Romania's central bank maintained its monetary policy rate at 1.75 percent, saying it expects inflation to remain negative the rest of this year and then slowly rise and return to within its target range by the second half of 2017.
The National Bank of Romania (NBR), which has left its key rate steady since May 2015, added it would cut the minimum reserve requirement ratio on banks' foreign exchange liabilities to 10 percent from 12 percent to further harmonize its standards with that of the European Central Bank (ECB).
The reserve requirement on leu-denominated liabilities remains at 8 percent.
Romania's inflation rate was minus 0.2 percent in August, up from 0.8 percent in July, as expected by the central bank. The NBR targets inflation of 2.5 percent, plus/minus 1 percentage point.
Romania's inflation rate has been pushed down by a combination of a cut in Value-Added-Tax to 20 percent from 24 percent, lower food and energy prices and weak demand and wages costs. As the impact of the VAT cut fades, inflation is expected to rise.
In its August inflation report the NBR forecast year-end inflation of 0.4 percent and 2.0 percent in 2017, with inflation seen at 1 percent this year when excluding the first-round effects of the VAT cut and 2.3 percent in 2017.
Romania's economy grew more than expected in the second quarter of this year due to higher household consumption and investment, pushing up the current account deficit, the NBR said.
Romania's Gross Domestic Product grew by an annual 6.0 percent in the second quarter, up from 3.8 percent in the first quarter.
Friday, September 30, 2016
Thursday, September 29, 2016
Mexico raises rate 50 bps, not start of tightening cycle
Mexico's central bank raised its benchmark target for the interbank overnight rate by 50 basis points to 4.75 percent, as expected by many economists, to counter inflationary pressures and anchor inflation expectations but added that this hike should not be seen as the start of a rate tightening cycle.
The Bank of Mexico, which has now raised its rate four times by a total of 175 basis points since the U.S. Federal Reserve's 25-point hike last December, added that it would closely follow all factors that determine inflation and inflation expectations, especially the transfer the peso's exchange rate to consumer prices, along with the relative monetary position to the U.S. and the economy's output gap.
The peso fell to a record low of almost 20 to the U.S. dollar earlier this week but gained back some ground following a debate between the two U.S. presidential candidates.
The peso has dropped as polls earlier this month showed that Republican candidate Donald Trump - who wants to renegotiate a trade deal with Mexico and build a wall between the two countries - had gained on his Democratic rival, Hillary Clinton.
The central bank said the peso had "showed a significant depreciation and high volatility" among emerging market currencies since its last board meeting in August and there is a risk that volatility could return to financial markets if there is nervousness about the possible implications for Mexico from the U.S. presidential election.
Today the peso was trading at 19.48 to the U.S. dollar, down 11.7 percent this year.
Mexico's inflation rate rose to 2.73 percent in August from 2.65 percent in July but the central bank said it expects inflation to slowly rise over the next few months and end the year slightly above its 3.0 percent target.
By 2017 headline and underlying inflation is seen around the inflation target though the central bank added that the short-term balance of risks to inflation have deteriorated as depreciation of the peso cannot be ruled out along with sudden increases in agricultural goods.
The balance of risks to the economy have also deteriorated, the bank said, as the growth in private consumption slowed while investment and external demand was weak and the industrial sector has remained stalled.
Mexico's Gross Domestic Product shrank by 0.2 percent in the second quarter from the first for annual growth of 2.5 percent, up from 2.4 percent in the first quarter.
www.CentralBankNews.info
The Bank of Mexico, which has now raised its rate four times by a total of 175 basis points since the U.S. Federal Reserve's 25-point hike last December, added that it would closely follow all factors that determine inflation and inflation expectations, especially the transfer the peso's exchange rate to consumer prices, along with the relative monetary position to the U.S. and the economy's output gap.
The peso fell to a record low of almost 20 to the U.S. dollar earlier this week but gained back some ground following a debate between the two U.S. presidential candidates.
The peso has dropped as polls earlier this month showed that Republican candidate Donald Trump - who wants to renegotiate a trade deal with Mexico and build a wall between the two countries - had gained on his Democratic rival, Hillary Clinton.
The central bank said the peso had "showed a significant depreciation and high volatility" among emerging market currencies since its last board meeting in August and there is a risk that volatility could return to financial markets if there is nervousness about the possible implications for Mexico from the U.S. presidential election.
Today the peso was trading at 19.48 to the U.S. dollar, down 11.7 percent this year.
Mexico's inflation rate rose to 2.73 percent in August from 2.65 percent in July but the central bank said it expects inflation to slowly rise over the next few months and end the year slightly above its 3.0 percent target.
By 2017 headline and underlying inflation is seen around the inflation target though the central bank added that the short-term balance of risks to inflation have deteriorated as depreciation of the peso cannot be ruled out along with sudden increases in agricultural goods.
The balance of risks to the economy have also deteriorated, the bank said, as the growth in private consumption slowed while investment and external demand was weak and the industrial sector has remained stalled.
Mexico's Gross Domestic Product shrank by 0.2 percent in the second quarter from the first for annual growth of 2.5 percent, up from 2.4 percent in the first quarter.
www.CentralBankNews.info
Moldova cuts rate 50 bps as inflation within target range
Moldova's central bank resumed its rate-cutting spree and lowered the base rate by a further 50 basis points to 9.50 percent, noting that inflation had now returned to its target range, as it had expected.
The National Bank of Moldova (NBM), which left its rate steady at its last meeting on Aug. 25, has now cut the rate by a total of 1,000 basis points this year as it continues to unwind rate hikes totaling 1,600 points between December 2014 and August 2015 in response to a plunge in the exchange rate of the leu and accelerating inflation.
Inflation in the Republic of Moldova, located between Ukraine and Romania, declined to 3.6 percent in August from 7.0 percent in July, within the central bank's target band of 5.0 percent, plus/minus 1.5 percentage points.
The exchange rate of Moldova's leu - which fell by 16.7 percent in 2014 and 21 percent in 2015 against the U.S. dollar - has stabilized this year.
Today the leu was trading at 19.75 to the dollar, steady from 19.70 at the start of the year.
Moldova's economy is continuing to improve, with Gross Domestic Product up by an annual rate of 1.8 percent in the second quarter, up from 0.8 percent in the first quarter, and the central bank said data for July and August shows "ongoing revival of economic activity in the third quarter."
Exports in July were up by 0.5 percent from the same month last year while industrial output was down by 5.2 percent. But in August, the annual growth of goods transported jumped by 19 percent and the volume of new loans rose by 17.3 percent and new deposits by 19.9 percent from a year ago.
The National Bank of Moldova (NBM), which left its rate steady at its last meeting on Aug. 25, has now cut the rate by a total of 1,000 basis points this year as it continues to unwind rate hikes totaling 1,600 points between December 2014 and August 2015 in response to a plunge in the exchange rate of the leu and accelerating inflation.
Inflation in the Republic of Moldova, located between Ukraine and Romania, declined to 3.6 percent in August from 7.0 percent in July, within the central bank's target band of 5.0 percent, plus/minus 1.5 percentage points.
The exchange rate of Moldova's leu - which fell by 16.7 percent in 2014 and 21 percent in 2015 against the U.S. dollar - has stabilized this year.
Today the leu was trading at 19.75 to the dollar, steady from 19.70 at the start of the year.
Moldova's economy is continuing to improve, with Gross Domestic Product up by an annual rate of 1.8 percent in the second quarter, up from 0.8 percent in the first quarter, and the central bank said data for July and August shows "ongoing revival of economic activity in the third quarter."
Exports in July were up by 0.5 percent from the same month last year while industrial output was down by 5.2 percent. But in August, the annual growth of goods transported jumped by 19 percent and the volume of new loans rose by 17.3 percent and new deposits by 19.9 percent from a year ago.
Taiwan holds rate on "renewed" economic momentum
Taiwan's central bank left its benchmark discount rate steady at 1.375 percent "against a backdrop of moderate global growth and renewed momentum for the domestic economy, along with a mild inflation outlook for next year."
The Central Bank of the Republic of China (Taiwan) (CBC), which has cut its key rate four times since September 2015 by a total of 50 basis points, forecast the inflation rate would rise slightly to 0.60 percent in the fourth quarter of this year to average 1.12 percent for 2016, slightly up from its June forecast of 1.09 percent.
Taiwan's inflation rate eased to 0.57 percent in August from 1.23 percent in July and with "no signs of strong domestic demand" and low raw materials prices the central bank said the inflation outlook for 2017 was "expected to be mild."
Taiwan's economy is improving with Gross Domestic Product returning to positive territory in the second quarter following three consecutive quarters of contraction.
The CBC said exports grew in July and August and the government's budget, accounting and statistics office forecasts growth of 2.38 percent in the fourth quarter and 1.22 percent for the full year, up from its previous forecast of 1.06 percent.
For 2017 growth is seen rising further to 1.88 percent as exports continue to improve along with a "mild" increase in private consumption and investments.
Taiwan's GDP grew by 0.15 percent in the second quarter from the first quarter for annual growth of 0.7 percent following declines of 0.29 percent, 0.89 percent and 0.8 percent, respectively, in the previous three quarters.
The central bank confirmed its policy of maintaining an "orderly" foreign exchange market in the event of "excess volatility and disorderly movements," adding that easing by major advanced economies, along with uncertainty over the U.S. Federal Reserve's rate hike, had "induced massive, erratic cross-border capital movements and increased fluctuations in the NT dollar exchange rate."
After declining from May 2015 to mid-January, the Taiwan dollar has been appreciating steadily against the U.S. dollar and was trading at 31.4 to the dollar today, up 5 percent this year.
The Central Bank of the Republic of China (Taiwan) (CBC), which has cut its key rate four times since September 2015 by a total of 50 basis points, forecast the inflation rate would rise slightly to 0.60 percent in the fourth quarter of this year to average 1.12 percent for 2016, slightly up from its June forecast of 1.09 percent.
Taiwan's inflation rate eased to 0.57 percent in August from 1.23 percent in July and with "no signs of strong domestic demand" and low raw materials prices the central bank said the inflation outlook for 2017 was "expected to be mild."
Taiwan's economy is improving with Gross Domestic Product returning to positive territory in the second quarter following three consecutive quarters of contraction.
The CBC said exports grew in July and August and the government's budget, accounting and statistics office forecasts growth of 2.38 percent in the fourth quarter and 1.22 percent for the full year, up from its previous forecast of 1.06 percent.
For 2017 growth is seen rising further to 1.88 percent as exports continue to improve along with a "mild" increase in private consumption and investments.
Taiwan's GDP grew by 0.15 percent in the second quarter from the first quarter for annual growth of 0.7 percent following declines of 0.29 percent, 0.89 percent and 0.8 percent, respectively, in the previous three quarters.
The central bank confirmed its policy of maintaining an "orderly" foreign exchange market in the event of "excess volatility and disorderly movements," adding that easing by major advanced economies, along with uncertainty over the U.S. Federal Reserve's rate hike, had "induced massive, erratic cross-border capital movements and increased fluctuations in the NT dollar exchange rate."
After declining from May 2015 to mid-January, the Taiwan dollar has been appreciating steadily against the U.S. dollar and was trading at 31.4 to the dollar today, up 5 percent this year.
Czech maintains rates, FX commitment, as expected
The central bank of the Czech Republic maintained its key rates, as expected, along with its commitment to "intervene on the foreign exchange market if needed to weaken the koruna so that the exchange rate of the koruna agains the euro is kept close to CZK 27/EUR."
The Czech National Bank (CNB) has kept a cap on the exchange rate of the koruna since November 2013 after cutting the benchmark two-week repo rate to its current level of 0.05 percent in November 2012.
The CNB has often said that it will not end the use of the exchange rate as a monetary policy instruments before 2017 and last month the new governor, Jiri Rusnok, said the board still expects to remove the cap on the koruna by the middle of next year.
Inflation in the Czech Republic rose to 0.6 percent in August, up from 0.5 percent in July, with the bank forecasting it rising to 2.4 percent by the end of 2017.
Gross Domestic Product expanded by 2.6 percent in the second quarter of this year, down from 3.0 percent in the first quarter and is seen averaging 2.4 percent this year. In 2017 growth is seen averaging 3.0 percent, down from 4.6 percent in 2015.
The koruna was trading at 27.02 to the euro today compared with 27.05 at the start of the year.
The Czech National Bank (CNB) has kept a cap on the exchange rate of the koruna since November 2013 after cutting the benchmark two-week repo rate to its current level of 0.05 percent in November 2012.
The CNB has often said that it will not end the use of the exchange rate as a monetary policy instruments before 2017 and last month the new governor, Jiri Rusnok, said the board still expects to remove the cap on the koruna by the middle of next year.
Inflation in the Czech Republic rose to 0.6 percent in August, up from 0.5 percent in July, with the bank forecasting it rising to 2.4 percent by the end of 2017.
Gross Domestic Product expanded by 2.6 percent in the second quarter of this year, down from 3.0 percent in the first quarter and is seen averaging 2.4 percent this year. In 2017 growth is seen averaging 3.0 percent, down from 4.6 percent in 2015.
The koruna was trading at 27.02 to the euro today compared with 27.05 at the start of the year.
Tuesday, September 27, 2016
Sri Lanka holds rate, money expansion seen slowing
Sri Lanka's central bank left its key rates steady, saying "adequate measures are currently in place to contain monetary expansion at levels supportive of maintaining the macroeconomic balance while facilitating economic activity."
The Central Bank of Sri Lanka said growth in broad money continued to remain high at an annual rate of 17.8 percent in July, up from 17 percent in the previous month, with growth in monetary aggregates mainly driven by credit flows to the private sector and the government.
Growth of credit to the private sector by commercial banks rose to an annual 28.5 percent in July form 28.2 percent in June but market interest rates, which have risen in response to the central bank's tightening measures, are expected to slow credit expansion in months ahead.
Last month the central bank's governor said he expected the growth in private sector credit to decelerate to 18 percent by the end of this year due to a tighter monetary policy.
The central bank has raised its two key rates, the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR), by a total of 100 basis points this year following rate hikes in February and July.
SLFR now stands at 7.0 percent and the SDRF at 8.50 percent.
Sri Lanka's inflation rate eased to 4.0 percent in August from 5.5 percent in July after it rose to 6.0 percent in June, the highest rate since October 2013, due to an increase in Value-Added-Tax to 15 percent from 11 percent to curb a rising budget deficit.
Sri Lanka's Gross Domestic Product expanded by an annual 2.6 percent in the second quarter, down from 5.2 percent in the first quarter and 7.0 percent in the second quarter of 2015.
The Central Bank of Sri Lanka said growth in broad money continued to remain high at an annual rate of 17.8 percent in July, up from 17 percent in the previous month, with growth in monetary aggregates mainly driven by credit flows to the private sector and the government.
Growth of credit to the private sector by commercial banks rose to an annual 28.5 percent in July form 28.2 percent in June but market interest rates, which have risen in response to the central bank's tightening measures, are expected to slow credit expansion in months ahead.
Last month the central bank's governor said he expected the growth in private sector credit to decelerate to 18 percent by the end of this year due to a tighter monetary policy.
The central bank has raised its two key rates, the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR), by a total of 100 basis points this year following rate hikes in February and July.
SLFR now stands at 7.0 percent and the SDRF at 8.50 percent.
Sri Lanka's inflation rate eased to 4.0 percent in August from 5.5 percent in July after it rose to 6.0 percent in June, the highest rate since October 2013, due to an increase in Value-Added-Tax to 15 percent from 11 percent to curb a rising budget deficit.
Sri Lanka's Gross Domestic Product expanded by an annual 2.6 percent in the second quarter, down from 5.2 percent in the first quarter and 7.0 percent in the second quarter of 2015.
Armenia cuts rate 50 bps, will consider further easing
Armenia's central bank lowered its benchmark refinancing rate by a further 50 basis points to 6.75 percent and said its board would consider further easing of monetary conditions in light of continuing low inflation, a significant fall in inflation expectations and low domestic demand.
But the Central Bank of Armenia (CBA) - which has cut its rate by 375 basis points since embarking on an easing cycle in August 2015, including cuts of 200 points this year alone - added that it doesn't see any risks of achieving its inflation target in the medium term despite the prevalence of short-term deflationary risks.
Armenia's inflation rate fell to minus 1.9 percent in August from minus 1.3 percent in July and the CBA said it expects inflation to remain low in September.
The CBA targets inflation in the medium term of 4.0 percent, plus/minus 1.5 points.
Data for economic activity in the third quarter show "worsening prospects of economic growth" - following "high" activity in the first half - and the central bank has revised downward expectations for domestic demand.
Armenia's dram currency has been firming since mid-February and was trading at 473.3 to the U.S. dollar today, up 3 percent since the start of this year.
www.CentralBankNews.info
But the Central Bank of Armenia (CBA) - which has cut its rate by 375 basis points since embarking on an easing cycle in August 2015, including cuts of 200 points this year alone - added that it doesn't see any risks of achieving its inflation target in the medium term despite the prevalence of short-term deflationary risks.
Armenia's inflation rate fell to minus 1.9 percent in August from minus 1.3 percent in July and the CBA said it expects inflation to remain low in September.
The CBA targets inflation in the medium term of 4.0 percent, plus/minus 1.5 points.
Data for economic activity in the third quarter show "worsening prospects of economic growth" - following "high" activity in the first half - and the central bank has revised downward expectations for domestic demand.
Armenia's dram currency has been firming since mid-February and was trading at 473.3 to the U.S. dollar today, up 3 percent since the start of this year.
www.CentralBankNews.info
Morocco maintains rate, sees 2016 inflation of 1.6%
Morocco's central bank maintained its key policy rate at 2.25 percent, saying inflation is forecast to remain in line with its objective and average 1.6 percent this year and 1.2 percent in 2017 due to "the dissipation of temporary shocks on volatile food prices which would more than offset the expected increase in core inflation."
The Bank of Morocco, which cut its rate by 25 basis points in March due to a downward revision in inflation forecasts, added that foreign exchange reserves are expected to continue to increase - though at a slower rate than expected in June due to an expected decline in foreign investment - to equal imports of around 7 months and 6 days by the end of this year and 7 months and 20 days by the end of 2017.
Morocco's inflation rate was steady at 1.6 percent in August and July.
In June the central bank forecast headline inflation in 2017 of 1.0 percent.
The exchange rate of Morocco's dirham depreciated by 0.61 percent in the second quarter, mainly due to a decline in the exchange rate against the euro, the bank said, adding that the real exchange rate fell by 0.78 percent as inflation in Morocco was lower than in partner countries.
"For the full year 2016, it is expected to rise by 1.4 percent and to decline by 0.4 percent in 2017," the central bank added.
The dirham was trading at 9.72 to the U.S. dollar today, up 2.06 percent this year.
The Bank of Morocco, which cut its rate by 25 basis points in March due to a downward revision in inflation forecasts, added that foreign exchange reserves are expected to continue to increase - though at a slower rate than expected in June due to an expected decline in foreign investment - to equal imports of around 7 months and 6 days by the end of this year and 7 months and 20 days by the end of 2017.
Morocco's inflation rate was steady at 1.6 percent in August and July.
In June the central bank forecast headline inflation in 2017 of 1.0 percent.
The exchange rate of Morocco's dirham depreciated by 0.61 percent in the second quarter, mainly due to a decline in the exchange rate against the euro, the bank said, adding that the real exchange rate fell by 0.78 percent as inflation in Morocco was lower than in partner countries.
"For the full year 2016, it is expected to rise by 1.4 percent and to decline by 0.4 percent in 2017," the central bank added.
The dirham was trading at 9.72 to the U.S. dollar today, up 2.06 percent this year.
Rwanda holds rate, sees inflation at 6% end-2016
Rwanda's central bank left its key repo rate at 6.5 percent, saying this was "in order to support the continued financing of the economy while mitigating inflationary and exchange rate pressures."
The National Bank of Rwanda, which has maintained its rate since cutting it by 50 basis points in June 2014, said inflation was projected to be around 6 percent in December as prices of fresh products are expected to ease following the start of the rainy season.
Rwanda's inflation rate eased to 6.4 percent in August from 6.9 percent in July - above the central bank's 5.0 percent target - following a rise in food prices and a higher pass-through of exchange rates to domestic prices.
Due to an increase in the exchange rate pass-through, imported inflation rose to 5.5 percent in August and 5.5 percent in July from 3.9 percent in June, the bank said.
In June the International Monetary Fund (IMF) forecast that Rwanda's consumer price inflation rate would average 2.5 percent this year, up from 1.8 percent in 2015, and rise to 4.6 percent in 4.6 percent.
Inflation end-2016 was seen by the IMF at 4.5 percent and 4.7 percent end-2017.
The exchange rate of the Rwandan franc has been steadily depreciating since 2008 and was trading at 805 to the U.S. dollar today, down 7.45 percent this year.
Last year the franc lost 7.6 percent against the dollar after a depreciation of 3.6 percent in 2014.
Rwanda is suffering a shortage of foreign exchange due to low commodity prices and in June it won an 18-month US$204 million standby facility from the IMF to boost its reserves.
The fall in commodity prices has also lead to an 2.2 percent increase in Rwanda's trade deficit in the first eight months of this year, a move that along with additional foreign exchange demand from some big projects under the public-private partnership (PPP) framework, "has put pressure on the FRW exchange rate," the central bank said.
www.CentralBankNews.info
The National Bank of Rwanda, which has maintained its rate since cutting it by 50 basis points in June 2014, said inflation was projected to be around 6 percent in December as prices of fresh products are expected to ease following the start of the rainy season.
Rwanda's inflation rate eased to 6.4 percent in August from 6.9 percent in July - above the central bank's 5.0 percent target - following a rise in food prices and a higher pass-through of exchange rates to domestic prices.
Due to an increase in the exchange rate pass-through, imported inflation rose to 5.5 percent in August and 5.5 percent in July from 3.9 percent in June, the bank said.
In June the International Monetary Fund (IMF) forecast that Rwanda's consumer price inflation rate would average 2.5 percent this year, up from 1.8 percent in 2015, and rise to 4.6 percent in 4.6 percent.
Inflation end-2016 was seen by the IMF at 4.5 percent and 4.7 percent end-2017.
The exchange rate of the Rwandan franc has been steadily depreciating since 2008 and was trading at 805 to the U.S. dollar today, down 7.45 percent this year.
Last year the franc lost 7.6 percent against the dollar after a depreciation of 3.6 percent in 2014.
Rwanda is suffering a shortage of foreign exchange due to low commodity prices and in June it won an 18-month US$204 million standby facility from the IMF to boost its reserves.
The fall in commodity prices has also lead to an 2.2 percent increase in Rwanda's trade deficit in the first eight months of this year, a move that along with additional foreign exchange demand from some big projects under the public-private partnership (PPP) framework, "has put pressure on the FRW exchange rate," the central bank said.
www.CentralBankNews.info
Kyrgyzstan holds rate, says economy improving
The central bank of the Kyrgyz Republic maintained its policy rate at 6.0 percent to help neutralize the deflationary environment and thus bring inflation back to within its target.
The National Bank of the Kyrgyz Republic (NBKR), which has cut its rate by 400 basis points this year, added that economic activity is reviving, with the economy expanding by 0.4 percent in the January-August period compared with a contraction of 1.2 percent in the January-July period.
However, manufacturing is continuing to decline, mainly due to lower output from the Kumtor gold mine, and there is still weak demand for domestic products.
Excluding output from Kumtor, data the central bank bases its monetary policy on, the economy grew by 2.1 percent in the first eight months, the NBKR said in a statement from Sept. 26.
Consumer price inflation declined to 0.5 percent in August from 1.2 percent in July but by Sept. 16, the overall price level fell by an annual 0.4 percent, the central bank said, adding that reduced domestic demand continues to limit the growth of consumer prices.
The NBKR targets inflation of 5-7 percent.
The central bank said the domestic foreign exchange market had remained stable - its policy aims to smooth any sharp fluctuations - and since the start of the year the som had risen 9.4 percent as of Sept. 23.
Today the som was trading at 68.3 to the U.S. dollar, up 11.1 percent from 75.9 at the start of the year.
www.CentralBankNews.info
The National Bank of the Kyrgyz Republic (NBKR), which has cut its rate by 400 basis points this year, added that economic activity is reviving, with the economy expanding by 0.4 percent in the January-August period compared with a contraction of 1.2 percent in the January-July period.
However, manufacturing is continuing to decline, mainly due to lower output from the Kumtor gold mine, and there is still weak demand for domestic products.
Excluding output from Kumtor, data the central bank bases its monetary policy on, the economy grew by 2.1 percent in the first eight months, the NBKR said in a statement from Sept. 26.
Consumer price inflation declined to 0.5 percent in August from 1.2 percent in July but by Sept. 16, the overall price level fell by an annual 0.4 percent, the central bank said, adding that reduced domestic demand continues to limit the growth of consumer prices.
The NBKR targets inflation of 5-7 percent.
The central bank said the domestic foreign exchange market had remained stable - its policy aims to smooth any sharp fluctuations - and since the start of the year the som had risen 9.4 percent as of Sept. 23.
Today the som was trading at 68.3 to the U.S. dollar, up 11.1 percent from 75.9 at the start of the year.
www.CentralBankNews.info
Sunday, September 25, 2016
This week in monetary policy: Israel, Kyrgyzstan, Morocco, Sri Lanka, Angola, Taiwan, Czech Rep., Moldova, Mexico, Romania, Bulgaria, Colombia, Trinidad & Tobago and Dominican Rep.
This week (September 25 through October 1) central banks from 14 countries or
jurisdictions are scheduled to decide on monetary policy: Israel, Kyrgyz Republic, Morocco, Sri Lanka, Angola, Taiwan, Czech Republic, Moldova, Mexico, Romania, Bulgaria, Colombia, Trinidad and Tobago, and the Dominican Republic.
Following table includes the name of the country, the date of the next policy
decision, the current policy rate, the result of the last policy decision, the
change in the policy rate year to date, the rate one year ago, and the
country’s MSCI classification.
The
table is updated when the latest decisions are announced and can always
accessed by clicking on This Week.
| WEEK 39 | ||||||
| SEP 25 - OCT 1, 2016: | ||||||
| COUNTRY | DATE | RATE | LATEST | YTD | 1 YR AGO | MSCI |
| ISRAEL | 26-Sep | 0.10% | 0 | 0 | 0.10% | DM |
| KYRGYZSTAN | 26-Sep | 6.00% | 0 | -400 | 10.00% | |
| MOROCCO | 27-Sep | 2.25% | 0 | -25 | 2.50% | FM |
| SRI LANKA | 28-Sep | 7.00% | 0 | 100 | 6.00% | FM |
| ANGOLA | 28-Sep | 16.00% | 200 | 500 | 10.50% | |
| TAIWAN | 29-Sep | 1.38% | -12.5 | -25 | 1.75% | EM |
| CZECH REPUBLIC | 29-Sep | 0.05% | 0 | 0 | 0.05% | EM |
| MOLDOVA | 29-Sep | 10.00% | -300 | -950 | 19.50% | |
| MEXICO | 29-Sep | 4.25% | 0 | 100 | 3.00% | EM |
| ROMANIA | 30-Sep | 1.75% | 0 | 0 | 1.75% | FM |
| BULGARIA | 30-Sep | 0.00% | 0 | -1 | 0.01% | FM |
| COLOMBIA | 30-Sep | 7.75% | 0 | 200 | 4.75% | EM |
| TRINIDAD & TOBAGO | 30-Sep | 4.75% | 0 | 0 | 4.50% | |
| DOMINICAN REP. | 30-Sep | 5.00% | 0 | 0 | 5.00% |
Saturday, September 24, 2016
Pakistan retains rate, sees rising domestic demand
Pakistan's central bank left its policy rate at 5.75 percent, saying an expected increase in domestic demand would largely determine inflation in the remaining months of fiscal 2017, which began July 1, with oil prices remaining the major risk factor
The State Bank of Pakistan (SBP), which cut its rate by 25 basis points in May, added that the country's economy had "fared well" due to a supportive economic environment, with record-high foreign exchange reserves supporting a stable exchange rate.
However, the SBB added that the current account was at risk of widening further due to declining exports and rising imports.
Pakistan's inflation rate declined to 3.56 percent in August from 4.12 percent in July, but up from 1.8 percent in August last year. In the first two months of the current fiscal year inflation was double the rate seen 12 months ago.
In fiscal 2016, which ended June 30, Pakistan's average consumer price inflation rate declined to a 47-year low of 2.9 percent while Gross Domestic Growth touched an 8-year high of 4.7 percent.
The economy is expected to expand further this year on improving industrial activity, with lower prices of inputs, low interest rates and better energy supplies seen boosting manufacturing.
The State Bank of Pakistan (SBP), which cut its rate by 25 basis points in May, added that the country's economy had "fared well" due to a supportive economic environment, with record-high foreign exchange reserves supporting a stable exchange rate.
However, the SBB added that the current account was at risk of widening further due to declining exports and rising imports.
Pakistan's inflation rate declined to 3.56 percent in August from 4.12 percent in July, but up from 1.8 percent in August last year. In the first two months of the current fiscal year inflation was double the rate seen 12 months ago.
In fiscal 2016, which ended June 30, Pakistan's average consumer price inflation rate declined to a 47-year low of 2.9 percent while Gross Domestic Growth touched an 8-year high of 4.7 percent.
The economy is expected to expand further this year on improving industrial activity, with lower prices of inputs, low interest rates and better energy supplies seen boosting manufacturing.
Thursday, September 22, 2016
Egypt leaves rate steady, says rise in inflation transitory
Egypt's central bank left its key policy rates unchanged, attributing the rise in inflation and future upside inflation risks to "transitory cost-push factors" while the demand side poses a risk to the outlook for inflation.
The Central Bank of Egypt (CBE), which has raised its rate by 250 basis points this year, left the benchmark overnight deposit rate at 11.75 percent, the overnight lending rate at 12.75 percent, and the rates on its main operation and the discount rate at 12.25 percent.
Egypt's headline inflation rate accelerated to 15.47 percent in August - its highest level since December 2008 - from 14.0 percent in the previous two months as Egypt's government implements reforms, including a cut to energy subsidies and the imposition of value-added-tax (VAT), that will help trim the budget deficit but push up prices.
In addition, the prices of fresh vegetables rose and there was a seasonal rise in the cost of meat in connection with Eid-Al-Adha while the pass-through from past exchange rate movements to domestic prices was limited.
In August the International Monetary Fund (IMF) agreed in principle to grant Egypt a $12 billion, 3-year loan to support the government's reform program and help its foreign currency shortage.
The extended fund facility is subject to final approval by the IMF executive committee and on Sunday the country's deputy finance minister was quoted as saying it was making good progress that would help release the first tranche of the loan.
The funds would help bolster Egypt's international reserves of US$16.6 billion, still about half of the levels seen before the uprising in 20111 that ousted Hosni Mubarak from power. Egypt is also planning to sell between $3 billion and $5 billion in international bonds and is in talks with China for a $4 billion loan to help finance sewage and renewable energy projects.
The central bank added that the country's economy expanded by 4.3 percent in the first nine months of the 2015/16 financial year, down from 4.8 percent in the same period a year ago, with growth driven by domestic demand from consumption while investment was weak.
The Central Bank of Egypt (CBE), which has raised its rate by 250 basis points this year, left the benchmark overnight deposit rate at 11.75 percent, the overnight lending rate at 12.75 percent, and the rates on its main operation and the discount rate at 12.25 percent.
Egypt's headline inflation rate accelerated to 15.47 percent in August - its highest level since December 2008 - from 14.0 percent in the previous two months as Egypt's government implements reforms, including a cut to energy subsidies and the imposition of value-added-tax (VAT), that will help trim the budget deficit but push up prices.
In addition, the prices of fresh vegetables rose and there was a seasonal rise in the cost of meat in connection with Eid-Al-Adha while the pass-through from past exchange rate movements to domestic prices was limited.
In August the International Monetary Fund (IMF) agreed in principle to grant Egypt a $12 billion, 3-year loan to support the government's reform program and help its foreign currency shortage.
The extended fund facility is subject to final approval by the IMF executive committee and on Sunday the country's deputy finance minister was quoted as saying it was making good progress that would help release the first tranche of the loan.
The funds would help bolster Egypt's international reserves of US$16.6 billion, still about half of the levels seen before the uprising in 20111 that ousted Hosni Mubarak from power. Egypt is also planning to sell between $3 billion and $5 billion in international bonds and is in talks with China for a $4 billion loan to help finance sewage and renewable energy projects.
The central bank added that the country's economy expanded by 4.3 percent in the first nine months of the 2015/16 financial year, down from 4.8 percent in the same period a year ago, with growth driven by domestic demand from consumption while investment was weak.
South Africa holds rate, may be ending tightening cycle
South Africa's central bank left its benchmark repurchase rate steady at 7.0 percent, as expected, citing an improvement in the outlook for inflation and a weak outlook for the economy.
Although the South African Reserve Bank (SARB) - which has raised its rate by 200 basis points since January 2014, including 75 basis points this year - is still concerned about inflation, it added that its monetary policy committee "may be close to the end of the tightening cycle" if forecasts hold.
The bank's policy committee was unanimous in its policy decision and said it considers the risks to its inflation forecast to be "more or less balanced," with the rand's exchange rate, which is currently stronger than expected, moderating risks to inflation.
However, SARB added that some of the factors helping the rand may be temporary and it remains vulnerable to domestic and external shocks.
Despite improved economic growth in the second quarter, SARB said the outlook remains constrained with the risks to its outlook broadly balanced as risks stem from global conditions, the implementation of structural reforms, business and consumer confidence.
Although the South African Reserve Bank (SARB) - which has raised its rate by 200 basis points since January 2014, including 75 basis points this year - is still concerned about inflation, it added that its monetary policy committee "may be close to the end of the tightening cycle" if forecasts hold.
The bank's policy committee was unanimous in its policy decision and said it considers the risks to its inflation forecast to be "more or less balanced," with the rand's exchange rate, which is currently stronger than expected, moderating risks to inflation.
However, SARB added that some of the factors helping the rand may be temporary and it remains vulnerable to domestic and external shocks.
Despite improved economic growth in the second quarter, SARB said the outlook remains constrained with the risks to its outlook broadly balanced as risks stem from global conditions, the implementation of structural reforms, business and consumer confidence.
South Africa's Gross Domestic Product was up by an annual 0.6 percent in the second quarter, rebounding from a 0.1 percent contraction in the first quarter.
The central bank raised its forecast for growth this year to average 0.4 percent, up from zero percent previously forecast, and the 2017 forecast to 1.2 percent from 1.1 percent. For 2018 SARB is expecting growth of 1.6 percent, up from 1.5 percent.
SARB lowered its outlook for inflation to average 6.4 percent this year, down from 6.6 percent previously forecast, with a peak of 6.7 percent being reached in the fourth quarter of this year, down from a previous forecast of a peak of 7.1 percent.
Inflation is now seen returning to SARB's 3-6 percent target range in the second quarter of 2017 and average 5.8 percent that year, down from the previous forecast of 6.0 percent. For 2018 inflation is seen declining further to an unchanged 5.5 percent.
South Africa's inflation rate eased to 5.9 percent in August from 6.0 percent in July, just below the central bank's upper limit of 6 percent.
After depreciating from mid-2011 to
January this year, the rand has trended higher on general optimism about
emerging markets but has been volatile, buffeted by domestic political turmoil.
Earlier this month Lesetja Kganyago,
SARB governor, said the dispute between the finance minster and a police unit
was creating uncertainty that wasn't "helping the rand," and he was
concerned that this volatility could feed into inflation.
Today the rand was trading at 13.48 to
the U.S. dollar, up from 16.9 seen on Jan. 17 and 15 percent higher than a rate
of 15.5 at the start of the year.
Turkey again cuts overnight rate 25 bps, retains key rate
Turkey's central bank once again lowered its overnight funding rate and late lending rates by 25 basis points while it retained its benchmark one-week repo rate as it took another "measured and cautious step toward simplification" of its monetary policy framework.
The Central Bank of the Republic of Turkey (CRT) also re-affirmed its guidance that future monetary policy decisions will depend on the outlook for inflation, and that a "cautious" policy stance will be maintained in light of inflation expectations, pricing behavior and "other factors" - viewed as a reference to the lira's exchange rate.
As expected, the CBRT cut the overnight funding rate to 8.25 percent from 8.50 percent and has now cut it by 250 basis points since March. The borrowing rate remained at 7.25 percent. The late liquidity lending rate was also cut by 25 points to 9.75 percent and the borrowing rate stayed at zero.
The benchmark one-week repo rate was left at 7.50 percent, unchanged since February 2015.
Turkey's inflation headline inflation rate eased to 8.05 percent in August from 8.79 percent in July and the central bank said slower demand and falling food prices should push down inflation.
However, a recent change in fuel taxes and other costs will limit any improvement in inflation and "thus necessitate the maintenance of a cautious monetary policy stance," the CBRT said.
In its quarterly inflation report from July, the CBRT expects inflation to stabilize around its 5.0 percent target as of 2018 after easing to an average of 7.5 percent this year and 6.0 percent in 2017.
Inflation is seen fluctuating between 6.6 percent and 8.4 percent in the rest of this year.
The latest economic data showed a declaration in economic activity, with lower tourism revenues having a negative impact although demand from Europe still supports exports.
"With the supportive measures and incentives provided recently, domestic demand is expected to recover starting from the final quarter," the CBRT said.
The number of tourists arriving in Turkey in July fell by 36.7 percent to 3.47 million from a year ago due to the failed coup attempt, terrorist attacks and tensions between Russia and Turkey.
The Central Bank of the Republic of Turkey (CRT) also re-affirmed its guidance that future monetary policy decisions will depend on the outlook for inflation, and that a "cautious" policy stance will be maintained in light of inflation expectations, pricing behavior and "other factors" - viewed as a reference to the lira's exchange rate.
As expected, the CBRT cut the overnight funding rate to 8.25 percent from 8.50 percent and has now cut it by 250 basis points since March. The borrowing rate remained at 7.25 percent. The late liquidity lending rate was also cut by 25 points to 9.75 percent and the borrowing rate stayed at zero.
The benchmark one-week repo rate was left at 7.50 percent, unchanged since February 2015.
Turkey's inflation headline inflation rate eased to 8.05 percent in August from 8.79 percent in July and the central bank said slower demand and falling food prices should push down inflation.
However, a recent change in fuel taxes and other costs will limit any improvement in inflation and "thus necessitate the maintenance of a cautious monetary policy stance," the CBRT said.
In its quarterly inflation report from July, the CBRT expects inflation to stabilize around its 5.0 percent target as of 2018 after easing to an average of 7.5 percent this year and 6.0 percent in 2017.
Inflation is seen fluctuating between 6.6 percent and 8.4 percent in the rest of this year.
The latest economic data showed a declaration in economic activity, with lower tourism revenues having a negative impact although demand from Europe still supports exports.
"With the supportive measures and incentives provided recently, domestic demand is expected to recover starting from the final quarter," the CBRT said.
The number of tourists arriving in Turkey in July fell by 36.7 percent to 3.47 million from a year ago due to the failed coup attempt, terrorist attacks and tensions between Russia and Turkey.
Indonesia cuts rate 25 bps to boost domestic demand
Indonesia's central bank cut its new benchmark 7-day reverse repo rate by 25 basis points to 5.00 percent, as expected, to provide a further boost to domestic demand and economic growth at a time of low inflation, a current account deficit that is under control and a "relatively stable" exchange rate.
Bank Indonesia (BI), which in August adopted the 7-day RR rate as its benchmark rate instead of the BI rate to improve the transmission of its monetary policy, also lowered the rate on its deposit facility by 25 points to 4.25 percent and the lending rate by 25 points to 5.75 percent.
The BI has now cut its key policy rates five times this year by a total of 125 basis points. Earlier this month the BI's governor, Agus Martowardojo, said the central bank was ready to ease its policy subject to the latest economic data.
Indonesia's inflation rate fell to 2.79 percent in August, the lowest rate since December 2009, from 3.21 percent in July, and the central bank said it now expects inflation to approach the lower limit of its target range this year.
In August the BI forecast that inflation would end this year within the target corridor of 4.0 percent, plus/minus 1 percentage point.
Indonesia's economy in the third quarter is not as strong as the central bank previously expected as non-construction investment is not showing "significant improvements' and fiscal stimulus is expected to remain limited, in line with the government's change for the second half of this year.
The BI in August lowered its growth forecast for this year to 4.9 - 5.3 percent from a previous 5.0 - 5.4 percent as the government cut its budget by 133 trillion rupiah.
www.CentralBankNews.info
Bank Indonesia (BI), which in August adopted the 7-day RR rate as its benchmark rate instead of the BI rate to improve the transmission of its monetary policy, also lowered the rate on its deposit facility by 25 points to 4.25 percent and the lending rate by 25 points to 5.75 percent.
The BI has now cut its key policy rates five times this year by a total of 125 basis points. Earlier this month the BI's governor, Agus Martowardojo, said the central bank was ready to ease its policy subject to the latest economic data.
Indonesia's inflation rate fell to 2.79 percent in August, the lowest rate since December 2009, from 3.21 percent in July, and the central bank said it now expects inflation to approach the lower limit of its target range this year.
In August the BI forecast that inflation would end this year within the target corridor of 4.0 percent, plus/minus 1 percentage point.
Indonesia's economy in the third quarter is not as strong as the central bank previously expected as non-construction investment is not showing "significant improvements' and fiscal stimulus is expected to remain limited, in line with the government's change for the second half of this year.
The BI in August lowered its growth forecast for this year to 4.9 - 5.3 percent from a previous 5.0 - 5.4 percent as the government cut its budget by 133 trillion rupiah.
www.CentralBankNews.info
Norway holds rate, raises policy rate, inflation forecasts
Norway's central bank left its key policy rate at 0.50 percent, as expected, but raised its forecast for inflation and the policy rate due to a stronger-than-expected effect of inflation from a weaker krone, which may then translate into higher wages next year.
Norges Bank (NB), which cut its rate by 25 basis points in March, said inflation had been "unexpectedly high" in recent months while there are also signs that economic growth was picking up at a slightly faster pace than projected in June while house price inflation has accelerated above expectations.
“Our current assessment of the outlook suggests that the key policy rate will most likely remain at today’s level in the period ahead,” NB Governor Oeystein Olsen said, adding that the bank's forecast still implies a slightly higher probability of a rate cut in the year ahead.
In its latest monetary policy report, the central bank raised its inflation forecast for 2016 to 3.6 percent from 3.3 percent forecast in June, the 2017 forecast to 2.6 percent from 2.2 percent, the 2018 forecast to 2.1 percent from 1.9 percent and the 2019 forecast to 1.8 percent from 1.7 percent.
Norway's inflation rate eased to 4.0 percent in August from 4.4 percent in July, mainly due to lower airfares.
NB raised its forecast for the key policy rate to average 0.6 percent this year, up from 0.5 percent, and the 2017 forecast to 0.4 percent from 0.3 percent. For 2018 the central bank also forecasts a key policy rate of 0.4 percent, rising to 0.7 percent in 2019.
The forecast for economic growth this year was raised to 0.9 percent from 0.8 percent, rising to 1.8 percent in 2017, up from 1.6 percent. For 2018 Gross Domestic Product was seen rising by an unchanged 2.1 percent while the forecast for 2019 was trimmed to 2.1 percent from 2.3 percent.
Norway's GDP grew by an annual rate of 2.5 percent in the second quarter of this year, up from 0.6 percent in the first quarter.
Norges Bank (NB), which cut its rate by 25 basis points in March, said inflation had been "unexpectedly high" in recent months while there are also signs that economic growth was picking up at a slightly faster pace than projected in June while house price inflation has accelerated above expectations.
“Our current assessment of the outlook suggests that the key policy rate will most likely remain at today’s level in the period ahead,” NB Governor Oeystein Olsen said, adding that the bank's forecast still implies a slightly higher probability of a rate cut in the year ahead.
In its latest monetary policy report, the central bank raised its inflation forecast for 2016 to 3.6 percent from 3.3 percent forecast in June, the 2017 forecast to 2.6 percent from 2.2 percent, the 2018 forecast to 2.1 percent from 1.9 percent and the 2019 forecast to 1.8 percent from 1.7 percent.
Norway's inflation rate eased to 4.0 percent in August from 4.4 percent in July, mainly due to lower airfares.
NB raised its forecast for the key policy rate to average 0.6 percent this year, up from 0.5 percent, and the 2017 forecast to 0.4 percent from 0.3 percent. For 2018 the central bank also forecasts a key policy rate of 0.4 percent, rising to 0.7 percent in 2019.
The forecast for economic growth this year was raised to 0.9 percent from 0.8 percent, rising to 1.8 percent in 2017, up from 1.6 percent. For 2018 Gross Domestic Product was seen rising by an unchanged 2.1 percent while the forecast for 2019 was trimmed to 2.1 percent from 2.3 percent.
Norway's GDP grew by an annual rate of 2.5 percent in the second quarter of this year, up from 0.6 percent in the first quarter.
Philippines holds rate, risks to inflation now to upside
The central bank of the Philippines left its benchmark overnight reverse repurchase rate (RRP) unchanged at 3.0 percent, as expected, and repeated that "increased uncertainty over prospects for growth and monetary policy action in major advanced economies warrants prudence in policy settings."
Bangko Sentral ng Pilipinas (BSP), which lowered its RRP rate by 100 basis points in June as part of shift to an interest rate corridor system, added that the balance of risks surrounding the inflation outlook "appears to be tilted to the upside" from pending petitions to changes in electricity rates along with proposed change in taxes on petroleum products.
In its August statement, the BSP described the balance of risks to inflation as "broadly balanced."
As in August, the central bank described the inflation environment as "manageable," with inflation seen slightly below the range of 3.0 percent, plus/minus 1 percentage points this year before rising toward the mid-point of its target range in 2017 and 2018.
The BSP currently forecasts average inflation of 1.8 percent for this year, 2.9 percent for 2017 and 2.6 percent for 2018.
Bangko Sentral ng Pilipinas (BSP), which lowered its RRP rate by 100 basis points in June as part of shift to an interest rate corridor system, added that the balance of risks surrounding the inflation outlook "appears to be tilted to the upside" from pending petitions to changes in electricity rates along with proposed change in taxes on petroleum products.
In its August statement, the BSP described the balance of risks to inflation as "broadly balanced."
As in August, the central bank described the inflation environment as "manageable," with inflation seen slightly below the range of 3.0 percent, plus/minus 1 percentage points this year before rising toward the mid-point of its target range in 2017 and 2018.
The BSP currently forecasts average inflation of 1.8 percent for this year, 2.9 percent for 2017 and 2.6 percent for 2018.
Wednesday, September 21, 2016
Central Bank News Link List - Sep 22: Fed keeps rates steady, signals one hike by end of year
Here's today's
Central Bank News' link list, click through if
you missed the previous link list. The list comprises news about central banks
that is not covered by Central Bank News. The list is updated during the day
with the latest developments so readers don't miss any important news.
- Fed keeps rates steady, signals one hike by end of year (Reuters)
- FOMC statement (Board of Governors of Federal Reserve System)
- FOMC economic projections (Board of Governors of Federal Reserve)
- New Zealand holds rate at 2pc, easing bias intact (Reuters)
- Analysis: BOJ actions, brillo or balmy? Mkt Undecided (MNI)
- Factbox: BOJ’s overhaul of its monetary policy framework (Reuters)
Central Bank News Link List - Sep 21: BOJ overhauls policy framework, sets yield curve target
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.
- BOJ overhauls policy framework, sets yield curve target (Reuters)
- BOJ shifts policy framework to targeting Japan's yield curve (Bloomberg)
- New framework for strengthening monetary easing (BOJ)
- BOJ's comprehensive assessment since introduction QQE (BOJ)
- Nigeria rates on hold as central bank resists political pressure (Bloomberg)
- Hungarian central bank to cap 3-month deposits at 900 bln forints (Reuters)
- Argentina central bank cuts reference rate for 8th straight week (Reuters)
- Expect lower interest rates for some time to come, Bank of Canada signals (F.P.)
- Bank of Israel to set interest rates only eight times a year (Haaretz)
- Sweden's central bank governor says problematic to buy mortgage bonds (Reuters)
- FOMC policymakers begin two-day meeting; near-term rate hike 'uncertain' (TBP)
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