Australia's left its benchmark cash rate steady at 2.0 percent and confirmed its guidance of recent months that "continued low inflation would provide scope for easier policy, should that be appropriate to lend support to demand."
Today's statement by Glenn Stevens, governor of the Reserve Bank of Australia (RBA), was largely a carbon copy of his previous statement from February apart from a few minor cosmetic changes, such as his description of the Australian dollar and to the forward guidance.
Stevens said today that the exchange rate "has been adjusting to the evolving economic outlook," whereas on Feb. 1 he said that the exchange rate "has continued its adjustment to the evolving economic outlook."
In his guidance, Stevens today said low inflation "would" provide scope for easier policy compared with his previous statement when he said low inflation "may" provide scope for easier policy, a shift that economists interpreted as signaling a slightly stronger easing bias.
The RBA, which cut its rate by 50 basis points in 2015, repeated that under the current economic conditions its monetary policy stance should remain accommodative, with low interest rates helping support demand while regulatory measures were containing risks in the housing market.
"At today's meeting, the Board judged that there were reasonable prospects for continued growth in the economy, with inflation close to target," Steven said, adding that the expansion of the non-mining part of the country's economy strengthened last year and this showed up in an improved labor market.
Australia's inflation rate is still seen remaining low over the next year or two, Stevens said. Australia's inflation rate rose slightly to 1.7 percent in the fourth quarter of last year from 1.5 percent in the previous quarter, below the RBA's target of 2-3 percent.
Its Gross Domestic Product expanded by 0.9 percent in the third quarter of 2015 from the second quarter for annual growth of 2.5 percent, up from 1.9 percent.
The unemployment rate rose to a higher-than-expected 6.0 percent in January from 5.8 percent in December, to the highest rate seen since September last year.
The Australian dollar started depreciating against the U.S. dollar in September 2014 and lost 11 percent in 2015. But since mid-January, the dollar - known as the Aussie - has firmed and was trading at 1.40 to the U.S. dollar today, down 2 percent since the start of this year but up from an exchange rate of almost 1.46 on Jan. 17.
Monday, February 29, 2016
Angola maintains rate but keeps close eye on inflation
Angola's central bank left its Basic Interest Rate steady at 12.0 percent, saying it was paying "particular attention" to the factors behind the recent trend in prices, such as an adjustment in administered prices and changes in the exchange rate of the kwanza.
The National Bank of Angola (BNA), which raised its rate by a 100 basis points at the last meeting of its monetary policy committee, noted that consumer price inflation rate rose by 3.06 percentage points from December to an annual rate of 17.34 percent in January, the highest rate seen since December 2005.
The categories of food and non-alcoholic beverages, transport, and housing water, electricity and fuel contributed most to inflation, the bank said.
The BNA has raised its basic rate by 325 basis points since embarking on a tightening cycle in October 2014, including 200 points in 2015 and 100 points this year.
On Feb. 1, the central bank said it expected inflation to have risen in January due to government cuts to subsidies on petrol at the start of the year.
Credit to the economy, which the central bank has often voiced its concern about, grew by 3.01 percent in January, a sharp drop from the cumulative increase of 17.5 percent in December.
Angola's kwanza has been hit hard by the fall in global crude oil prices since mid-2014 and the BNA has devalued its exchange rate several times. Angola is Africa's second largest oil producer and relies on oil exports for almost all its foreign exchange earnings.
The kwanza was quoted at 158.8 to the U.S. dollar today, down 14.9 percent this year alone after losing 24 percent against the dollar in 2015. The BNA said the average exchange rate in January was 155.6 to the dollar for a monthly depreciation of 15 percent.
Earlier this month the central bank announced that the Financial Action Task Force (FATF) had removed Angola from its blacklist after the country revised its regulatory framework and set up a financial intelligence unit that collects data on suspicious or unusual financial activity.
The FATF, which sets standards to prevent money laundering, added Angola to its list in 2010.
The BNA has forecast economic growth this year of 3.3 percent, down from an estimated 4 percent in 2015 and the lowest level since 2009, as the fall in oil prices cuts into exports and government revenue.
www.CentralBankNews.info
The National Bank of Angola (BNA), which raised its rate by a 100 basis points at the last meeting of its monetary policy committee, noted that consumer price inflation rate rose by 3.06 percentage points from December to an annual rate of 17.34 percent in January, the highest rate seen since December 2005.
The categories of food and non-alcoholic beverages, transport, and housing water, electricity and fuel contributed most to inflation, the bank said.
The BNA has raised its basic rate by 325 basis points since embarking on a tightening cycle in October 2014, including 200 points in 2015 and 100 points this year.
On Feb. 1, the central bank said it expected inflation to have risen in January due to government cuts to subsidies on petrol at the start of the year.
Credit to the economy, which the central bank has often voiced its concern about, grew by 3.01 percent in January, a sharp drop from the cumulative increase of 17.5 percent in December.
Angola's kwanza has been hit hard by the fall in global crude oil prices since mid-2014 and the BNA has devalued its exchange rate several times. Angola is Africa's second largest oil producer and relies on oil exports for almost all its foreign exchange earnings.
The kwanza was quoted at 158.8 to the U.S. dollar today, down 14.9 percent this year alone after losing 24 percent against the dollar in 2015. The BNA said the average exchange rate in January was 155.6 to the dollar for a monthly depreciation of 15 percent.
Earlier this month the central bank announced that the Financial Action Task Force (FATF) had removed Angola from its blacklist after the country revised its regulatory framework and set up a financial intelligence unit that collects data on suspicious or unusual financial activity.
The FATF, which sets standards to prevent money laundering, added Angola to its list in 2010.
The BNA has forecast economic growth this year of 3.3 percent, down from an estimated 4 percent in 2015 and the lowest level since 2009, as the fall in oil prices cuts into exports and government revenue.
www.CentralBankNews.info
Fiji holds rate, growth takes hit from Cyclone Winston
Fiji's central bank left its benchmark Overnight Policy Rate (OPR) steady at 0.50 percent but said the impact from Cyclone Winston will lead to lower growth than expected this year and exacerbate the impact of weak global conditions on the economy.
The Reserve Bank of Fiji (RBF), which has maintained its rate since October 2011, added the dual objectives of the bank remain stable but it will continue to monitor developments and align its monetary policy stance accordingly.
Fiji was struck by Tropical Cyclone Winston on the night of Feb. 20, with wind gusts up to 325 kph (202 mph) that killed 42 people and left more than 62,000 people homeless. The government has estimated damage of 1 billion Fijian dollars, or US$460 million.
In January the RBF forecast economic growth this year of 3.5 percent, down from an estimated 4.0 percent in 2015 and 5.3 percent in 2014, but RBF Governor and Chairman Barry Whiteside said Cyclone Winston was expected to lower this growth forecast, notwithstanding the impetus from recovery activities.
With winds of 296 kph (184 mph), Cyclone Winston is the worst cyclone ever recorded in the Southern Hemisphere, smashing the previous record of 178 mph set by Cyclone Zoe which hit the Solomon Islands in 2002. If Winston had occurred in the Atlantic, it would have been categorized as a Category 5 hurricane.
Fiji's inflation rate is expected to be below 3.0 percent by the end of this year, Whiteside said, taking into account low global commodity prices, soft inflation in trading partners, the lower Value Added Tax and temporary price increases of certain items following the cyclone.
Fiji's inflation rate fell to 0.2 percent in January from 1.6 percent in December, reflecting a reduction in VAT to 9 percent from 15 percent.
Fiji's foreign reserves were "comfortable" at $2.019 billion as of Feb. 29, sufficient for 5.7 months of imports, but Whiteside said these will be "slightly dented" by higher demand for imports in connection with the recovery of the Island nation and growth in exports will be "more subdued."
However, he added that remittances from abroad and inflow from tourism should hold up.
The RBF has activated its Natural Disaster Rehabilitation Facility (NDRF) to support relief efforts in the wake of Winston and is providing loans to businesses and homeowners through commercial banks, the Fiji Development Bank and credit institutions.
The Reserve Bank of Fiji (RBF), which has maintained its rate since October 2011, added the dual objectives of the bank remain stable but it will continue to monitor developments and align its monetary policy stance accordingly.
Fiji was struck by Tropical Cyclone Winston on the night of Feb. 20, with wind gusts up to 325 kph (202 mph) that killed 42 people and left more than 62,000 people homeless. The government has estimated damage of 1 billion Fijian dollars, or US$460 million.
In January the RBF forecast economic growth this year of 3.5 percent, down from an estimated 4.0 percent in 2015 and 5.3 percent in 2014, but RBF Governor and Chairman Barry Whiteside said Cyclone Winston was expected to lower this growth forecast, notwithstanding the impetus from recovery activities.
With winds of 296 kph (184 mph), Cyclone Winston is the worst cyclone ever recorded in the Southern Hemisphere, smashing the previous record of 178 mph set by Cyclone Zoe which hit the Solomon Islands in 2002. If Winston had occurred in the Atlantic, it would have been categorized as a Category 5 hurricane.
Fiji's inflation rate is expected to be below 3.0 percent by the end of this year, Whiteside said, taking into account low global commodity prices, soft inflation in trading partners, the lower Value Added Tax and temporary price increases of certain items following the cyclone.
Fiji's inflation rate fell to 0.2 percent in January from 1.6 percent in December, reflecting a reduction in VAT to 9 percent from 15 percent.
Fiji's foreign reserves were "comfortable" at $2.019 billion as of Feb. 29, sufficient for 5.7 months of imports, but Whiteside said these will be "slightly dented" by higher demand for imports in connection with the recovery of the Island nation and growth in exports will be "more subdued."
However, he added that remittances from abroad and inflow from tourism should hold up.
The RBF has activated its Natural Disaster Rehabilitation Facility (NDRF) to support relief efforts in the wake of Winston and is providing loans to businesses and homeowners through commercial banks, the Fiji Development Bank and credit institutions.
Sunday, February 28, 2016
This week in monetary policy: Fiji, Angola, Kyrgyzstan, Bulgaria, Australia, Brazil and Ukraine
This week (February 29 through March 5) central banks from seven countries or
jurisdictions are scheduled to decide on monetary policy: Fiji, Angola, Kyrgyz Republic, Bulgaria, Australia, Brazil and Ukraine.
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 9 | ||||||
| FEB 29-MAR 5, 2016: | ||||||
| COUNTRY | DATE | RATE | LATEST | YTD | 1 YR AGO | MSCI |
| FIJI | 29-Feb | 0.50% | 0 | 0 | 0.50% | |
| ANGOLA | 29-Feb | 12.00% | 100 | 100 | 9.00% | |
| KYRGYZSTAN | 29-Feb | 10.00% | 0 | 0 | 11.00% | |
| BULGARIA | 29-Feb | 0.00% | -1 | -1 | 0.01% | FM |
| AUSTRALIA | 1-Mar | 2.00% | 0 | 0 | 2.25% | DM |
| BRAZIL | 2-Mar | 14.25% | 0 | 0 | 12.25% | EM |
| UKRAINE | 3-Mar | 22.00% | 0 | 0 | 19.50% | FM |
Thursday, February 25, 2016
Moldova cuts rate 50 bps as inflation seen trending lower
Moldova's central bank cut its base rate by 50 basis points to 19.0 percent as it gradually normalizes its monetary policy stance and anchors inflation expectations and aims for an inflation rate that is close to its target over the medium term.
The National Bank of Moldova (NBM), which in January said last year's rate hikes should have the effect of tempering inflation this year, added that the conditions for a reversal of the trend in inflation were now appearing despite the fact that inflation remains above its upper limit.
The NBM, which raised its base rate by 13 percentage points in 2015, targets inflation of 5.0 percent, plus/minus 1.5 percentage points.
Moldova's headline inflation rate eased to 13.4 percent in January from 13.6 percent in December, helped by a lower contribution of core inflation and regulated prices, the bank said. Core inflation, which excludes food, beverages, fuel and regulated prices, dropped to 14.2 percent in January from 14.6 percent in December.
In its February inflation report, the central bank forecast consumer price inflation of 10.1 percent in 2016 and 6.6 percent in 2017, and said the fall in January inflation was in line with this forecast.
Inflation in Moldova, a former Soviet state located between Romania and Ukraine, was fueled by a depreciation of the leu currency and it fell almost 21 percent against the U.S. dollar in 2015.
Since mid-January the leu has firmed and was trading at 19.9 to the dollar today, down 1 percent since the start of this year.
Economic activity in Moldova contracted further in the fourth quarter of 2015, the NBM said, as exports fell by 13.6 percent and imports by 29.4 percent from the same 2014 period, as disinflationary pressures from aggregate demand slowly increase. Third quarter Gross Domestic Product shrank by an annual rate of 3.7 percent.
In addition to lowering its base rate, the central bank said it was cutting the rate on overnight loans by 50 basis points to 22.0 percent and the rate on overnight deposits to 16.0 percent from 16.50 percent.
The National Bank of Moldova (NBM), which in January said last year's rate hikes should have the effect of tempering inflation this year, added that the conditions for a reversal of the trend in inflation were now appearing despite the fact that inflation remains above its upper limit.
The NBM, which raised its base rate by 13 percentage points in 2015, targets inflation of 5.0 percent, plus/minus 1.5 percentage points.
Moldova's headline inflation rate eased to 13.4 percent in January from 13.6 percent in December, helped by a lower contribution of core inflation and regulated prices, the bank said. Core inflation, which excludes food, beverages, fuel and regulated prices, dropped to 14.2 percent in January from 14.6 percent in December.
In its February inflation report, the central bank forecast consumer price inflation of 10.1 percent in 2016 and 6.6 percent in 2017, and said the fall in January inflation was in line with this forecast.
Inflation in Moldova, a former Soviet state located between Romania and Ukraine, was fueled by a depreciation of the leu currency and it fell almost 21 percent against the U.S. dollar in 2015.
Since mid-January the leu has firmed and was trading at 19.9 to the dollar today, down 1 percent since the start of this year.
Economic activity in Moldova contracted further in the fourth quarter of 2015, the NBM said, as exports fell by 13.6 percent and imports by 29.4 percent from the same 2014 period, as disinflationary pressures from aggregate demand slowly increase. Third quarter Gross Domestic Product shrank by an annual rate of 3.7 percent.
In addition to lowering its base rate, the central bank said it was cutting the rate on overnight loans by 50 basis points to 22.0 percent and the rate on overnight deposits to 16.0 percent from 16.50 percent.
Wednesday, February 24, 2016
Paraguay keeps rate steady, inflation in line with target
Paraguay's central bank left its monetary policy rate steady at 6.0 percent, saying inflation and inflationary expectations are in line with its target and keeping the rate steady is the most prudent course of action given the uncertain domestic and especially international environment.
The Central Bank of Paraguay, which raised its rate by 25 basis points in January, said the decision by its committee was unanimous and that the currencies of several countries in South America, including the guarani, had strengthened against the U.S. dollar.
Paraguay's consumer price inflation rate jumped to 5.2 percent in January from 3.1 percent in December, pushed up by a 6.4 percent rise in food and a 3.2 percent rise in housing.
The central bank targets inflation of 4.5 percent, plus/minus 2 percentage points.
The exchange rate of the guarani started depreciating in September 2014 and fell steadily until late January this year.
In 2015 it lost 20 percent against the dollar but today it was trading at 5,709 to the dollar, up 1.3 percent since the start of this year.
www.CentralBankNews.info
The Central Bank of Paraguay, which raised its rate by 25 basis points in January, said the decision by its committee was unanimous and that the currencies of several countries in South America, including the guarani, had strengthened against the U.S. dollar.
Paraguay's consumer price inflation rate jumped to 5.2 percent in January from 3.1 percent in December, pushed up by a 6.4 percent rise in food and a 3.2 percent rise in housing.
The central bank targets inflation of 4.5 percent, plus/minus 2 percentage points.
The exchange rate of the guarani started depreciating in September 2014 and fell steadily until late January this year.
In 2015 it lost 20 percent against the dollar but today it was trading at 5,709 to the dollar, up 1.3 percent since the start of this year.
www.CentralBankNews.info
Tuesday, February 23, 2016
Turkey holds rate, confirms inflation to determine moves
Turkey's' central bank left its benchmark repo rate unchanged at 7.50 percent and confirmed its guidance that "future monetary policy decisions will be conditional on the inflation outlook" and that a tight policy stance will be maintained in light of inflation expectations.
The Central Bank of the Republic of Turkey (CBRT), which lowered its key rate by 75 basis points last year, also repeated its view from January that energy prices were having a favorable affected on inflation while other cost factors were limiting the improvement in core inflation indicators.
Turkey's headline inflation rate accelerated to 9.58 percent in January from a 2015-high of 8.81 percent December, moving further away from the central bank's target of 5 percent.
It is the fifth year in a row that inflation has topped the central bank's target. Core inflation rose to 9.7 percent in December from 9.5 percent in November 2015.
Last month the CBRT raised its 2016 inflation forecast to 7.5 percent from 6.5 percent due to the impact of the government's 30 percent increase in minimum wages, the impact of past depreciation of the lira currency and a continued rise in food prices.
The central bank expects inflation to ease to 6 percent in 2017 and then hit 5 percent in 2018.
Earlier this month the International Monetary Fund (IMF) called on the central bank to tighten its policy stance "decisively" in order to bring inflation back to its target, a move that would help anchor inflation expectations and ease some of the pressure on the lira.
It said the higher minimum wage will raise consumption by an estimated 0.5 to 1 percent of Gross Domestic Product this year, with growth forecast between 3.5 percent and 4 percent compared with 2015 growth estimated at 3.8 percent.
The IMF's view echoes that of economists who say the central bank needs to raise rates to help bolster its credibility. Turkey's president, Tayyip Erdogan, has long called for lower rates, arguing that high rates are fueling inflation.
The lira started falling in response to the "taper tantrum" of May 2014 and fell 20 percent against the U.S. dollar in 2015. This year it has been relatively stable, quoted at 2.93 to the dollar today, largely unchanged from 2.92 at the start of the year.
In its statement, the CRBR made no reference to simplifying its interest rate structure. The CBRT said in August that it would shift to a single policy rate from its current wide corridor and lower the distance between the upper and lower rates.
However, the bank's governor Erdem Basci, whose term expires at the end of March, said last month that financial markets remain too volatile and the change in rate structure will first be considered when global uncertainties ease.
The Central Bank of the Republic of Turkey (CBRT), which lowered its key rate by 75 basis points last year, also repeated its view from January that energy prices were having a favorable affected on inflation while other cost factors were limiting the improvement in core inflation indicators.
Turkey's headline inflation rate accelerated to 9.58 percent in January from a 2015-high of 8.81 percent December, moving further away from the central bank's target of 5 percent.
It is the fifth year in a row that inflation has topped the central bank's target. Core inflation rose to 9.7 percent in December from 9.5 percent in November 2015.
Last month the CBRT raised its 2016 inflation forecast to 7.5 percent from 6.5 percent due to the impact of the government's 30 percent increase in minimum wages, the impact of past depreciation of the lira currency and a continued rise in food prices.
The central bank expects inflation to ease to 6 percent in 2017 and then hit 5 percent in 2018.
Earlier this month the International Monetary Fund (IMF) called on the central bank to tighten its policy stance "decisively" in order to bring inflation back to its target, a move that would help anchor inflation expectations and ease some of the pressure on the lira.
It said the higher minimum wage will raise consumption by an estimated 0.5 to 1 percent of Gross Domestic Product this year, with growth forecast between 3.5 percent and 4 percent compared with 2015 growth estimated at 3.8 percent.
The IMF's view echoes that of economists who say the central bank needs to raise rates to help bolster its credibility. Turkey's president, Tayyip Erdogan, has long called for lower rates, arguing that high rates are fueling inflation.
The lira started falling in response to the "taper tantrum" of May 2014 and fell 20 percent against the U.S. dollar in 2015. This year it has been relatively stable, quoted at 2.93 to the dollar today, largely unchanged from 2.92 at the start of the year.
In its statement, the CRBR made no reference to simplifying its interest rate structure. The CBRT said in August that it would shift to a single policy rate from its current wide corridor and lower the distance between the upper and lower rates.
However, the bank's governor Erdem Basci, whose term expires at the end of March, said last month that financial markets remain too volatile and the change in rate structure will first be considered when global uncertainties ease.
Monday, February 22, 2016
Israel hold rate, accommodative for considerable time
Israel's central bank maintained its key interest rate at 0.1 percent and confirmed its guidance that "monetary policy will remain accommodative for a considerable time" in light of inflation, domestic and global economic growth, the exchange rate of the shekel and the monetary policy of major central banks.
The Bank of Israel (BOI), which cut its rate by 15 basis points in 2015, also said the risks to meeting its inflation target and economic growth remain high, a slight change to its statement from January when it said the risks to achieving its inflation target had increased.
It added that interest rates as reflected in the Tel Aviv Interbank Offered Rate (Telbor) are currently mostly below the BOI's key rate and private forecasters now on average expect some decline in the rate in the next three months before rising in about a year.
Israel's inflation rate was minus 0.6 percent in January, slightly up from minus 1.0 percent in December with inflation expectations derived from capital markets negative 0.2 percent one year ahead and expectations based on bank's internal rates negative 0.4 percent, up from 0.3 percent last month, the BOI said.
The BOI, which targets inflation of 1-3 percent, said inflation excluding energy and administrative price reductions in January was 0.7 percent.
The exchange rate of the shekel has been relatively stable in recent months following a sharp fall from July 2014 through March 2015. Since the last monetary meeting of the BOI on Jan. 24, the shekel has appreciated by 1.5 percent against the U.S. dollar and was trading at 3.9 to the dollar today, largely unchanged since the start of this year.
Economic growth in the fourth quarter of last year is expected to have accelerated somewhat from the third quarter, the BOI said, with first estimates showing Gross Domestic Product growth of 3.3 percent, up from 2.52 percent in the third quarter.
Buoyed by higher vehicle imports, private consumption rose by 5.8 percent in the fourth quarter, fixed capital formation (excluding ships and aircraft) was up by 5.5 percent and civilian imports (excluding ships, aircraft and diamonds) was up by 28.4 percent.
The Bank of Israel (BOI), which cut its rate by 15 basis points in 2015, also said the risks to meeting its inflation target and economic growth remain high, a slight change to its statement from January when it said the risks to achieving its inflation target had increased.
It added that interest rates as reflected in the Tel Aviv Interbank Offered Rate (Telbor) are currently mostly below the BOI's key rate and private forecasters now on average expect some decline in the rate in the next three months before rising in about a year.
Israel's inflation rate was minus 0.6 percent in January, slightly up from minus 1.0 percent in December with inflation expectations derived from capital markets negative 0.2 percent one year ahead and expectations based on bank's internal rates negative 0.4 percent, up from 0.3 percent last month, the BOI said.
The BOI, which targets inflation of 1-3 percent, said inflation excluding energy and administrative price reductions in January was 0.7 percent.
The exchange rate of the shekel has been relatively stable in recent months following a sharp fall from July 2014 through March 2015. Since the last monetary meeting of the BOI on Jan. 24, the shekel has appreciated by 1.5 percent against the U.S. dollar and was trading at 3.9 to the dollar today, largely unchanged since the start of this year.
Economic growth in the fourth quarter of last year is expected to have accelerated somewhat from the third quarter, the BOI said, with first estimates showing Gross Domestic Product growth of 3.3 percent, up from 2.52 percent in the third quarter.
Buoyed by higher vehicle imports, private consumption rose by 5.8 percent in the fourth quarter, fixed capital formation (excluding ships and aircraft) was up by 5.5 percent and civilian imports (excluding ships, aircraft and diamonds) was up by 28.4 percent.
Sunday, February 21, 2016
This week in monetary policy: Israel, Turkey, Hungary, Paraguay, Moldova and Fiji
This week (February 22 through February 27) central banks from six countries or
jurisdictions are scheduled to decide on monetary policy: Israel, Turkey, Hungary, Paraguay, Moldova and Fiji.
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 8 | ||||||
| FEB 22-FEB 27, 2016: | ||||||
| COUNTRY | DATE | RATE | LATEST | YTD | 1 YR AGO | MSCI |
| ISRAEL | 22-Feb | 0.10% | 0 | 0 | 0.10% | DM |
| TURKEY | 23-Feb | 7.50% | 0 | 0 | 7.50% | EM |
| HUNGARY | 23-Feb | 1.35% | 0 | 0 | 2.10% | EM |
| PARAGUAY | 24-Feb | 6.00% | 25 | 25 | 6.75% | |
| MOLDOVA | 25-Feb | 19.50% | 0 | 0 | 13.50% | |
| FIJI | 25-Feb | 0.50% | 0 | 0 | 0.50% |
Friday, February 19, 2016
Sri Lanka raises rate 50 bps in pre-emptive move
Sri Lanka's central bank raised its key interest rates by 50 basis points, saying the "excessive growth in broad money fueled by domestic credit expansion in the midst of continued upwards trend in underlying inflation requires pre-emptive policy measures in order to contain further build-up of demand driven inflationary pressure."
The Central Bank of Sri Lanka, which cut its policy rate by 50 basis points in 2015, raised the standing deposit facility rate (SDFR) to 6.50 percent from 6.0 percent and the Standing Lending Facility Rate (SLFR) to 8.0 percent from 7.50 percent.
Although the central bank's January increase of its reserve requirement had absorbed excess rupee liquidity from the money market and market rates had moved higher, the central bank said "certain risks to macroeconomic stability continue," such as the growth in money supply.
Money supply as measured by M2 rose by an annual rate of 17.8 percent in December, 2015 compared with 13.4 percent in December 2014 as the growth in credit granted to the private sector by banks accelerated to 25.1 percent in December last year form 8.8 percent in December 2014.
Sri Lanka's headline inflation rate eased to 0.9 percent in January from 2.8 percent in December, reflecting the low international commodity prices, favorable supply of domestic factors and the comparison with a relatively high base in January 2015, the central bank said.
Core inflation rose to 4.6 percent in January from 4.5 percent in December 2015 and 0.8 percent February 2015.
The Central Bank of Sri Lanka, which cut its policy rate by 50 basis points in 2015, raised the standing deposit facility rate (SDFR) to 6.50 percent from 6.0 percent and the Standing Lending Facility Rate (SLFR) to 8.0 percent from 7.50 percent.
Although the central bank's January increase of its reserve requirement had absorbed excess rupee liquidity from the money market and market rates had moved higher, the central bank said "certain risks to macroeconomic stability continue," such as the growth in money supply.
Money supply as measured by M2 rose by an annual rate of 17.8 percent in December, 2015 compared with 13.4 percent in December 2014 as the growth in credit granted to the private sector by banks accelerated to 25.1 percent in December last year form 8.8 percent in December 2014.
Sri Lanka's headline inflation rate eased to 0.9 percent in January from 2.8 percent in December, reflecting the low international commodity prices, favorable supply of domestic factors and the comparison with a relatively high base in January 2015, the central bank said.
Core inflation rose to 4.6 percent in January from 4.5 percent in December 2015 and 0.8 percent February 2015.
Colombia raises rate 6th month in row as inflation jumps
Colombia's central bank raised its policy rate for the sixth month in a row, as expected, and said it would be "particularly attentive to the behavior of inflation and its expectations in order to ensure convergence of inflation to its target in 2017."
The Central Bank of Colombia raised its policy rate by another 25 basis points to 6.25 percent and has now raised it by 175 points since embarking on a tightening cycle in September 2015 to push down inflation to its target of 3.0 percent, plus/minus 1 percentage point.
The central bank said pressure on inflation remains to the upside from higher-than-expected food prices and the fall in the peso's exchange rate from the fall in oil prices.
"Inflation expectations remain high and an additional pass-through of the devaluation of the peso to domestic prices is foreseeable," the bank said, signaling that it is likely to raise rates further.
However, the central bank also said that cuts in public spending and the firm commitment of the government to submit a structural tax reform this year would help ease the current account deficit and inflationary pressures.
Earlier today Colombia's finance minister said the government would cut 6 trillion pesos from its spending in response to the decline in oil-related revenue with the aim of reducing the deficit to 3.6 percent.
Standard & Poor's this week lowered its credit rating outlook on Colombia to negative, citing the current account deficit, which was 3.3 percent of Gross Domestic Product in 2014 and estimated to have risen to 6 percent.
Colombia's inflation rate jumped to a higher-than-expected 7.45 percent in January with expectations one to two-years ahead at 4.5 and 3.7 percent, respectively.
Although the central bank considers the rise in food prices and the depreciation of the peso as temporary shocks, it said the magnitude of the depreciation and the intensity of the El Nino weather patterns had raised the risk that inflation would be slower to converge to its inflation target as it would impact expectation and trigger higher prices through index mechanisms.
The peso has been falling since mid-2014, when crude oil prices started to decline, and fell by 25 percent against the U.S. dollar in 2015. Today it was trading at 3,355.6 to the dollar, down 5.4 percent since the start of this year.
Colombia's economy expanded by an annual rate of 3.2 percent in the third quarter of last year and the central bank said growth in the fourth quarter was similar to the third quarter, with growth for the full year seen at 3.0 percent, the same growth rate as the central bank estimated in January.
For this year, the central bank confirmed its forecast for 2.7 percent growth - within a range of 1.5 to 3.2 percent.
The Central Bank of Colombia raised its policy rate by another 25 basis points to 6.25 percent and has now raised it by 175 points since embarking on a tightening cycle in September 2015 to push down inflation to its target of 3.0 percent, plus/minus 1 percentage point.
The central bank said pressure on inflation remains to the upside from higher-than-expected food prices and the fall in the peso's exchange rate from the fall in oil prices.
"Inflation expectations remain high and an additional pass-through of the devaluation of the peso to domestic prices is foreseeable," the bank said, signaling that it is likely to raise rates further.
However, the central bank also said that cuts in public spending and the firm commitment of the government to submit a structural tax reform this year would help ease the current account deficit and inflationary pressures.
Earlier today Colombia's finance minister said the government would cut 6 trillion pesos from its spending in response to the decline in oil-related revenue with the aim of reducing the deficit to 3.6 percent.
Standard & Poor's this week lowered its credit rating outlook on Colombia to negative, citing the current account deficit, which was 3.3 percent of Gross Domestic Product in 2014 and estimated to have risen to 6 percent.
Colombia's inflation rate jumped to a higher-than-expected 7.45 percent in January with expectations one to two-years ahead at 4.5 and 3.7 percent, respectively.
Although the central bank considers the rise in food prices and the depreciation of the peso as temporary shocks, it said the magnitude of the depreciation and the intensity of the El Nino weather patterns had raised the risk that inflation would be slower to converge to its inflation target as it would impact expectation and trigger higher prices through index mechanisms.
The peso has been falling since mid-2014, when crude oil prices started to decline, and fell by 25 percent against the U.S. dollar in 2015. Today it was trading at 3,355.6 to the dollar, down 5.4 percent since the start of this year.
Colombia's economy expanded by an annual rate of 3.2 percent in the third quarter of last year and the central bank said growth in the fourth quarter was similar to the third quarter, with growth for the full year seen at 3.0 percent, the same growth rate as the central bank estimated in January.
For this year, the central bank confirmed its forecast for 2.7 percent growth - within a range of 1.5 to 3.2 percent.
Thursday, February 18, 2016
Indonesia cuts rate for 2nd time in 2016 to boost growth
Indonesia's central bank cut its key interest rates for the second time in a row, a move that was expected by many, along with the reserve requirement for banks in a move to boost economic growth while inflationary pressures are easing and the exchange rate of the rupiah currency has been rising.
Bank Indonesia (BI) cut its benchmark BI rate by another 25 basis points to 7.0 percent and the deposit facility rate - known as Faspi - and the lending facility rate by the same amount to 5.0 percent and 7.50 percent, respectively.
The primary reserve requirement on rupiah deposits was lowered by 100 basis points to 6.5 percent, effective from March 16.
BI did not issue a specific guidance though it said recent government deregulation had given it "greater room to ease monetary policy while maintaining macroeconomic stability" in 2016.
In January the BI also cut its rate by 25 basis points and it has now cut the rate by a total of 75 points since November 2014, including a 25 point cut in February 2015.
"The dual policy of lowering the BI rate and primary reserve requirement is expected to strengthen efforts to boost the ongoing economic growth," BI said.
Expectations that BI would cut its rate today firmed following data that showed a larger-than-expected 21 percent plunge in Indonesia's exports in January, the 16th month of decline, while a 17 percent fall in imports also topped forecasts.
Indonesia's economy shrank by 1.83 percent in the fourth quarter from the third quarter but on an annual basis Gross Domestic Product rose by 5.04 percent, up from 4.74 percent, supported by government spending on infrastructure.
But personal consumption and non-construction investment is sluggish, BI said, adding that the slump in exports is persisting in line with the global economic slowdown and falling commodity prices.
For 2016 BI is expecting growth of 5.2 to 5.6 percent, up from 2015's 4.8 percent, with activity supported by fiscal stimulus in the form of accelerated infrastructure project development while private investment is expected to improve after government deregulation and the greater room to ease monetary policy.
Inflation in Indonesia fell in the last four months of 2015 but rose to 4.14 percent in January from December's 3.35 percent but low oil prices are expected to restrain any inflationary pressures and the BI confirmed that it expects inflation in 2016 to remain in the middle of its target range of 4.0 percent, plus/minus 1 percentage point.
The rupiah fell out of favor with investors last year, dropping almost 10 percent against the U.S. dollar but this year it has been on a firmer trend, with BI attributing this to foreign capital inflows as uncertainty eased on global financial markets and confidence in the domestic economy was restored following the government's move to improve the investment climate and begin infrastructure projects.
BI also said a more "dovish" outlook for the U.S. federal funds rate, with expectations for further hikes pushed back until the second half of this year and the size of these increases now smaller, also drove an appreciation of the rupiah.
The rupiah was trading at 13,490 to the dollar today, up 2.3 percent from the start of the year.
Bank Indonesia (BI) cut its benchmark BI rate by another 25 basis points to 7.0 percent and the deposit facility rate - known as Faspi - and the lending facility rate by the same amount to 5.0 percent and 7.50 percent, respectively.
The primary reserve requirement on rupiah deposits was lowered by 100 basis points to 6.5 percent, effective from March 16.
BI did not issue a specific guidance though it said recent government deregulation had given it "greater room to ease monetary policy while maintaining macroeconomic stability" in 2016.
In January the BI also cut its rate by 25 basis points and it has now cut the rate by a total of 75 points since November 2014, including a 25 point cut in February 2015.
"The dual policy of lowering the BI rate and primary reserve requirement is expected to strengthen efforts to boost the ongoing economic growth," BI said.
Expectations that BI would cut its rate today firmed following data that showed a larger-than-expected 21 percent plunge in Indonesia's exports in January, the 16th month of decline, while a 17 percent fall in imports also topped forecasts.
Indonesia's economy shrank by 1.83 percent in the fourth quarter from the third quarter but on an annual basis Gross Domestic Product rose by 5.04 percent, up from 4.74 percent, supported by government spending on infrastructure.
But personal consumption and non-construction investment is sluggish, BI said, adding that the slump in exports is persisting in line with the global economic slowdown and falling commodity prices.
For 2016 BI is expecting growth of 5.2 to 5.6 percent, up from 2015's 4.8 percent, with activity supported by fiscal stimulus in the form of accelerated infrastructure project development while private investment is expected to improve after government deregulation and the greater room to ease monetary policy.
Inflation in Indonesia fell in the last four months of 2015 but rose to 4.14 percent in January from December's 3.35 percent but low oil prices are expected to restrain any inflationary pressures and the BI confirmed that it expects inflation in 2016 to remain in the middle of its target range of 4.0 percent, plus/minus 1 percentage point.
The rupiah fell out of favor with investors last year, dropping almost 10 percent against the U.S. dollar but this year it has been on a firmer trend, with BI attributing this to foreign capital inflows as uncertainty eased on global financial markets and confidence in the domestic economy was restored following the government's move to improve the investment climate and begin infrastructure projects.
BI also said a more "dovish" outlook for the U.S. federal funds rate, with expectations for further hikes pushed back until the second half of this year and the size of these increases now smaller, also drove an appreciation of the rupiah.
The rupiah was trading at 13,490 to the dollar today, up 2.3 percent from the start of the year.
Wednesday, February 17, 2016
Mexico raises rate 50 bps in surprise move
Mexico's central bank raised its benchmark target for the overnight interest rate by 50 basis points to 3.75 percent at an extraordinary board meeting in response to the depreciation of the peso and the likely rise in inflation expectations in excess of its 3.0 percent target.
The Bank of Mexico, which in December raised its rate by 25 basis points in the wake of the U.S. Federal Reserve's first rate hike since July 2006, said today's rate rise did not herald the beginning of a monetary tightening cycle though it would closely monitor inflation and inflation expectations along with the exchange rate and its possible transfer to consumer prices.
At its last meeting on Feb. 4, the bank's board of governors left its rate steady as it expected inflation to converge to its target but also warned that the economic situation had changed in an unfavorable manner and risks had risen.
Economists viewed the central bank's statement as a sign it could raise rates if the peso continued to decline.
Since this meeting, volatility in financial markets has increased and the external environment facing Mexico has continued to deteriorate, the bank said, noting that the continued fall in oil prices had affected public finances and the current account, which has hit the peso's exchange rate.
The peso has been falling since mid-2014 and was trading at 18.9 to the U.S. dollar earlier today, down 22.2 percent since the start of 2015 and 9 percent since the start of 2016. On Feb. 11 the peso hit an all-time low of 19.3 to the dollar.
After the rate hike was announced, the peso rose to 18.3 to the dollar and the central bank was reported to have sold dollars.
Earlier today the Mexican government announced plans to reduce spending by 132.3 billion pesos, including 100 billion that will be cut by state-owned oil company Petroleos Mexicanos, better known as Pemex.
The central bank said its rate hike was taken with the knowledge of the Federal government's decision to strengthen its finances and its board deemed its "appropriate to contribute to strengthening economic fundaments of the country in its area of responsibility."
Earlier this month the central bank's governor, Agustin Carstens, forecast economic growth of slightly more than 2.5 percent this year, about the same as in 2015 according to preliminary data.
Mexico's headline inflation rate rose to 2.61 percent in January from 2.13 percent in December.
www.CentralBankNews.info
The Bank of Mexico, which in December raised its rate by 25 basis points in the wake of the U.S. Federal Reserve's first rate hike since July 2006, said today's rate rise did not herald the beginning of a monetary tightening cycle though it would closely monitor inflation and inflation expectations along with the exchange rate and its possible transfer to consumer prices.
At its last meeting on Feb. 4, the bank's board of governors left its rate steady as it expected inflation to converge to its target but also warned that the economic situation had changed in an unfavorable manner and risks had risen.
Economists viewed the central bank's statement as a sign it could raise rates if the peso continued to decline.
Since this meeting, volatility in financial markets has increased and the external environment facing Mexico has continued to deteriorate, the bank said, noting that the continued fall in oil prices had affected public finances and the current account, which has hit the peso's exchange rate.
The peso has been falling since mid-2014 and was trading at 18.9 to the U.S. dollar earlier today, down 22.2 percent since the start of 2015 and 9 percent since the start of 2016. On Feb. 11 the peso hit an all-time low of 19.3 to the dollar.
After the rate hike was announced, the peso rose to 18.3 to the dollar and the central bank was reported to have sold dollars.
Earlier today the Mexican government announced plans to reduce spending by 132.3 billion pesos, including 100 billion that will be cut by state-owned oil company Petroleos Mexicanos, better known as Pemex.
The central bank said its rate hike was taken with the knowledge of the Federal government's decision to strengthen its finances and its board deemed its "appropriate to contribute to strengthening economic fundaments of the country in its area of responsibility."
Earlier this month the central bank's governor, Agustin Carstens, forecast economic growth of slightly more than 2.5 percent this year, about the same as in 2015 according to preliminary data.
Mexico's headline inflation rate rose to 2.61 percent in January from 2.13 percent in December.
www.CentralBankNews.info
Armenia cuts rate 25 bps and sees further easing
Armenia's central bank cut its benchmark refinancing rate by a 25 basis points to 8.50 percent and expects to ease its policy further as inflationary expectations remain high while the trend toward lower inflation is expected to continue in coming months.
The Central Bank of Armenia (CBA), which has now cut its rate by 200 basis points since embarking on an easing cycle in August 2015, said on Feb. 16 that the low level of inflation is almost entirely due to the fall in commodity prices and the deflationary impact from the foreign sector on domestic prices, and its board estimates that this trend will continue.
In December 2015, when the CBA cut its rate by 100 basis points, the central bank said it believed that it had now largely overcome the inflationary risks from the last year and expected to ease its policy further in the absence of any external or internal risks.
Armenia's headline inflation rate dropped to minus 0.4 percent in January from minus 0.1 percent in December while the depreciation of the dram currency continued.
Following a plunge in the dram's exchange rate in November and December 2014 in response to the drop in Russia's ruble - Armenia's largest trading partner - the central bank raised rates three times by a total of 375 basis points from December 2014 to February 2015.
This helped stabilize the dram and it only depreciated by 1.8 percent against the U.S. dollar in 2015 compared with its 14.7 percent fall in 2014.
This year it has continued to ease and was trading at 496.1 to the dollar today, down 2.1 percent since the beginning of the year, with local press reporting on Feb. 5 that the central bank had spent US$29 million in intervening in the domestic currency market to support the dram's exchange rate.
Armenia's economy is estimated to have expanded 3.2 percent in 2015, helped by agriculture and mining, but the CBA said domestic demand remains weak despite "years of government and central bank stimulus policies."
www.CentralBankNews.info
The Central Bank of Armenia (CBA), which has now cut its rate by 200 basis points since embarking on an easing cycle in August 2015, said on Feb. 16 that the low level of inflation is almost entirely due to the fall in commodity prices and the deflationary impact from the foreign sector on domestic prices, and its board estimates that this trend will continue.
In December 2015, when the CBA cut its rate by 100 basis points, the central bank said it believed that it had now largely overcome the inflationary risks from the last year and expected to ease its policy further in the absence of any external or internal risks.
Armenia's headline inflation rate dropped to minus 0.4 percent in January from minus 0.1 percent in December while the depreciation of the dram currency continued.
Following a plunge in the dram's exchange rate in November and December 2014 in response to the drop in Russia's ruble - Armenia's largest trading partner - the central bank raised rates three times by a total of 375 basis points from December 2014 to February 2015.
This helped stabilize the dram and it only depreciated by 1.8 percent against the U.S. dollar in 2015 compared with its 14.7 percent fall in 2014.
This year it has continued to ease and was trading at 496.1 to the dollar today, down 2.1 percent since the beginning of the year, with local press reporting on Feb. 5 that the central bank had spent US$29 million in intervening in the domestic currency market to support the dram's exchange rate.
Armenia's economy is estimated to have expanded 3.2 percent in 2015, helped by agriculture and mining, but the CBA said domestic demand remains weak despite "years of government and central bank stimulus policies."
www.CentralBankNews.info
Mauritius holds rate on low inflation but excess liquidity
The central bank of Mauritius left its benchmark repo rate unchanged at 4.40 percent, saying it expects inflation to remain "quite low" but added that its monetary policy committee had taken note of "the evolution of excess liquidity in the banking system."
The Bank of Mauritius, which cut its rate by 25 basis points in November last year in the first change in rates since June 2013, also said members of its MPC had discussed maintaining the rate or reducing it but a majority had decided to keep the rate steady.
In November the MPC was unanimous in its decision to cut the rate to provide further stimulus to domestic growth as inflation didn't pose any serious risks and was expected to remain low.
Since the meeting in November, the central bank said inflation had continued to decline due to low commodity prices and persistent economic slack and forecast inflation of around 2.3 percent in 2016.
In November the bank's staff had forecast inflation of around 3.0 percent for 2016 and 3.3 percent by the end of the year.
Headline inflation in Mauritius - and island nation in the Indian Ocean off the coast of Africa - eased to 0.4 percent in January from 1.3 percent in December, continuing its decline from 1.7 percent in June 2015.
CORE2 inflation, which excludes energy prices, mortgages and administered prices from the consumer basket in addition to food, beverages and tobacco, rose by 3.5 percent in January from 2.3 percent in December and 0.8 percent in January 2015.
The economy of Mauritius expanded by an estimated 3.4 percent in 2015 but is still operating below its potential level, mainly due to sluggish investment, the bank said.
The bank's staff is forecasting Gross Domestic Product growth of 3.8 percent in 2016, below its November forecast of 4.2 percent.
The Bank of Mauritius, which cut its rate by 25 basis points in November last year in the first change in rates since June 2013, also said members of its MPC had discussed maintaining the rate or reducing it but a majority had decided to keep the rate steady.
In November the MPC was unanimous in its decision to cut the rate to provide further stimulus to domestic growth as inflation didn't pose any serious risks and was expected to remain low.
Since the meeting in November, the central bank said inflation had continued to decline due to low commodity prices and persistent economic slack and forecast inflation of around 2.3 percent in 2016.
In November the bank's staff had forecast inflation of around 3.0 percent for 2016 and 3.3 percent by the end of the year.
Headline inflation in Mauritius - and island nation in the Indian Ocean off the coast of Africa - eased to 0.4 percent in January from 1.3 percent in December, continuing its decline from 1.7 percent in June 2015.
CORE2 inflation, which excludes energy prices, mortgages and administered prices from the consumer basket in addition to food, beverages and tobacco, rose by 3.5 percent in January from 2.3 percent in December and 0.8 percent in January 2015.
The economy of Mauritius expanded by an estimated 3.4 percent in 2015 but is still operating below its potential level, mainly due to sluggish investment, the bank said.
The bank's staff is forecasting Gross Domestic Product growth of 3.8 percent in 2016, below its November forecast of 4.2 percent.
Namibia raises rate 25 bps to avoid capital outflows
Namibia's central bank raised its benchmark repo rate by 25 basis points to 6.75 percent to align interest rates with those of South Africa, with the bank saying this "decision was necessary to avoid possible capital outflows, which could put pressure on the country's reserves."
The Bank of Namibia, which raised its rate by 50 basis points in 2015, added that its monetary policy committee welcomed the continued slowdown in the growth of installment credit but also expressed its concern over the recent "significant increases" in other loans and advances.
Namibia, South Africa, Lesotho and Swaziland are part of the Common Monetary Area (CMA) that was formed in 1986, with the Namibian dollar exchanged at par with the South African rand.
Economists had expected Namibia's central bank to raise its rate following the South African Reserve Bank's 50-basis point rate hike on Jan. 28 to 6.75 percent in response to a deteriorating outlook from inflation, mainly from a depreciation of its rand.
At its last meeting in December, Namibia's central bank had noted the downward trend in installment credit, with growth in Private Sector Credit Extension (PSCE) growing by 15.3 percent in 2015 as compared to 15.7 percent in 2014 and installment credit to individuals slowing to 14.1 percent in December from a high of 23.5 percent in February last year.
However, the central bank added that growth in other loans and advances had risen to 20.9 percent in December from 17.5 percent.
"Although the annual inflation rate remained low and stable in 2015, it rose in January 2016 and is expected to rise further for the most part of 2016," the central bank said.
Namibia's inflation rate jumped to 5.3 percent in January from 3.7 percent in December, with the depreciation of the Namibian dollar against the U.S. dollar somewhat reversing the downward pressure on inflation from low international oil prices. The country's average inflation rate for 2015 eased to 3.4 percent from 5.4 percent in 2014.
Namibia's dollar depreciated by 25 percent against the U.S. dollar in 2015 but since Jan. 20 it has been appreciating and rose further in response to today's rate hike. The NAD was trading at 15.66 to the U.S. dollar, slightly down from 15.5 at the start of the year but up 7.2 percent from Jan. 20.
"The stock of international reserves remain sufficient to sustain the one-to-one link of the Namibia dollar to the South African Rand," the central bank said, noting reserves of N$27.4 billion as of Feb. 11 compared with N$23.0 in December for the equivalent of 5.8 times currency in circulation and enough for 3.5 months of imports.
Namibia's economy slowed in 2015 in response to a decline in the mining sector and a reduction in agricultural output due to drought. Namibia is the world's largest producer of offshore diamonds and a major producer of uranium.
In the third quarter of 2015 growth in Gross Domestic Product eased to an annual 3.5 percent from 6.0 percent the preceding two quarters and the central bank forecast 2016 growth of 4.3 percent from an estimated 4.5 percent last year.
The central bank is looking for good growth across all industries, but noted the risks from soft commodity prices, drought and a slow recovery of its trading partners.
www.CentralBankNews.info
The Bank of Namibia, which raised its rate by 50 basis points in 2015, added that its monetary policy committee welcomed the continued slowdown in the growth of installment credit but also expressed its concern over the recent "significant increases" in other loans and advances.
Namibia, South Africa, Lesotho and Swaziland are part of the Common Monetary Area (CMA) that was formed in 1986, with the Namibian dollar exchanged at par with the South African rand.
Economists had expected Namibia's central bank to raise its rate following the South African Reserve Bank's 50-basis point rate hike on Jan. 28 to 6.75 percent in response to a deteriorating outlook from inflation, mainly from a depreciation of its rand.
At its last meeting in December, Namibia's central bank had noted the downward trend in installment credit, with growth in Private Sector Credit Extension (PSCE) growing by 15.3 percent in 2015 as compared to 15.7 percent in 2014 and installment credit to individuals slowing to 14.1 percent in December from a high of 23.5 percent in February last year.
However, the central bank added that growth in other loans and advances had risen to 20.9 percent in December from 17.5 percent.
"Although the annual inflation rate remained low and stable in 2015, it rose in January 2016 and is expected to rise further for the most part of 2016," the central bank said.
Namibia's inflation rate jumped to 5.3 percent in January from 3.7 percent in December, with the depreciation of the Namibian dollar against the U.S. dollar somewhat reversing the downward pressure on inflation from low international oil prices. The country's average inflation rate for 2015 eased to 3.4 percent from 5.4 percent in 2014.
Namibia's dollar depreciated by 25 percent against the U.S. dollar in 2015 but since Jan. 20 it has been appreciating and rose further in response to today's rate hike. The NAD was trading at 15.66 to the U.S. dollar, slightly down from 15.5 at the start of the year but up 7.2 percent from Jan. 20.
"The stock of international reserves remain sufficient to sustain the one-to-one link of the Namibia dollar to the South African Rand," the central bank said, noting reserves of N$27.4 billion as of Feb. 11 compared with N$23.0 in December for the equivalent of 5.8 times currency in circulation and enough for 3.5 months of imports.
Namibia's economy slowed in 2015 in response to a decline in the mining sector and a reduction in agricultural output due to drought. Namibia is the world's largest producer of offshore diamonds and a major producer of uranium.
In the third quarter of 2015 growth in Gross Domestic Product eased to an annual 3.5 percent from 6.0 percent the preceding two quarters and the central bank forecast 2016 growth of 4.3 percent from an estimated 4.5 percent last year.
The central bank is looking for good growth across all industries, but noted the risks from soft commodity prices, drought and a slow recovery of its trading partners.
www.CentralBankNews.info
Monday, February 15, 2016
South Korea holds rate, improvement in economy falters
South Korea's central bank left its base rate steady at 1.50 percent, as widely expected, but said the "trend of improvement in the Korean economy is faltering, amid a weakening of the recovery in domestic demand while the sluggishness of exports worsens."
But the Bank of Korea (BOK), which cut its rate by 50 basis points last year, repeated its view from last month that the domestic economy will continue to recover though uncertainties surrounding the growth path have increased.
The BOK also repeated that it is closely monitoring external risks, including changes in the monetary policies of major countries, the financial and economic conditions in China, movements in capital flows, geopolitical risks and the rise in household debt.
In January the BOK lowered its 2016 growth forecast to 3.0 percent from October's forecast of 3.2 percent but at that point the central bank governor said the cut in the forecast did not warrant an easing of monetary policy.
South Korea's economy grew by an annual rate of 3.0 percent in the fourth quarter of 2015, up from 2.7 percent in the third quarter and the BOK estimated full year growth of 2.6 percent.
Consumer price inflation in South Korea eased to 0.8 percent in January from 1.3 percent in December as the impact of higher cigarette prices dropped out of the comparison. Core inflation, which excludes agricultural and petroleum products, fell to 1.7 percent from 2.4 percent.
The BOK forecasts 2016 inflation of 1.4 percent, down from its previous forecast of 1.7 percent, and below its target of 2.0 percent.
But the Bank of Korea (BOK), which cut its rate by 50 basis points last year, repeated its view from last month that the domestic economy will continue to recover though uncertainties surrounding the growth path have increased.
The BOK also repeated that it is closely monitoring external risks, including changes in the monetary policies of major countries, the financial and economic conditions in China, movements in capital flows, geopolitical risks and the rise in household debt.
In January the BOK lowered its 2016 growth forecast to 3.0 percent from October's forecast of 3.2 percent but at that point the central bank governor said the cut in the forecast did not warrant an easing of monetary policy.
South Korea's economy grew by an annual rate of 3.0 percent in the fourth quarter of 2015, up from 2.7 percent in the third quarter and the BOK estimated full year growth of 2.6 percent.
Consumer price inflation in South Korea eased to 0.8 percent in January from 1.3 percent in December as the impact of higher cigarette prices dropped out of the comparison. Core inflation, which excludes agricultural and petroleum products, fell to 1.7 percent from 2.4 percent.
The BOK forecasts 2016 inflation of 1.4 percent, down from its previous forecast of 1.7 percent, and below its target of 2.0 percent.
Azerbaijan raises rate 200 bps to boost manat confidence
Azerbaijan's central bank raised its benchmark refinancing rate by 200 basis points to 5.0 percent to strengthen confidence in the manat currency, encourage growth of domestic deposits and improve its monetary policy tools and the money market.
The Central Bank of the Republic of Azerbaijan (CBA), which cut its rate by 50 basis points in July last year, added that the lower limit of its interest rate corridor was set a 2.0 percent while the upper limit was set at 10 percent.
The CBA, which shifted to a floating exchange rate regime in 2015, added that stability in the foreign exchange rate market would be helped by banks offering more attractive rates for manat deposits and by offering local currency bonds at a higher yield.
The economy of Azerbaijan - which is located west of the Caspian Sea, north of Iran and south of Russia - has been hard hit by the fall in crude oil prices. Oil and gas account for 95 percent of the country's exports and 75 percent of government revenue.
Since 2011 the CBA had effectively pegged its manat currency to the U.S. dollar but the central bank had been drawing heavily on its reserves to defend the peg as bank depositors began converting savings into dollars in light of impact of the the fall in crude oil prices on economic activity.
On Feb. 16, 2015 the CBA abandoned that peg in favor of a dollar-euro basket. Then on Feb. 21 it devalued the manat by 33.5 percent against the dollar and by 30 percent against the euro with the manat's exchange rate set at 1.05 to the dollar.
On Dec. 21, 2015 the central bank shifted to a floating exchange rate regime to help the country's competitiveness and let the value of the manat be set by supply and demand.
Since that shift, the manat has depreciated slightly, trading at 1.588 to the dollar today, down 1.8 percent since the beginning of the year and down 51 percent since the end of 2014.
So far this month, the CBA has held seven foreign exchange auctions as part of its new regime in which it has offered $200 million in each auction, with the central bank saying it had supplied less than demand with the result that the exchange rate has strengthened "slightly."
Azerbaijan's inflation rate rose to a 2015-high of 4.0 percent in December from 3.7 percent in the previous three months.
www.CentralBankNews.info
The Central Bank of the Republic of Azerbaijan (CBA), which cut its rate by 50 basis points in July last year, added that the lower limit of its interest rate corridor was set a 2.0 percent while the upper limit was set at 10 percent.
The CBA, which shifted to a floating exchange rate regime in 2015, added that stability in the foreign exchange rate market would be helped by banks offering more attractive rates for manat deposits and by offering local currency bonds at a higher yield.
The economy of Azerbaijan - which is located west of the Caspian Sea, north of Iran and south of Russia - has been hard hit by the fall in crude oil prices. Oil and gas account for 95 percent of the country's exports and 75 percent of government revenue.
Since 2011 the CBA had effectively pegged its manat currency to the U.S. dollar but the central bank had been drawing heavily on its reserves to defend the peg as bank depositors began converting savings into dollars in light of impact of the the fall in crude oil prices on economic activity.
On Feb. 16, 2015 the CBA abandoned that peg in favor of a dollar-euro basket. Then on Feb. 21 it devalued the manat by 33.5 percent against the dollar and by 30 percent against the euro with the manat's exchange rate set at 1.05 to the dollar.
On Dec. 21, 2015 the central bank shifted to a floating exchange rate regime to help the country's competitiveness and let the value of the manat be set by supply and demand.
Since that shift, the manat has depreciated slightly, trading at 1.588 to the dollar today, down 1.8 percent since the beginning of the year and down 51 percent since the end of 2014.
So far this month, the CBA has held seven foreign exchange auctions as part of its new regime in which it has offered $200 million in each auction, with the central bank saying it had supplied less than demand with the result that the exchange rate has strengthened "slightly."
Azerbaijan's inflation rate rose to a 2015-high of 4.0 percent in December from 3.7 percent in the previous three months.
www.CentralBankNews.info
Mozambique raises rate 100 bps on inflation pressures
Mozambique's central bank raised its benchmark rate on its permanent facility for providing liquidity by 100 basis points to 10.75 percent, citing a "prevalence of pressure in the short and medium-term" on domestic inflation from reduced supply of fresh agricultural products due to drought in the southern part of the country and the impact of the depreciation of the metical.
The Bank of Mozambique, which already raised its rate by 225 basis points in 2015, added that economic growth has been below forecasts and noted the slowdown in the international economy, with the slowdown in China's economy and the continuing decline in commodity prices as the main risks facing the global economy that is also characterized by the strengthening U.S. dollar.
Mozambique's inflation rate rose further to 11.25 percent in January from a 2015 high of 10.55 percent in December.
The central bank also said it would target a monetary base of 68.163 billion meticais in February from 71.179 billion in late January.
The exchange rate of Mozambique's metical was volatile last year, reflecting shocks to the country's economy, the continued rise in the U.S. dollar, the fall in prices of the main goods exported from Mozambique and reduced foreign direct investment and foreign aid flow.
The central bank said the metical's exchange rate was 46.06 to the dollar on the interbank foreign exchange market on the last day of January for a monthly depreciation of 2.47 percent and an annual depreciation of 42.25 percent. In banks, the average exchange rate on the same day was 47.65 for a monthly depreciation of 0.74 percent and in exchange bureaux the metical was quoted at 50.89 to the dollar.
Mozambique's Gross Domestic Product expanded by an annual 5.9 percent in the third quarter of last year and the central bank estimated fourth quarter growth of 5.6 percent with business confidence as expressed by the economic climate indicators down for the fourth consecutive month in December.
www.CentralBankNews.info
The Bank of Mozambique, which already raised its rate by 225 basis points in 2015, added that economic growth has been below forecasts and noted the slowdown in the international economy, with the slowdown in China's economy and the continuing decline in commodity prices as the main risks facing the global economy that is also characterized by the strengthening U.S. dollar.
Mozambique's inflation rate rose further to 11.25 percent in January from a 2015 high of 10.55 percent in December.
The central bank also said it would target a monetary base of 68.163 billion meticais in February from 71.179 billion in late January.
The exchange rate of Mozambique's metical was volatile last year, reflecting shocks to the country's economy, the continued rise in the U.S. dollar, the fall in prices of the main goods exported from Mozambique and reduced foreign direct investment and foreign aid flow.
The central bank said the metical's exchange rate was 46.06 to the dollar on the interbank foreign exchange market on the last day of January for a monthly depreciation of 2.47 percent and an annual depreciation of 42.25 percent. In banks, the average exchange rate on the same day was 47.65 for a monthly depreciation of 0.74 percent and in exchange bureaux the metical was quoted at 50.89 to the dollar.
Mozambique's Gross Domestic Product expanded by an annual 5.9 percent in the third quarter of last year and the central bank estimated fourth quarter growth of 5.6 percent with business confidence as expressed by the economic climate indicators down for the fourth consecutive month in December.
www.CentralBankNews.info
Uganda holds rate, sees core inflation in target in 2017
Uganda's central bank left its benchmark Central Bank Rate (CBR) unchanged at 17.0 percent, saying it "believes that this monetary policy stance will curb the rise in core inflation over the next two to three quarters and then gradually bring it back to the target of 5 percent over the medium term."
The Bank of Uganda (BOU), which raised its rate by 600 basis points in 2015, said the inflation outlook had improved slightly since December due to a stability in the shilling's exchange rate and food price developments, with the impact of the El Nino weather pattern on food prices mild.
The BOU forecast that core inflation would peak at 6-9 percent in the second quarter of this year and then gradually fall back to the 5 percent target in the course of 2017. In December the BOU had forecast that core inflation would peak at 10 percent in the third quarter of 2016.
However, the central bank also pointed to "significant upside risks to this outlook," including the exchange rate and the possibility of adverse weather.
Uganda's statistics office has rebased its consumer price index to 2009/10 to reflect an expanded consumption basket and a lower share of food crops.
As a result, headline inflation in December 2015 eased to 8.4 percent from a previously reported 9.3 percent while core inflation rose to 7.6 percent from 7.4 percent.
In January 2016 headline inflation eased further to 7.6 percent while core inflation fell to 7.1 percent, but although core inflation eased in January, the BOU said the inflation rate had risen in the last three months, reflecting "persistence of underlying inflationary pressures."
Uganda's shilling started depreciating in April 2014 and fell steadily to the end of September 2015 when it hit 3,696 to the U.S. dollar, a drop of 32 percent since the start of 2014.
Since then it has been trending firmer and was trading today at 3,412 to the dollar, down 1.2 percent from 3,372 at the start of the year. Compared with the low on Sept. 30, the shilling is up 8.3 percent.
Uganda's Gross Domestic Product grew by an annual rate of 4.9 percent in the third quarter of last year, down from 7.1 percent in the second quarter, but the BOU said data indicated that growth in the fourth quarter was higher than in the third quarter and consistent with its forecast for growth of 5 percent in the financial year 2015/16, which ends June 30.
Earlier this month the central bank's governor told Reuters that the growth forecast for 2015/16 had been cut for the second time to 5 percent from 5.4 percent forecast in August.
For the 2016/17 financial year, the central bank lowered its forecast to 5.5 percent from a previous 5.8 percent, with the reduction reflecting "the current global economic weakness and volatility in the international financial markets."
www.CentralBankNews.info
The Bank of Uganda (BOU), which raised its rate by 600 basis points in 2015, said the inflation outlook had improved slightly since December due to a stability in the shilling's exchange rate and food price developments, with the impact of the El Nino weather pattern on food prices mild.
The BOU forecast that core inflation would peak at 6-9 percent in the second quarter of this year and then gradually fall back to the 5 percent target in the course of 2017. In December the BOU had forecast that core inflation would peak at 10 percent in the third quarter of 2016.
However, the central bank also pointed to "significant upside risks to this outlook," including the exchange rate and the possibility of adverse weather.
Uganda's statistics office has rebased its consumer price index to 2009/10 to reflect an expanded consumption basket and a lower share of food crops.
As a result, headline inflation in December 2015 eased to 8.4 percent from a previously reported 9.3 percent while core inflation rose to 7.6 percent from 7.4 percent.
In January 2016 headline inflation eased further to 7.6 percent while core inflation fell to 7.1 percent, but although core inflation eased in January, the BOU said the inflation rate had risen in the last three months, reflecting "persistence of underlying inflationary pressures."
Uganda's shilling started depreciating in April 2014 and fell steadily to the end of September 2015 when it hit 3,696 to the U.S. dollar, a drop of 32 percent since the start of 2014.
Since then it has been trending firmer and was trading today at 3,412 to the dollar, down 1.2 percent from 3,372 at the start of the year. Compared with the low on Sept. 30, the shilling is up 8.3 percent.
Uganda's Gross Domestic Product grew by an annual rate of 4.9 percent in the third quarter of last year, down from 7.1 percent in the second quarter, but the BOU said data indicated that growth in the fourth quarter was higher than in the third quarter and consistent with its forecast for growth of 5 percent in the financial year 2015/16, which ends June 30.
Earlier this month the central bank's governor told Reuters that the growth forecast for 2015/16 had been cut for the second time to 5 percent from 5.4 percent forecast in August.
For the 2016/17 financial year, the central bank lowered its forecast to 5.5 percent from a previous 5.8 percent, with the reduction reflecting "the current global economic weakness and volatility in the international financial markets."
www.CentralBankNews.info
Sunday, February 14, 2016
This week in monetary policy: Uganda, Mozambique, South Korea, Mauritius, Namibia, Indonesia and Colombia
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 7 | ||||||
| FEB 15-FEB 20, 2016: | ||||||
| COUNTRY | DATE | RATE | LATEST | YTD | 1 YR AGO | MSCI |
| UGANDA | 15-Feb | 17.00% | 0 | 0 | 11.00% | |
| MOZAMBIQUE | 15-Feb | 9.75% | 0 | 0 | 7.50% | |
| SOUTH KOREA | 16-Feb | 1.50% | 0 | 0 | 2.00% | EM |
| MAURITIUS | 17-Feb | 4.40% | -25 | 0 | 4.65% | FM |
| NAMIBIA | 17-Feb | 6.50% | 0 | 0 | 6.25% | |
| INDONESIA | 18-Feb | 7.25% | -25 | -25 | 7.50% | EM |
| COLOMBIA | 19-Feb | 6.00% | 25 | 25 | 4.50% | EM |
Subscribe to:
Comments (Atom)