U.S. Federal Reserve in September.
During the third quarter the rupiah appreciated on average by 5.35 percent to 13,873 to the U.S. dollar but it is still down 9.4 percent this year, trading at 13,737 today.
Indonesia's economy expanded by an annual 4.73 percent in the third quarter, up from 4.67 percent in the second quarter, due to higher government spending, but sluggish growth in trading partners and low commodity prices "precipitated a deeper contraction in exports," BI said.
Although it expects growth to continue in the fourth quarter as government infrastructure projects gains momentum, the BI said growth was projected "at the lower end of the 4.7-5.1% range for 2015. Last month the BI had only forecast growth in the 4.7 to 5.1 percent range.
For 2016 growth is expected to increase to 5.2 to 5.6 percent.
Bank Indonesia (BI), which cut its rate by 25 basis points in February, also repeated its view from October that continued improvement in macroeconomic stability is "making room for monetary policy easing" and that it remains confident that inflation will be at the lower end of its target while the current account deficit is seen at 2 percent of Gross Domestic Product.
However, BI is also acutely aware of the uncertain conditions in global financial markets from the expected increase in U.S. rates along with what it described as "the diversity of monetary policies form ECB, BoJ, and PBoC," and said it would "remain vigilant in easing its monetary policy," tempering any expectations for a series of rate cuts.
The BI's guidance from October had raised expectations among some economists that it would ease its policy stance today while others had expected the BI to keep its policy steady given the concern that the rupiah's exchange rate could weaken in response to a rate cut, dealing a setback to the central bank's efforts to bring down inflation following a jump last year after the government cut fuel subsidies, pushing up fuel prices.
Indonesia's inflation rate immediately jumped to 8.36 percent in December last year and has remained well-above the BI's target of 4.0 percent, plus/minus 1 percentage point this year.
But in October the inflation rate eased to 6.25 percent from 6.83 percent in September, for a year-to-date rate of 2.16, BI said, adding that core inflation eased further to 5.02 percent in October, reflecting appreciation of the rupiah, limited domestic demand and anchored inflation expectations.
Last month the rupiah appreciated after renewed optimism about the economic outlook for the country following new government policy packages, intervention by the BI to stabilize the currency, and what it described as a "dovish announcement" by the U.S. Federal Reserve in September.
During the third quarter the rupiah appreciated on average by 5.35 percent to 13,873 to the U.S. dollar but it is still down 9.4 percent this year, trading at 13,737 today.
Indonesia's economy expanded by an annual 4.73 percent in the third quarter, up from 4.67 percent in the second quarter, due to higher government spending, but sluggish growth in trading partners and low commodity prices "precipitated a deeper contraction in exports," BI said.
Although it expects growth to continue in the fourth quarter as government infrastructure projects gains momentum, the BI said growth was projected "at the lower end of the 4.7-5.1% range for 2015. Last month the BI had only forecast growth in the 4.7 to 5.1 percent range.
For 2016 growth is expected to increase to 5.2 to 5.6 percent.
Monday, November 16, 2015
Mozambique raises rate another 50 bps on inflation risks
Mozambique's central bank raised its benchmark standing facility rate by a further 50 basis points to 8.25 percent, citing the need for "redoubled caution" in light of the prospects for short and medium-term inflation at a time of growing foreign and domestic risks.
The Bank of Mozambique (BM), which has now raised its rate by 75 basis points this year following an initial hike in October, added that it was also increasing the reserve requirement by a further 150 basis points to 10.50 percent with effect for the maintenance period that begins Dec. 7.
The interest rate on the bank's deposit facility will also be raised by 75 basis points to 2.75 percent while the central bank will target a monetary base of 66.437 billion meticais in November from 61.312 billion, line with the bank's estimate, and up by an annual 15.1 percent.
BM said the INE economic climate business indicator declined in September, reflecting a less positive view about job prospects, demand and prices. Apart from the industrial production and construction sectors, all sectors were pessimistic.
Mozambique's inflation rate jumped to 4.74 percent in October from 2.73 percent in September, with the rise in prices reflecting the depreciation of the metical's exchange rate and the impact of a change to the administered prices of some goods and services, including bread, water, electric power, tomatoes, soft drinks, rise and motor vehicles.
The metical has been depreciating since October 2014 but its decline steepened in August, prompting the central bank to increase sales of foreign exchange.
On the last day of October, the metical's exchange rate was 42.01 at on the interbank foreign exchange market, the bank said, for an annual decline of 35.95 percent. Today the metical was quoted at 45.5 to the dollar for a decline since the start of this year of 27.5 percent.
Mozambique's Net International Reserves fell by US$92.7 in October to $2.0268 billion, or 3.71 months of imports.
The decline reflects foreign currency net sales by the central bank of $104 million of which $57.9 million were for fuel bills, payments abroad of $16.4 million and external debt repayments of $12.4 million. But the central bank also purchased foreign exchange of $13.8 million, disbursed foreign aid worth $22.1 million, had potential net foreign exchange gains of $12.0 million and gains from changes in its gold holdings worth $7.5 million.
www.CentralBankNews.info
The Bank of Mozambique (BM), which has now raised its rate by 75 basis points this year following an initial hike in October, added that it was also increasing the reserve requirement by a further 150 basis points to 10.50 percent with effect for the maintenance period that begins Dec. 7.
The interest rate on the bank's deposit facility will also be raised by 75 basis points to 2.75 percent while the central bank will target a monetary base of 66.437 billion meticais in November from 61.312 billion, line with the bank's estimate, and up by an annual 15.1 percent.
BM said the INE economic climate business indicator declined in September, reflecting a less positive view about job prospects, demand and prices. Apart from the industrial production and construction sectors, all sectors were pessimistic.
Mozambique's inflation rate jumped to 4.74 percent in October from 2.73 percent in September, with the rise in prices reflecting the depreciation of the metical's exchange rate and the impact of a change to the administered prices of some goods and services, including bread, water, electric power, tomatoes, soft drinks, rise and motor vehicles.
The metical has been depreciating since October 2014 but its decline steepened in August, prompting the central bank to increase sales of foreign exchange.
On the last day of October, the metical's exchange rate was 42.01 at on the interbank foreign exchange market, the bank said, for an annual decline of 35.95 percent. Today the metical was quoted at 45.5 to the dollar for a decline since the start of this year of 27.5 percent.
Mozambique's Net International Reserves fell by US$92.7 in October to $2.0268 billion, or 3.71 months of imports.
The decline reflects foreign currency net sales by the central bank of $104 million of which $57.9 million were for fuel bills, payments abroad of $16.4 million and external debt repayments of $12.4 million. But the central bank also purchased foreign exchange of $13.8 million, disbursed foreign aid worth $22.1 million, had potential net foreign exchange gains of $12.0 million and gains from changes in its gold holdings worth $7.5 million.
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Ghana raises rate 100 bps, lower rate if inflation anchored
Ghana's central bank raised its policy rate by a further 100 basis points to 26.0 percent due to "imminent upside risks to the inflation outlook," but held out the possibility of lowering the rate when inflationary expectations are well-anchored.
The Bank of Ghana, which has now raised its rate by 500 basis points this year, said its policy stance already remains tight but additional tightening was necessary to "re-anchor displaced inflation expectations" and together with the current fiscal consolation should help break the "high inflation inertia."
Without the additional policy tightening, inflation is likely to drift further away from the bank's target band of 8.0 percent, plus/minus 2 percentage points, and lengthen the forecast horizon into late 2017.
Ghana's inflation rate was steady at 17.4 percent in October and September, indicating some moderation in prices due to the tight policy stance, an appreciation of the cedi's exchange rate in July and a decline in international oil prices.
Nevertheless, the central bank underscored that inflation and inflation expectations were "far above" its target range and there are risks to the outlook from worsening external financial conditions and the planned increase in utility tariffs that are now likely to be higher than expected.
The cedi has been depreciating since early 2013 but firmed sharply in July. Since October it has been trading sideways and was quoted at 3.82 to the U.S. dollar today, down 16.5 percent since the start of the year.
Compared with the same period last year, the central bank said the cedi depreciated by 31.2 percent in the year to October.
The Bank of Ghana, which has now raised its rate by 500 basis points this year, said its policy stance already remains tight but additional tightening was necessary to "re-anchor displaced inflation expectations" and together with the current fiscal consolation should help break the "high inflation inertia."
Without the additional policy tightening, inflation is likely to drift further away from the bank's target band of 8.0 percent, plus/minus 2 percentage points, and lengthen the forecast horizon into late 2017.
Ghana's inflation rate was steady at 17.4 percent in October and September, indicating some moderation in prices due to the tight policy stance, an appreciation of the cedi's exchange rate in July and a decline in international oil prices.
Nevertheless, the central bank underscored that inflation and inflation expectations were "far above" its target range and there are risks to the outlook from worsening external financial conditions and the planned increase in utility tariffs that are now likely to be higher than expected.
The cedi has been depreciating since early 2013 but firmed sharply in July. Since October it has been trading sideways and was quoted at 3.82 to the U.S. dollar today, down 16.5 percent since the start of the year.
Compared with the same period last year, the central bank said the cedi depreciated by 31.2 percent in the year to October.
Sunday, November 15, 2015
This week in monetary policy: Ghana, Mozambique, Indonesia, Hungary, Kenya, South Africa, Paraguay and Japan
This week (November 16 through November 21) central banks from 8 countries or
jurisdictions are scheduled to decide on monetary policy: Ghana, Mozambique, Indonesia, Hungary, Kenya, South Africa, Paraguay and Japan.
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 47 | ||||||
NOV 16-NOV 21, 2015: | ||||||
COUNTRY | DATE | RATE | LATEST | YTD | 1 YR AGO | MSCI |
GHANA | 16-Nov | 25.00% | 100 | 400 | 21.00% | |
MOZAMBIQUE | 16-Nov | 7.75% | 25 | 25 | 7.50% | |
INDONESIA | 17-Nov | 7.50% | 0 | 25 | 7.75% | EM |
HUNGARY | 17-Nov | 1.35% | 0 | -75 | 2.10% | EM |
KENYA | 17-Nov | 11.50% | 0 | 300 | 8.50% | FM |
SOUTH AFRICA | 19-Nov | 6.00% | 0 | 25 | 5.75% | EM |
PARAGUAY | 19-Nov | 5.75% | 0 | -100 | 6.75% | |
JAPAN | 19-Nov | N/A | 0 | 0 | N/A | DM |
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