Australia's central bank left its benchmark cash rate at 1.50 percent, as expected, reiterating its view from October that an unchanged rate "would be consistent with sustainable growth in the economy and achieving the inflation target over time" following rate cuts in May and August.
The Reserve Bank of Australia (RBA), which has cut its rate by a total of 50 basis points this year, once again said the lower exchange rate of the Australian dollar had been helping its exports, but added that "an appreciating exchange rate could complicate this."
The Australian dollar, which depreciated from 2013 through 2015, has been appreciating this year. Today it was quoted at 1.31 to the U.S. dollar, up 4.6 percent this year.
The RBA affirmed that Australia's economy was "growing at a moderate rate" - the same expression it has used in recent months and its forecasts were little changed from three months ago.
"Over the next year, the economy is forecast to grow at close to its potential rate, before gradually strengthening. Inflation is expected to pick up gradually over the next two years," the RBA said in a statement from its governor, Philip Lowe.
Australia's inflation rate rose to 1.3 percent in the third quarter from 1.0 percent in the second quarter while its Gross Domestic Product grew at an annual rate of 3.3 percent in the second quarter, up from 3.1 percent in the first quarter.
The RBA targets inflation of 2-3 percent.
Monday, October 31, 2016
BOJ maintains policy stance, yield curve control
The Bank of Japan (BOJ) left its monetary policy stance unchanged, essentially reiterating its statement from September in which it adopted a new policy of "yield curve control" to reach its inflation target by controlling both short-term and long-term interest rates.
The BOJ maintained its interest rate of minus 0.10 percent on banks' deposits that exceed reserve requirements and confirmed that it plans to buy 10-year government bonds so yields remain at around zero percent.
This means the BOJ will continue purchasing bonds at its current pace, around 80 trillion yen. In addition, the BOJ will purchase exchange-traded funds (ETFs) and real estate investment trusts so their outstanding amount rise by an annual pace of about 6 trillion yen and about 90 billion yen, respectively.
The BOJ will also continue purchasing commercial paper and corporate bonds at a pace of about 2.2 trillion and 3.2 trillion yen, respectively.
www.CentralBankNews.info
The BOJ maintained its interest rate of minus 0.10 percent on banks' deposits that exceed reserve requirements and confirmed that it plans to buy 10-year government bonds so yields remain at around zero percent.
This means the BOJ will continue purchasing bonds at its current pace, around 80 trillion yen. In addition, the BOJ will purchase exchange-traded funds (ETFs) and real estate investment trusts so their outstanding amount rise by an annual pace of about 6 trillion yen and about 90 billion yen, respectively.
The BOJ will also continue purchasing commercial paper and corporate bonds at a pace of about 2.2 trillion and 3.2 trillion yen, respectively.
www.CentralBankNews.info
Dominican Rep. raises rate 50 bps in preventative move
The central bank of the Dominican Republic raised its monetary policy interest rate by 50 basis points to 5.50 percent, describing this as a preventative measure that reflects the balance of risks surrounding inflation projections, market expectations, the domestic economy, expectations the U.S. Federal Reserve will raise its rate, the trend toward higher international oil prices and the uncertainty generated in international financial markets from the U.S. Presidential election.
It is the first change in policy rates by the Central Bank of the Dominican Republic (CBRD) since a rate cut in June 2015 and comes as September inflation eased to 1.35 percent from 1.47 percent in August, well below the central bank's target of 4.0 percent, plus/minus 1 percentage point.
While the central bank acknowledged that inflation remains below its target, it said this was largely due to the positive supply shock from the fall in international oil prices and comes amidst an economy that is growing above its potential.
The central bank expects the recent gradual increase in oil prices to continue, creating a potential risk that inflation will deviate from its target in 2017. In addition, higher oil prices will impact the current account, which recorded a surplus in the first quarter of this year following three consecutive quarters of deficit.
The Gross Domestic Product of the Dominican Republic grew by an annual rate of 8.7 percent in the second quarter of this year for growth of 6.9 recent in the first nine months of the year.
Current forecasts call for GDP growth of 6.5 percent this year, the highest growth rate in Latin America for the third consecutive year.
Credit to the private sector also grew at an annual rate of around 12 percent in October, above nominal GDP, and beyond what the central bank had expected in its monetary program.
www.CentralBankNews.info
It is the first change in policy rates by the Central Bank of the Dominican Republic (CBRD) since a rate cut in June 2015 and comes as September inflation eased to 1.35 percent from 1.47 percent in August, well below the central bank's target of 4.0 percent, plus/minus 1 percentage point.
While the central bank acknowledged that inflation remains below its target, it said this was largely due to the positive supply shock from the fall in international oil prices and comes amidst an economy that is growing above its potential.
The central bank expects the recent gradual increase in oil prices to continue, creating a potential risk that inflation will deviate from its target in 2017. In addition, higher oil prices will impact the current account, which recorded a surplus in the first quarter of this year following three consecutive quarters of deficit.
The Gross Domestic Product of the Dominican Republic grew by an annual rate of 8.7 percent in the second quarter of this year for growth of 6.9 recent in the first nine months of the year.
Current forecasts call for GDP growth of 6.5 percent this year, the highest growth rate in Latin America for the third consecutive year.
Credit to the private sector also grew at an annual rate of around 12 percent in October, above nominal GDP, and beyond what the central bank had expected in its monetary program.
www.CentralBankNews.info
Sri Lanka maintains rates as credit growth decelerates
Sri Lanka's central bank left its key policy rates steady, as expected by most economists, saying that credit by banks to the private sector decelerated to an annual rate of 27.3 percent in August from 28.5 percent in July as market interest rates continued to rise.
The Central Bank of Sri Lanka, which has raised its two key rates by 100 basis points this year to slow down rapid growth in credit, added that inflation also remained in single digits in October while core inflation was also subdued.
As exemplified by the pickup in inflation in May and June from a rise in Value-Added-Tax, the central bank said the Nation Building Tax (NBT) that takes effect from Nov. 1 is also expected to have a one-off impact on inflation.
Sri Lanka's headline inflation rate rose slightly to 4.2 percent in October from 3.9 percent in September and and 4.0 percent in August. In June inflation jumped to a 2016-high of 6.0 percent and eased to 5.5 percent in July following the hike in VAT to 15 percent from 11 percent.
Sri Lanka's Gross Domestic Product grew by an annual rate of 2.6 percent in the second quarter, down from 5.2 percent in the first quarter.
The rupeee has been depreciating this year and was trading at 147.9 to the U.S. dollar today, down 2.6 percent this year.
The central bank raised its two key rates, the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) in February and July.
SLFR now stands at 7.0 percent and the SDRF at 8.50 percent.
The Central Bank of Sri Lanka, which has raised its two key rates by 100 basis points this year to slow down rapid growth in credit, added that inflation also remained in single digits in October while core inflation was also subdued.
As exemplified by the pickup in inflation in May and June from a rise in Value-Added-Tax, the central bank said the Nation Building Tax (NBT) that takes effect from Nov. 1 is also expected to have a one-off impact on inflation.
Sri Lanka's headline inflation rate rose slightly to 4.2 percent in October from 3.9 percent in September and and 4.0 percent in August. In June inflation jumped to a 2016-high of 6.0 percent and eased to 5.5 percent in July following the hike in VAT to 15 percent from 11 percent.
Sri Lanka's Gross Domestic Product grew by an annual rate of 2.6 percent in the second quarter, down from 5.2 percent in the first quarter.
The rupeee has been depreciating this year and was trading at 147.9 to the U.S. dollar today, down 2.6 percent this year.
The central bank raised its two key rates, the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) in February and July.
SLFR now stands at 7.0 percent and the SDRF at 8.50 percent.
Saturday, October 29, 2016
UPDATE-This week in monetary policy: Sri Lanka, Bulgaria, Angola, Japan, Australia, USA, U.K., Czech Republic and Romania
(UPDATE - Albania on Oct. 31 changed the date of its policy report to Nov. 9)
This week (October 30 through November 5) central banks from 10 countries or jurisdictions are scheduled to decide on monetary policy: Sri Lanka, Bulgaria, Angola, Japan, Australia, Albania, United States, United Kingdom, Czech Republic and Romania.
This week (October 30 through November 5) central banks from 10 countries or jurisdictions are scheduled to decide on monetary policy: Sri Lanka, Bulgaria, Angola, Japan, Australia, Albania, United States, United Kingdom, Czech Republic and Romania.
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 44 | ||||||
| OCT 30 - NOV 5, 2016: | ||||||
| COUNTRY | DATE | RATE | LATEST | YTD | 1 YR AGO | MSCI |
| DOMINICAN REP. | 30-Oct | 5.50% | 50 | 50 | 5.00% | |
| SRI LANKA | 31-Oct | 7.00% | 0 | -100 | 6.00% | FM |
| BULGARIA | 31-Oct | 0.00% | 0 | -1 | 0.01% | FM |
| ANGOLA | 31-Oct | 16.00% | 200 | 500 | 10.50% | |
| JAPAN | 1-Nov | -0.10% | 0 | -20 | 0.10% | DM |
| AUSTRALIA | 1-Nov | 1.50% | 0 | -50 | 2.00% | DM |
| UNITED STATES | 2-Nov | 0.50% | 0 | 0 | 0.25% | DM |
| UNITED KINGDOM | 3-Nov | 0.25% | 0 | -25 | 0.50% | DM |
| CZECH REPUBLIC | 3-Nov | 0.05% | 0 | 0 | 0.05% | EM |
| ROMANIA | 4-Nov | 1.75% | 0 | 0 | 1.75% | FM |
Friday, October 28, 2016
Russia maintains rate to anchor downward inflation trend
Russia's central bank maintained its key policy rate at 10.00 percent, as it pledged in September, saying "for the trend towards inflation slowdown to become sustainable, according to Bank of Russia estimates, it is necessary to hold the current key rate throughout 2016, with its potential downgrades due in 2017 Q1-Q2."
Today's guidance by the Bank of Russia is largely identical to its statement from last month when it also said it would maintain its rate this year and first cut it next year to ensure the trend towards a "sustainable decline in inflation to strengthen."
Russia's inflation rate eased to a 2016-low of 6.2 percent as of Oct. 24, down from 6.4 percent in September and 6.9 percent in August but the central bank said this decline was "to a great extent on the back of temporary factors, while the deceleration in inflation expectations remains unsteady."
The central bank is fighting to push down inflation toward its target of 4.0 percent by the end of 2017 and by 4.5 percent by October 2017.
Inflation is being held by back a rise in the exchange rate of Russia's ruble, a good harvest that helped keep food prices in check, while the disinflationary impact of domestic demand is starting to lift, which means there will be a slower decline in non-food prices, the central bank said.
After plunging in 2014 and 2015, the ruble has risen more than the central bank expected this year and was trading at 62.9 to the U.S. dollar today, up 16.7 percent so far this year.
The central bank said its guidance from last month aimed to alter the expectations of investors and households who were looking for a faster pace of rate cuts and a slower decline in inflation that it had forecast.
The central bank's September guidance was party successful - the yield curve shifted upwards and thus maintained tight monetary conditions - but inflation expectations for late 2017 still remain above the central bank's 4.0 percent target.
The central bank said there are still risks that it may not reach its inflation target due to inflation expectations, a possible weakening of households' propensity to save and higher wages. In addition, the government has not yet decided on budget cuts nor an indexation of public sector wages and social benefits, and volatility in global financial and commodity markets could have a negative impact on the exchange rate and thus inflation expectations.
"The Bank of Russia estimates that moderately tight monetary conditions do not hinder economic recovery, with structural factors being the main restrictions,' the central bank said.
While there are signs that Russia's economy is adjusting to a new environment of low oil prices and the fall in the ruble that is resulting in import substitution and growth in some high-tech sectors, overall investment activity is "persistently weak" and several industries are stagnating or declining.
"Positive trends need time to develop and root," the central bank said, forecasting that overall output this year will decline by 0.5-0.7 percent, though the fourth quarter will witness "slight quarterly growth" and growth next year will be below 1 percent.
Russia's Gross Domestic Product shrank by an annual 0.6 percent in the second quarter of this year, down from a decline of 1.2 percent in the first quarter for the sixth consecutive quarter of contraction.
Today's guidance by the Bank of Russia is largely identical to its statement from last month when it also said it would maintain its rate this year and first cut it next year to ensure the trend towards a "sustainable decline in inflation to strengthen."
Russia's inflation rate eased to a 2016-low of 6.2 percent as of Oct. 24, down from 6.4 percent in September and 6.9 percent in August but the central bank said this decline was "to a great extent on the back of temporary factors, while the deceleration in inflation expectations remains unsteady."
The central bank is fighting to push down inflation toward its target of 4.0 percent by the end of 2017 and by 4.5 percent by October 2017.
Inflation is being held by back a rise in the exchange rate of Russia's ruble, a good harvest that helped keep food prices in check, while the disinflationary impact of domestic demand is starting to lift, which means there will be a slower decline in non-food prices, the central bank said.
After plunging in 2014 and 2015, the ruble has risen more than the central bank expected this year and was trading at 62.9 to the U.S. dollar today, up 16.7 percent so far this year.
The central bank said its guidance from last month aimed to alter the expectations of investors and households who were looking for a faster pace of rate cuts and a slower decline in inflation that it had forecast.
The central bank's September guidance was party successful - the yield curve shifted upwards and thus maintained tight monetary conditions - but inflation expectations for late 2017 still remain above the central bank's 4.0 percent target.
The central bank said there are still risks that it may not reach its inflation target due to inflation expectations, a possible weakening of households' propensity to save and higher wages. In addition, the government has not yet decided on budget cuts nor an indexation of public sector wages and social benefits, and volatility in global financial and commodity markets could have a negative impact on the exchange rate and thus inflation expectations.
"The Bank of Russia estimates that moderately tight monetary conditions do not hinder economic recovery, with structural factors being the main restrictions,' the central bank said.
While there are signs that Russia's economy is adjusting to a new environment of low oil prices and the fall in the ruble that is resulting in import substitution and growth in some high-tech sectors, overall investment activity is "persistently weak" and several industries are stagnating or declining.
"Positive trends need time to develop and root," the central bank said, forecasting that overall output this year will decline by 0.5-0.7 percent, though the fourth quarter will witness "slight quarterly growth" and growth next year will be below 1 percent.
Russia's Gross Domestic Product shrank by an annual 0.6 percent in the second quarter of this year, down from a decline of 1.2 percent in the first quarter for the sixth consecutive quarter of contraction.
Thursday, October 27, 2016
Moldova cuts rate 50 bps, raises 2017 inflation forecast
Moldova's central bank cut its base rate by another 50 basis points to 9.0 percent, along with its overnight rates, and lowered its 2016 inflation forecast but raised the 2017 forecast.
The National Bank of Moldova (NBM) has now cut its rate by 1,050 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.
The central bank said it now expects inflation to average 6.3 percent this year, down by 0.4 percentage points from its forecast in August, and 4.6 percent next year, up from 4.8 percent.
Moldova's inflation fell to a 2016-low of 3.0 percent in September from 3.6 percent in August, with the NBM saying higher international food prices and raw materials, along with the volatility in oil prices, are among the external risks to its forecast.
Further risks of higher inflation stem from the impact of changes to excise duties next year, along with the harvest.
Moldova's economy continued to recover in the first two months of the third quarter, with exports up by an annual 16.5 percent in July-August, imports up by 4.9 percent, retail trade turnover up by 4.6 percent while volume of services dropped by 4.4 percent, the central bank said.
In addition, real average wages grew by an annual 8.4 percent in August while the average rate on new loans in leu in June eased by 0.56 percentage points to 13.59 percent.
Moldova's Gross Domestic Product grew by an annual rate of 1.8 percent in the second quarter of this year, up from 0.8 percent in the first quarter.
The National Bank of Moldova (NBM) has now cut its rate by 1,050 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.
The central bank said it now expects inflation to average 6.3 percent this year, down by 0.4 percentage points from its forecast in August, and 4.6 percent next year, up from 4.8 percent.
Moldova's inflation fell to a 2016-low of 3.0 percent in September from 3.6 percent in August, with the NBM saying higher international food prices and raw materials, along with the volatility in oil prices, are among the external risks to its forecast.
Further risks of higher inflation stem from the impact of changes to excise duties next year, along with the harvest.
Moldova's economy continued to recover in the first two months of the third quarter, with exports up by an annual 16.5 percent in July-August, imports up by 4.9 percent, retail trade turnover up by 4.6 percent while volume of services dropped by 4.4 percent, the central bank said.
In addition, real average wages grew by an annual 8.4 percent in August while the average rate on new loans in leu in June eased by 0.56 percentage points to 13.59 percent.
Moldova's Gross Domestic Product grew by an annual rate of 1.8 percent in the second quarter of this year, up from 0.8 percent in the first quarter.
Ukraine cuts rate another 100 bps and sees more easing
Ukraine's central bank cut its key policy rate by another 100 basis points and affirmed that it "will continue to move ahead with monetary easing" to lower borrowing costs and underpin economic growth as long as inflation continues to decelerate.
The National Bank of Ukraine (NBU) has now cut its rate by 800 basis points this year and 1,600 points since it embarked on an easing campaign in August 2015 in response to a decline in inflationary pressures amid a more stable exchange rate of the hryvnia.
Although Ukraine's inflation rate has ticked up due to an increase in administered prices, the NBU said this was built into its forecasts and inflationary pressures had continued to ease, illustrated by a continued decline in core inflation.
"Therefore the inflation targets for 2017 and 2018 (8% +/-2% and 6% +/- 2% respectively) remain within reach and will be supported by the appropriate monetary policy," the NBU said.
Ukraine's headline inflation rate eased to 7.9 percent in September from 8.4 percent in August and 7.9 percent in July while core inflation fell to a 2016-low of 6.3 percent in September from 7.4 percent in August and 7.9 percent in July.
By the fourth quarter of this year the central bank expects inflation to meet its year-end target of 12 percent, plus/minus 3 percentage points, with inflation expected to tick up due to higher utility prices.
Next year inflation is expected to follow "an erratic path," possibly topping 12 percent in the first three quarters due to the rise in administered prices.
But as this impact wanes, inflation is expected to return to the central bank's target in the fourth quarter of 2017 while core inflation is seen stable around 5-6 percent.
The supply of foreign exchange exceeded demand in October, allowing the central bank to purchase more foreign exchange to replenish its reserves without braking the trend toward a higher exchange rate, the central bank said.
Supported by higher foreign direct investment and expected disbursement of funds from the International Monetary Fund (IMF), the NBU forecast that its international reserves will rise o US$17.5 billion by the end of this year, then to $23.1 billion by the end of next year and $27.8 billion by the end of 2018.
A reduced risk of military conflict is helping encourage new investment, which initially will boost imports of machinery and equipment and thus the current account deficit. Longer-term, however, the overall balance of payments should show a surplus and also lead to higher exports.
The central bank maintained its forecast of economic growth this year at 1.1 percent but in following years the economy should grow a little slower than earlier expected due to a "worsened external environment."
In 2017 the economy is seen expanding by 2.5 percent and by 3.5 percent in 2018. In the second quarter of this year Ukraine's Gross Domestic Product grew by an annual rate of 1.4 percent, up from 0.1 percent in the first quarter, reversing eight consecutive quarters of contraction.
The National Bank of Ukraine (NBU) has now cut its rate by 800 basis points this year and 1,600 points since it embarked on an easing campaign in August 2015 in response to a decline in inflationary pressures amid a more stable exchange rate of the hryvnia.
Although Ukraine's inflation rate has ticked up due to an increase in administered prices, the NBU said this was built into its forecasts and inflationary pressures had continued to ease, illustrated by a continued decline in core inflation.
"Therefore the inflation targets for 2017 and 2018 (8% +/-2% and 6% +/- 2% respectively) remain within reach and will be supported by the appropriate monetary policy," the NBU said.
Ukraine's headline inflation rate eased to 7.9 percent in September from 8.4 percent in August and 7.9 percent in July while core inflation fell to a 2016-low of 6.3 percent in September from 7.4 percent in August and 7.9 percent in July.
By the fourth quarter of this year the central bank expects inflation to meet its year-end target of 12 percent, plus/minus 3 percentage points, with inflation expected to tick up due to higher utility prices.
Next year inflation is expected to follow "an erratic path," possibly topping 12 percent in the first three quarters due to the rise in administered prices.
But as this impact wanes, inflation is expected to return to the central bank's target in the fourth quarter of 2017 while core inflation is seen stable around 5-6 percent.
The supply of foreign exchange exceeded demand in October, allowing the central bank to purchase more foreign exchange to replenish its reserves without braking the trend toward a higher exchange rate, the central bank said.
Supported by higher foreign direct investment and expected disbursement of funds from the International Monetary Fund (IMF), the NBU forecast that its international reserves will rise o US$17.5 billion by the end of this year, then to $23.1 billion by the end of next year and $27.8 billion by the end of 2018.
A reduced risk of military conflict is helping encourage new investment, which initially will boost imports of machinery and equipment and thus the current account deficit. Longer-term, however, the overall balance of payments should show a surplus and also lead to higher exports.
The central bank maintained its forecast of economic growth this year at 1.1 percent but in following years the economy should grow a little slower than earlier expected due to a "worsened external environment."
In 2017 the economy is seen expanding by 2.5 percent and by 3.5 percent in 2018. In the second quarter of this year Ukraine's Gross Domestic Product grew by an annual rate of 1.4 percent, up from 0.1 percent in the first quarter, reversing eight consecutive quarters of contraction.
Norway maintains rate as economy largely as expected
Norway's central bank left its key policy rate at 0.50 percent, as expected, saying economic developments have been largely as it forecast in September when it also indicated that the policy rate would be maintained in coming months.
Norges Bank (NB), which cut its rate by 25 basis points in March, said oil prices had risen more than it had expected while the exchange rate of the krone had also appreciated but overall capacity utilization in the country's economy was broadly as projected in September.
Inflation, however, had been lower than expected, NB added.
Norway's inflation rate eased to a lower-than-expected 3.6 percent in September from 4.0 percent in August and 4.4 percent in July.
In its September monetary policy report, NB forecast 2016 inflation of 3.6 percent, 2017 inflation of 2.6 percent, 2018 inflation of 2.1 percent and 2019 inflation of 1.8 percent.
The central bank will update its economic forecasts on Dec. 15.
Norges Bank (NB), which cut its rate by 25 basis points in March, said oil prices had risen more than it had expected while the exchange rate of the krone had also appreciated but overall capacity utilization in the country's economy was broadly as projected in September.
Inflation, however, had been lower than expected, NB added.
Norway's inflation rate eased to a lower-than-expected 3.6 percent in September from 4.0 percent in August and 4.4 percent in July.
In its September monetary policy report, NB forecast 2016 inflation of 3.6 percent, 2017 inflation of 2.6 percent, 2018 inflation of 2.1 percent and 2019 inflation of 1.8 percent.
The central bank will update its economic forecasts on Dec. 15.
Sweden holds rate but pushes back rate hikes 6 months
Sweden's central bank left its benchmark repo rate at minus 0.50 percent but pushed back the time frame for maintaining its ultra-easy policy stance by another six months as inflation is forecast to remain below target longer than previously expected despite healthy economic growth.
Sveriges Riksbank, which cut its rate by 15 basis points in February, also said it was ready to extend the purchase of government bonds beyond the second half of 2016 and such a decision could be taken prior to its next monetary policy meeting in December.
Sweden's inflation rate has been rising since 2014, helped by a decline in the exchange rate of the krona, but the Riksbank said this rise was now slowing down, illustrating uncertainty over high quickly inflation will rise towards its 2.0 percent target.
The headline inflation rate in Sweden eased to less-than-expected 0.9 percent in September from 1.1 percent in the previous two months.
"The Riksbank therefore still has a high level of preparedness to make monetary policy even more expansionary if the upward trend in inflation were to be threatened," the bank said.
In its latest monetary policy report, the central bank forecast that the repo rate would average minus 0.6 percent in 2017, implying it may trim the rate even more, down from its previous forecast in September of an unchanged rate of minus 0.5 percent.
For 2018 the Riksbank forecast that the repo rate would rise to an average of minus 0.3 percent, sharply down from its forecast in September of 0.0 percent. For 2019 the rate is seen averaging 0.2 percent.
The Riksbank also lowered its outlook for inflation, with inflation seen averaging 1.0 percent this year, down from a previous forecast of 1.1 percent, before rising to 1.4 percent in 2017, down from its earlier forecast of 1.8 percent.
By 2018 inflation is seen returning to the Riksbank's target and averaging 2.2 percent, down from a previous forecast of 2.6 percent, and then rising further to 2.9 percent in 2019.
Sveriges Riksbank, which cut its rate by 15 basis points in February, also said it was ready to extend the purchase of government bonds beyond the second half of 2016 and such a decision could be taken prior to its next monetary policy meeting in December.
Sweden's inflation rate has been rising since 2014, helped by a decline in the exchange rate of the krona, but the Riksbank said this rise was now slowing down, illustrating uncertainty over high quickly inflation will rise towards its 2.0 percent target.
The headline inflation rate in Sweden eased to less-than-expected 0.9 percent in September from 1.1 percent in the previous two months.
"The Riksbank therefore still has a high level of preparedness to make monetary policy even more expansionary if the upward trend in inflation were to be threatened," the bank said.
In its latest monetary policy report, the central bank forecast that the repo rate would average minus 0.6 percent in 2017, implying it may trim the rate even more, down from its previous forecast in September of an unchanged rate of minus 0.5 percent.
For 2018 the Riksbank forecast that the repo rate would rise to an average of minus 0.3 percent, sharply down from its forecast in September of 0.0 percent. For 2019 the rate is seen averaging 0.2 percent.
The Riksbank also lowered its outlook for inflation, with inflation seen averaging 1.0 percent this year, down from a previous forecast of 1.1 percent, before rising to 1.4 percent in 2017, down from its earlier forecast of 1.8 percent.
By 2018 inflation is seen returning to the Riksbank's target and averaging 2.2 percent, down from a previous forecast of 2.6 percent, and then rising further to 2.9 percent in 2019.
Wednesday, October 26, 2016
Georgia maintains rate, sees 6% rate in next 2 quarters
Georgia's central bank left its policy rate unchanged at 6.50 percent, saying past rate cuts were not fully reflected in the economy, but it expects to cut the rate to 6.0 percent over the next two quarters.
The National Bank of Georgia (NBG) has cut its rate four times this year by a total of 150 basis points and said in September that it aimed to cut the policy rate to 6.0 percent in the "medium term" as demand is still expected to remain weak and inflation expectations indicate that the rate has to be cut further to reach a neutral level.
But the central bank said there had been an increase in demand for variable rate loans denominated in lari, which had helped improve the transmission mechanism of its monetary policy.
To further improve this transmission, the central bank wants its loosening to have further effect and decided therefore to maintain the rate this month.
Georgia's inflation rate eased to 01 percent in September from 0.9 percent in August and the central bank expects inflation to return to its target in the second half of 2017.
www.CentralBankNews.info
The National Bank of Georgia (NBG) has cut its rate four times this year by a total of 150 basis points and said in September that it aimed to cut the policy rate to 6.0 percent in the "medium term" as demand is still expected to remain weak and inflation expectations indicate that the rate has to be cut further to reach a neutral level.
But the central bank said there had been an increase in demand for variable rate loans denominated in lari, which had helped improve the transmission mechanism of its monetary policy.
To further improve this transmission, the central bank wants its loosening to have further effect and decided therefore to maintain the rate this month.
Georgia's inflation rate eased to 01 percent in September from 0.9 percent in August and the central bank expects inflation to return to its target in the second half of 2017.
www.CentralBankNews.info
Tuesday, October 25, 2016
Hungary keeps base rate, cuts overnight, RR rates
Hungary's central bank maintained its benchmark base rate rate at 0.90 percent, as widely expected, but continued its policy of easing overall monetary conditions by lowering the overnight lending rate by 10 basis points and cutting the required reserve ratio by 100 basis points..
The National Bank of Hungary (NBH) last cut its key rate in May but is now limiting the use of its main policy tool, the 3-month deposit facility, to encourage banks to buy government debt and offer cheaper loans to consumers and businesses.
Last month the NBH lowered the total limit on the use of its 3-month deposit facility to 900 billion forint by the end of 2016, pushing out at least 200-400 billion forints from its facility.
While cutting the overnight lending rate to 1.05 percent to "increase the banking system's liquidity and ease monetary conditions further," the central bank left the overnight deposit rate at minus 0.05 percent. This resulted in a narrowing of the interest rate corridor so rates on one-week central bank loans fell by 5 basis points to 1.0 percent, the NBH said.
By cutting the reserve requirement to 1.0 percent from 2.0 percent as of Dec. 1, the central bank expanded the freely available liquidity in the banking system by 170 billion forint.
"The Bank aims to ease monetary conditions and provide a corresponding degree of support to the economy through a decline in money market rates," the central bank said, adding it considers the limit on its three-month deposit stock and potential future changes "an integral part of monetary policy instruments."
In a separate move, the central bank said it was offering to accept 150 billion forints of funds from banks in its 3-month deposit facility. At the last unlimited tender in September, banks deposited 687 billion forints in the facility.
The National Bank of Hungary (NBH) last cut its key rate in May but is now limiting the use of its main policy tool, the 3-month deposit facility, to encourage banks to buy government debt and offer cheaper loans to consumers and businesses.
Last month the NBH lowered the total limit on the use of its 3-month deposit facility to 900 billion forint by the end of 2016, pushing out at least 200-400 billion forints from its facility.
While cutting the overnight lending rate to 1.05 percent to "increase the banking system's liquidity and ease monetary conditions further," the central bank left the overnight deposit rate at minus 0.05 percent. This resulted in a narrowing of the interest rate corridor so rates on one-week central bank loans fell by 5 basis points to 1.0 percent, the NBH said.
By cutting the reserve requirement to 1.0 percent from 2.0 percent as of Dec. 1, the central bank expanded the freely available liquidity in the banking system by 170 billion forint.
"The Bank aims to ease monetary conditions and provide a corresponding degree of support to the economy through a decline in money market rates," the central bank said, adding it considers the limit on its three-month deposit stock and potential future changes "an integral part of monetary policy instruments."
In a separate move, the central bank said it was offering to accept 150 billion forints of funds from banks in its 3-month deposit facility. At the last unlimited tender in September, banks deposited 687 billion forints in the facility.
Sunday, October 23, 2016
This week in monetary policy: Hungary, Georgia, Sweden, Norway, Israel, Ukraine, Moldova, Fiji and Russia
This week (October 23 through October 29 central banks from 9 countries or
jurisdictions are scheduled to decide on monetary policy: Hungary, Georgia, Sweden, Norway, Israel, Ukraine, Moldova, Fiji and Russia.
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 43 | ||||||
| OCT 23 - OCT 29, 2016: | ||||||
| COUNTRY | DATE | RATE | LATEST | YTD | 1 YR AGO | MSCI |
| HUNGARY | 25-Oct | 0.90% | 0 | -45 | 1.35% | EM |
| GEORGIA | 26-Oct | 6.50% | -25 | -150 | 7.00% | |
| SWEDEN | 27-Oct | -0.50% | 0 | -15 | -0.35% | DM |
| NORWAY | 27-Oct | 0.50% | 0 | -25 | 0.75% | DM |
| ISRAEL | 27-Oct | 0.10% | 0 | 0 | 0.10% | DM |
| UKRAINE | 27-Oct | 15.00% | -50 | -700 | 22.00% | FM |
| MOLDOVA | 27-Oct | 9.50% | -50 | -1,000 | 19.50% | |
| FIJI | 27-Oct | 0.50% | 0 | 0 | 0.50% | |
| RUSSIA | 28-Oct | 10.00% | -50 | -50 | -100 | EM |
Thursday, October 20, 2016
ECB maintains rates as growth risks tilted to downside
The European Central Bank (ECB) left is key policy rates steady, as widely expected, but raised the prospect of changing its policy measures in December by underscoring that risks to economic growth "remain tilted to the downside" and it will continue to use all available instruments to ensure that inflation continues to rise.
The ECB, which in March cut its benchmark refinancing rate to zero, confirmed that monthly asset purchases of 80 billion euros were still intended to run until the end of March 2017, or beyond if necessary to ensure that inflation is moving toward the target of just below, but close to 2 percent.
But ECB President Mario Draghi said the ECB remained "committed to preserving the very substantial degree of monetary accommodation," a sign the ECB may either extend its asset purchases beyond March next year or adjust it to encompass other securities or loosen some of its restrictions.
In December the ECB will update its economic forecasts through to 2019 while the governing council will also hear from committees about the options for ensuring that its purchase program is proceeding smoothly, addressing concerns the ECB is running out of bonds to buy.
Draghi said the euro area economy in the third quarter had continued to expand at a rate that was "around the pace" of the second quarter and further ahead growth should proceed at a "moderate but steady pace."
In the second quarter the euro zone economy grew by 0.3 percent from the first quarter for annual growth of 1.6 percent, down from 1.7 percent in the first quarter.
In September the ECB revised upwards its 2016 growth forecast to 1.7 percent from 1.6 percent, but lowered its outlook for 2017 growth to 1.6 percent from 1.7 percent and its 2017 forecast to 1.6 percent from 1.7 percent.
Domestic demand will continue to be supported by the ECB's easy policy and largely neutral fiscal policy in 2017 but Draghi said the recovery was still being dampened by subdue foreign demand, the necessary adjustments of balance sheets in a number of sectors and the sluggish pace of structural reforms, which he once again called on governments to accelerate to reduce unemployment and boost the potential growth.
"Structural reforms are necessary in all euro area countries," said Draghi.
Inflation in the euro area rose to 0.4 percent in September from 0.2 percent in August.
In its latest forecast, the ECB expects inflation to average 0.2 percent this year, 1.2 percent in 2017 and 1.6 percent in 2018.
The ECB, which in March cut its benchmark refinancing rate to zero, confirmed that monthly asset purchases of 80 billion euros were still intended to run until the end of March 2017, or beyond if necessary to ensure that inflation is moving toward the target of just below, but close to 2 percent.
But ECB President Mario Draghi said the ECB remained "committed to preserving the very substantial degree of monetary accommodation," a sign the ECB may either extend its asset purchases beyond March next year or adjust it to encompass other securities or loosen some of its restrictions.
In December the ECB will update its economic forecasts through to 2019 while the governing council will also hear from committees about the options for ensuring that its purchase program is proceeding smoothly, addressing concerns the ECB is running out of bonds to buy.
Draghi said the euro area economy in the third quarter had continued to expand at a rate that was "around the pace" of the second quarter and further ahead growth should proceed at a "moderate but steady pace."
In the second quarter the euro zone economy grew by 0.3 percent from the first quarter for annual growth of 1.6 percent, down from 1.7 percent in the first quarter.
In September the ECB revised upwards its 2016 growth forecast to 1.7 percent from 1.6 percent, but lowered its outlook for 2017 growth to 1.6 percent from 1.7 percent and its 2017 forecast to 1.6 percent from 1.7 percent.
Domestic demand will continue to be supported by the ECB's easy policy and largely neutral fiscal policy in 2017 but Draghi said the recovery was still being dampened by subdue foreign demand, the necessary adjustments of balance sheets in a number of sectors and the sluggish pace of structural reforms, which he once again called on governments to accelerate to reduce unemployment and boost the potential growth.
"Structural reforms are necessary in all euro area countries," said Draghi.
Inflation in the euro area rose to 0.4 percent in September from 0.2 percent in August.
In its latest forecast, the ECB expects inflation to average 0.2 percent this year, 1.2 percent in 2017 and 1.6 percent in 2018.
Turkey maintains repo and overnight rate on low lira
Turkey's central bank left its benchmark one-week repo rate steady at 7.50 percent but surprised financial markets by pausing in its policy of lowering the overnight funding rate, saying "recent developments in exchange rates and other cost factors restrain the improvement in the inflation outlook and thus necessitate the maintenance of a cautious monetary policy stance."
The Central Bank of the Republic of Turkey (CBRT) has cut the overnight funding rate by 250 basis points to 8.25 percent since March, most recently last month, as part of a simplification of its monetary policy framework and efforts to stimulate demand and economic growth.
But the benchmark rate, the one-week repo rate, has been maintained since February 2015 as the central bank tries to push down inflation.
"The Committee stated that the direction and the timing of the next step in the monetary policy simplification process will be data dependent," the central bank said, adding its usual guidance that it will maintain a cautious policy stance and the outlook for inflation will determine its decisions.
Turkey's headline inflation rate eased to 7.28 percent in September from 8.05 percent in August as food prices declined for the first on a monthly basis since 2003. The CBRT has forecast year-end inflation of 7.5 percent.
While the exchange rate of the lira has weakened this year - on Tuesday it hit a record low of 3.11 to the U.S. dollar - it rose in response to the central bank's decision today.
The lira was trading at 3.06 to the U.S. dollar shortly after news of the CBRT's decision to maintain rates, up from 3.07. But it is still down 4.6 percent compared with the the start of this year.
Turkey's economy decelerated in the third quarter, the CBRT said, noting the decline in tourism revenue and moderate consumer lending. But the central bank said it expected domestic demand to start to recover in the fourth quarter, helped by recent supportive measures and incentives.
Turkey's Gross Domestic Product grew by an annual rate of 3.1 percent in the second quarter, down from 4.7 percent in the first quarter.
The Central Bank of the Republic of Turkey (CBRT) has cut the overnight funding rate by 250 basis points to 8.25 percent since March, most recently last month, as part of a simplification of its monetary policy framework and efforts to stimulate demand and economic growth.
But the benchmark rate, the one-week repo rate, has been maintained since February 2015 as the central bank tries to push down inflation.
"The Committee stated that the direction and the timing of the next step in the monetary policy simplification process will be data dependent," the central bank said, adding its usual guidance that it will maintain a cautious policy stance and the outlook for inflation will determine its decisions.
Turkey's headline inflation rate eased to 7.28 percent in September from 8.05 percent in August as food prices declined for the first on a monthly basis since 2003. The CBRT has forecast year-end inflation of 7.5 percent.
While the exchange rate of the lira has weakened this year - on Tuesday it hit a record low of 3.11 to the U.S. dollar - it rose in response to the central bank's decision today.
The lira was trading at 3.06 to the U.S. dollar shortly after news of the CBRT's decision to maintain rates, up from 3.07. But it is still down 4.6 percent compared with the the start of this year.
Turkey's economy decelerated in the third quarter, the CBRT said, noting the decline in tourism revenue and moderate consumer lending. But the central bank said it expected domestic demand to start to recover in the fourth quarter, helped by recent supportive measures and incentives.
Turkey's Gross Domestic Product grew by an annual rate of 3.1 percent in the second quarter, down from 4.7 percent in the first quarter.
Indonesia cuts rate another 25 bps, trims growth forecast
Indonesia's central bank cut is new benchmark interest rate by 25 basis points for the second month in a row to stimulate domestic demand, including credit, to stimulate domestic demand at a time that inflation will remain close to the floor of its target range and economic growth is slightly weaker than expected.
Bank Indonesia (BI) cut its BI 7-day Reverse Repo Rate (BI 7-day RR Rate) to 4.75 percent from 5.0 percent, brining the total cut in that rate to 50 basis points following the cut in September.
BI adopted the 7-day rate as its new benchmark rate in August to improve the transmission of its monetary policy decisions to money markets. Prior to August BI cut its previous benchmark rate, the BI rate, four times from January through June by a total of 100 points.
Indonesia's inflation rate rose to 3.07 percent in September from 2.79 percent in August but BI reiterated that inflation is expected to fall towards the floor of its target corridor of 3 - 5 percent.
Indonesia's economy in the third quarter was slightly weaker than BI had expected and the impact of government spending is now seen as "somewhat limited" as spending is adjusted in the second half of this year.
Sluggish world trade has also undermined the country's exports while the rupiah's exchange rate has continued to appreciate, making the country's exports less competitive.
Economic growth this year is therefore expected to be around the lower end of the 4.9 percent to 5.3 percent range that BI has forecast, a slight downgrade in its forecast.
In August BI cut its growth forecast to 4.9-5.3 percent from a previous 5.0-5.4 percent and last month confirmed that expectation.
Indonesia's Gross Domestic Product grew by an annual rate of 5.18 percent in the second quarter, up from 4.91 percent in the first quarter, but BI said consumption in the third quarter had remained limited and private investment, particularly non-construction investment, had remained weak.
After being hit hard in 2013 - the year of the "taper tantrum" when the rupiah fell by 21 percent - the rupiah continued to depreciate until October 2015.
Since then it has been rising on positive sentiment about the economy along with a tax amnesty that encouraged Indonesians abroad to repatriate funds.
The rupiah was trading at 13,003 to the U.S. dollar today, up 6.1 percent this year.
Bank Indonesia (BI) cut its BI 7-day Reverse Repo Rate (BI 7-day RR Rate) to 4.75 percent from 5.0 percent, brining the total cut in that rate to 50 basis points following the cut in September.
BI adopted the 7-day rate as its new benchmark rate in August to improve the transmission of its monetary policy decisions to money markets. Prior to August BI cut its previous benchmark rate, the BI rate, four times from January through June by a total of 100 points.
Indonesia's inflation rate rose to 3.07 percent in September from 2.79 percent in August but BI reiterated that inflation is expected to fall towards the floor of its target corridor of 3 - 5 percent.
Indonesia's economy in the third quarter was slightly weaker than BI had expected and the impact of government spending is now seen as "somewhat limited" as spending is adjusted in the second half of this year.
Sluggish world trade has also undermined the country's exports while the rupiah's exchange rate has continued to appreciate, making the country's exports less competitive.
Economic growth this year is therefore expected to be around the lower end of the 4.9 percent to 5.3 percent range that BI has forecast, a slight downgrade in its forecast.
In August BI cut its growth forecast to 4.9-5.3 percent from a previous 5.0-5.4 percent and last month confirmed that expectation.
Indonesia's Gross Domestic Product grew by an annual rate of 5.18 percent in the second quarter, up from 4.91 percent in the first quarter, but BI said consumption in the third quarter had remained limited and private investment, particularly non-construction investment, had remained weak.
After being hit hard in 2013 - the year of the "taper tantrum" when the rupiah fell by 21 percent - the rupiah continued to depreciate until October 2015.
Since then it has been rising on positive sentiment about the economy along with a tax amnesty that encouraged Indonesians abroad to repatriate funds.
The rupiah was trading at 13,003 to the U.S. dollar today, up 6.1 percent this year.
Wednesday, October 19, 2016
Canada keeps rate steady but cuts growth forecast
Canada's central bank left its benchmark target for the overnight rate at 0.50 percent, as widely expected, but lowered its growth forecast for this year and next year due to a slowdown in housing sales and a lower-than-expected increase in exports.
The Bank of Canada (BOC), which cut its rate twice last year by a total of 50 basis points, said it considers the risks around its latest inflation forecast to be "roughly balanced, albeit in a context of heightened uncertainty."
In September the BOC said that the risks to inflation had "titled somewhat to the downside" since its previous Monetary Policy Report in July.
The BOC has often been concerned about the impact of rising home prices in parts of the country but said new housing measures by the government to promote more stability should help cushion the risks to financial stability.
The central bank lowered its forecast for Canada's Gross Domestic Product to grow by 1.1 percent this year, down from 1.3 percent forecast in July, and to 2.0 percent in 2017, down from 2.2 percent. In 2018 the country's economy is still seen expanding by 2.1 percent.
In the second quarter of this year Canada's economy grew by an annual rate of 0.9 percent, down from 1.2 percent in the first quarter but the BOC still expects economic activity to exceed the country's potential in the second half of this year as it continues to adjust to the shock from lower oil prices and a hit to growth from wildfires in Alberta.
"This projection implies that the economy returns to full capacity around mid-2018, materially later than the Bank had anticipated in July," the BOC said.
Exports are now seen growing by only 0.2 percent this year, down from 0.3 percent seen in July, and by 0.8 percent in 2017, down from 1.1 percent. In 2018 exports are forecast to grow 1.0 percent, down from 1.3 percent.
Canada's inflation rate continues to be below expectations due to weak gasoline, food and telecommunications prices.
In August headline inflation fell to 1.1 percent from 1.3 percent in July and the BOC trimmed its 2016 inflation forecast to 1.5 percent from 1.6 percent and the 2017 forecast to 1.9 percent from a previous forecast of 2.1 percent.
In 2018 inflation is seen averaging 1.9 percent, just below the BOC's 2.0 percent target, and below the July forecast of 2.0 percent.
Canada's dollar has been trending downward against the U.S. dollar since 2013 but reversed course in mid-January this year when it rose sharply. But since early May it has been easing slightly and was trading at 1.31 to the USD this morning, up 6.1 percent since the start of the year.
The Bank of Canada (BOC), which cut its rate twice last year by a total of 50 basis points, said it considers the risks around its latest inflation forecast to be "roughly balanced, albeit in a context of heightened uncertainty."
In September the BOC said that the risks to inflation had "titled somewhat to the downside" since its previous Monetary Policy Report in July.
The BOC has often been concerned about the impact of rising home prices in parts of the country but said new housing measures by the government to promote more stability should help cushion the risks to financial stability.
The central bank lowered its forecast for Canada's Gross Domestic Product to grow by 1.1 percent this year, down from 1.3 percent forecast in July, and to 2.0 percent in 2017, down from 2.2 percent. In 2018 the country's economy is still seen expanding by 2.1 percent.
In the second quarter of this year Canada's economy grew by an annual rate of 0.9 percent, down from 1.2 percent in the first quarter but the BOC still expects economic activity to exceed the country's potential in the second half of this year as it continues to adjust to the shock from lower oil prices and a hit to growth from wildfires in Alberta.
"This projection implies that the economy returns to full capacity around mid-2018, materially later than the Bank had anticipated in July," the BOC said.
Exports are now seen growing by only 0.2 percent this year, down from 0.3 percent seen in July, and by 0.8 percent in 2017, down from 1.1 percent. In 2018 exports are forecast to grow 1.0 percent, down from 1.3 percent.
Canada's inflation rate continues to be below expectations due to weak gasoline, food and telecommunications prices.
In August headline inflation fell to 1.1 percent from 1.3 percent in July and the BOC trimmed its 2016 inflation forecast to 1.5 percent from 1.6 percent and the 2017 forecast to 1.9 percent from a previous forecast of 2.1 percent.
In 2018 inflation is seen averaging 1.9 percent, just below the BOC's 2.0 percent target, and below the July forecast of 2.0 percent.
Canada's dollar has been trending downward against the U.S. dollar since 2013 but reversed course in mid-January this year when it rose sharply. But since early May it has been easing slightly and was trading at 1.31 to the USD this morning, up 6.1 percent since the start of the year.
Tuesday, October 18, 2016
Chile maintains rate, confirms neutral guidance
Chile's central bank left its monetary policy interest rate 3.50 percent, confirming its neutral guidance that future rate changes depend on the inflationary outlook.
The Central Bank of Chile, which has maintained its rate this year after raising it by 50 basis points in 2015, most recently in December, noted that inflation in September was "unexpectedly low" so inflation approached its 3.0 percent target sooner than expected.
Chile's inflation rate eased further to 3.1 percent in September from 3.4 percent in August and the central bank said expectations revolve around the bank's target. The central bank targets inflation of 3.0 percent within a 2 - 4 percent range.
In August the central bank dropped its tightening bias that it had maintained since December as inflation continued to decline, with inflation in August falling below the central bank's upper limit for the first time since November 2015.
The Central Bank of Chile, which has maintained its rate this year after raising it by 50 basis points in 2015, most recently in December, noted that inflation in September was "unexpectedly low" so inflation approached its 3.0 percent target sooner than expected.
Chile's inflation rate eased further to 3.1 percent in September from 3.4 percent in August and the central bank said expectations revolve around the bank's target. The central bank targets inflation of 3.0 percent within a 2 - 4 percent range.
In August the central bank dropped its tightening bias that it had maintained since December as inflation continued to decline, with inflation in August falling below the central bank's upper limit for the first time since November 2015.
Global lending to emerging markets rises in Q2 - BIS
Cross-border lending to emerging market economies rose for the first time in a year during the second quarter of 2016 against a backdrop of overall stagnant international banking activity, according to the Bank for International Settlements (BIS).
International bank lending data from the end of June showed that cross-border claims on borrowers from emerging markets rose by $110 billion to an outstanding stock of $3.3 trillion, partially offsetting a $379 billion decline seen in the previous three quarters.
A $61 billion increase in second quarter lending to China dominated a $70 billion rise in lending to emerging Asia but total claims on China were still down 24 percent year-on-year while claims on emerging markets in Asia were down 15 percent.
Cross-border lending to Latin America and the Caribbean also grew in the second quarter, up by $11 billion, with claims on Mexico and Brazil growing by $6 billion and $4 billion, respectively. BIS said Spanish banks accounted for a substantial share of lending to Brazil.
Lending to Africa and the Middle East also rose in the second quarter - up by $33 billion - pushing the annual growth growth to 12 percent to a record $573 billion in outstanding claims. Most of the loans went to the United Arab Emirates (a rise of $17 billion), Saudi Arabia (up by $9 billion) and Qatar, up by $4 billion.
But overall data for global cross-border credit showed that outstanding claims at the end of June were largely unchanged from June last year at $27.4 trillion, with claims on lenders from advanced economies of $19.7 trillion
Although global cross-border claims were up by $464 billion in the second quarter, intragroup banking activity accounted for most of this increase so BIS said that on a consolidated basis, claims were virtually unchanged.
Click to read BIS international banking statistics at end-June 2016.
www.CentralBankNews.info
International bank lending data from the end of June showed that cross-border claims on borrowers from emerging markets rose by $110 billion to an outstanding stock of $3.3 trillion, partially offsetting a $379 billion decline seen in the previous three quarters.
A $61 billion increase in second quarter lending to China dominated a $70 billion rise in lending to emerging Asia but total claims on China were still down 24 percent year-on-year while claims on emerging markets in Asia were down 15 percent.
Cross-border lending to Latin America and the Caribbean also grew in the second quarter, up by $11 billion, with claims on Mexico and Brazil growing by $6 billion and $4 billion, respectively. BIS said Spanish banks accounted for a substantial share of lending to Brazil.
Lending to Africa and the Middle East also rose in the second quarter - up by $33 billion - pushing the annual growth growth to 12 percent to a record $573 billion in outstanding claims. Most of the loans went to the United Arab Emirates (a rise of $17 billion), Saudi Arabia (up by $9 billion) and Qatar, up by $4 billion.
But overall data for global cross-border credit showed that outstanding claims at the end of June were largely unchanged from June last year at $27.4 trillion, with claims on lenders from advanced economies of $19.7 trillion
Although global cross-border claims were up by $464 billion in the second quarter, intragroup banking activity accounted for most of this increase so BIS said that on a consolidated basis, claims were virtually unchanged.
Click to read BIS international banking statistics at end-June 2016.
www.CentralBankNews.info
Uganda cuts rate another 100 bps to support growth
Uganda's central bank cut its benchmark Central Bank Rate (CBR) by 100 basis points to 13.0 percent, saying there is scope to ease its monetary policy stance "to support the domestic economic growth momentum, especially against the ongoing global economic slowdown" as core inflation is forecast to remain around the medium term target in the next 12 months.
The Bank of Uganda (BOU) has now cut its key rate by 400 basis points this year. The BOU also lowered its rediscount rate and bank rate to 17 percent and 18 percent, respectively, as the band around the CBR was maintained at plus/minus 3 percentage points and the margin on the rediscount rate at 4 percentage points.
Uganda's core inflation rate dropped to 4.1 percent in September from 4.9 percent in August while headline inflation eased to 4.2 percent from 4.8 percent, with the central bank saying its forecast for 2016 and 2017 remains unchanged from August despite a slightly higher forecast for headline inflation due to higher-than-expected food prices.
BOU expects core inflation to remain around its midpoint target of 5.0 percent in the current 2016/17 financial year, which began July 1, with the exchange rate and the impact of less-than-normal rains on harvests and food prices the main uncertainties.
Inflation is currently held back by weak consumer demand, decreasing inflation expectations and a relatively stable exchange rate of the shilling on the back of moderately tight monetary policy in the past year. However, drought in many parts of Uganda has pushed up food prices, with annual food crop inflation up to 5.1 percent in the last three months from minus 1.9 percent, the BOU said.
After depreciating in 2014 and 2015, the shilling has been stable since March this year and was trading at 3,465.1 to the U.S. dollar today, down 2.7 percent this year.
Uganda's economy grew by 3.9 percent in the second calendar quarter of this year from the same period last year and by 4.8 percent in the 2015/16 financial year, up from an earlier BOU estimate of 4.6 percent.
Recent data point indicate that a "significant pick-up in economic activity" in the fourth quarter of the fourth quarter of 2015/16 had carried over to the first quarter of the current fiscal year, BOU said.
The BOU said its overall economic outlook remained largely unchanged but lowered its forecast for economic growth in 2016/17 to 5.0 percent from its August forecast of 5.5 percent.
For financial year 2017/18 BOU forecast growth of between 5.0 percent and 5.5 percent.
www.CentralBankNews.info
The Bank of Uganda (BOU) has now cut its key rate by 400 basis points this year. The BOU also lowered its rediscount rate and bank rate to 17 percent and 18 percent, respectively, as the band around the CBR was maintained at plus/minus 3 percentage points and the margin on the rediscount rate at 4 percentage points.
Uganda's core inflation rate dropped to 4.1 percent in September from 4.9 percent in August while headline inflation eased to 4.2 percent from 4.8 percent, with the central bank saying its forecast for 2016 and 2017 remains unchanged from August despite a slightly higher forecast for headline inflation due to higher-than-expected food prices.
BOU expects core inflation to remain around its midpoint target of 5.0 percent in the current 2016/17 financial year, which began July 1, with the exchange rate and the impact of less-than-normal rains on harvests and food prices the main uncertainties.
Inflation is currently held back by weak consumer demand, decreasing inflation expectations and a relatively stable exchange rate of the shilling on the back of moderately tight monetary policy in the past year. However, drought in many parts of Uganda has pushed up food prices, with annual food crop inflation up to 5.1 percent in the last three months from minus 1.9 percent, the BOU said.
After depreciating in 2014 and 2015, the shilling has been stable since March this year and was trading at 3,465.1 to the U.S. dollar today, down 2.7 percent this year.
Uganda's economy grew by 3.9 percent in the second calendar quarter of this year from the same period last year and by 4.8 percent in the 2015/16 financial year, up from an earlier BOU estimate of 4.6 percent.
Recent data point indicate that a "significant pick-up in economic activity" in the fourth quarter of the fourth quarter of 2015/16 had carried over to the first quarter of the current fiscal year, BOU said.
The BOU said its overall economic outlook remained largely unchanged but lowered its forecast for economic growth in 2016/17 to 5.0 percent from its August forecast of 5.5 percent.
For financial year 2017/18 BOU forecast growth of between 5.0 percent and 5.5 percent.
www.CentralBankNews.info
Monday, October 17, 2016
Botswana maintains rate, inflation seen in target range
Botswana's central bank left its Bank Rate steady at 5.5 percent as "the prevailing monetary policy stance is consistent with maintaining inflation within the Bank's medium-term objective range of 3 - 6 percent."
Bank Botswana (BB), which cut its rate by 50 basis points in August, added that "subdued domestic demand pressures and benign foreign price developments contribute to the positive inflation outlook in the medium term."
Botswana's inflation rate rose slightly to 2.8 percent in September from a historic low of 2.6 percent in August, with the central bank saying that it inflation outlook is subject to downside risks from sluggish global economic activity and the resultant low commodity prices.
On the other hand, inflation could also be affected by unexpectedly large rises in administrative prices and government levies along with higher-than-expected global food and oil prices.
In its August midterm review, BB forecast that inflation would remain low and stable in line with its objective, with implementation of monetary policy focused on entrenching expectations of low and sustainable inflation through timely responses to price developments.
Botswana's inflationary pressures are likely to remain restrained by low inflation in its trading partners apart from in South Africa where inflation is seen averaging 6.6 percent this year and remaining above the upper end of the central bank's target range for the rest of this year.
The relative strength of Botswana's pula against South Africa's rand should help moderate imported inflation, BB said in August.
BB's exchange rate policy entails a 0.38 percent upward rate of crawl for the nominal effective exchange rate for the rest of this year.
The pula, which had been depreciating steadily against the U.S. dollar since August 2011, has rebounded since hitting 12 to the dollar on Jan 20 this year. Today the pula was trading at 10.8 to the dollar, up 4.6 percent since the start of 2016.
Botswana's Gross Domestic Product contracted by 1.3 percent in the second quarter from the first quarter due to lower mining output. On an annual basis, GDP grew 1.6 percent, down from 2.7 percent in the first quarter.
Bank Botswana (BB), which cut its rate by 50 basis points in August, added that "subdued domestic demand pressures and benign foreign price developments contribute to the positive inflation outlook in the medium term."
Botswana's inflation rate rose slightly to 2.8 percent in September from a historic low of 2.6 percent in August, with the central bank saying that it inflation outlook is subject to downside risks from sluggish global economic activity and the resultant low commodity prices.
On the other hand, inflation could also be affected by unexpectedly large rises in administrative prices and government levies along with higher-than-expected global food and oil prices.
In its August midterm review, BB forecast that inflation would remain low and stable in line with its objective, with implementation of monetary policy focused on entrenching expectations of low and sustainable inflation through timely responses to price developments.
Botswana's inflationary pressures are likely to remain restrained by low inflation in its trading partners apart from in South Africa where inflation is seen averaging 6.6 percent this year and remaining above the upper end of the central bank's target range for the rest of this year.
The relative strength of Botswana's pula against South Africa's rand should help moderate imported inflation, BB said in August.
BB's exchange rate policy entails a 0.38 percent upward rate of crawl for the nominal effective exchange rate for the rest of this year.
The pula, which had been depreciating steadily against the U.S. dollar since August 2011, has rebounded since hitting 12 to the dollar on Jan 20 this year. Today the pula was trading at 10.8 to the dollar, up 4.6 percent since the start of 2016.
Botswana's Gross Domestic Product contracted by 1.3 percent in the second quarter from the first quarter due to lower mining output. On an annual basis, GDP grew 1.6 percent, down from 2.7 percent in the first quarter.
Sunday, October 16, 2016
This week in monetary policy: Argentina, Chile, Canada, Namibia, Brazil, Indonesia, euro area, Turkey and Paraguay
This week (October 16 through October 22) central banks from 9 countries or
jurisdictions are scheduled to decide on monetary policy: Argentina, Chile, Canada, Namibia, Brazil, Indonesia, euro area, Turkey and Paraguay.
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 42 | ||||||
| OCT 16 - OCT 22, 2016: | ||||||
| COUNTRY | DATE | RATE | LATEST | YTD | 1 YR AGO | MSCI |
| ARGENTINA | 18-Oct | 26.75% | 0 | -1,000 | N/A | FM |
| CHILE | 18-Oct | 3.50% | 0 | 0 | 3.25% | EM |
| CANADA | 19-Oct | 0.50% | 0 | 0 | 0.50% | DM |
| NAMIBIA | 19-Oct | 7.00% | 0 | 50 | 6.50% | |
| BRAZIL | 19-Oct | 14.25% | 0 | 0 | 14.25% | EM |
| INDONESIA | 20-Oct | 5.00% | -25 | -125 | 7.50% | EM |
| EURO AREA | 20-Oct | 0.00% | 0 | -5 | 0.05% | DM |
| TURKEY | 20-Oct | 7.50% | 0 | 0 | 7.50% | EM |
| PARAGUAY | 20-Oct | 5.50% | 0 | -25 | 5.75% | |
Thursday, October 13, 2016
Peru holds rate, revises up 2016 growth forecast to 3.8%
Peru's central bank left its monetary policy rate at 4.25 percent, saying business expectations had continued to improve for the fourth consecutive months and it now expects the country's economy to expand by 3.8 percent this year, up from last month's forecast of 3.7 percent, while it continues to expect growth of 4.2 percent in 2017.
The Central Reserve Bank of Peru (BRCP), which paused in its tightening cycle in March after four rate hikes, added that inflation expectations continue to reverse and inflation is expected to remain within the upper level of its inflation target range in coming months before it reaches 2.0 percent by the end of next year.
Peru's inflation rate rose to 3.13 percent in September from 2.94 percent in August. Excluding food and energy, the annual inflation rate rose to 3.01 percent from 2.96 percent.
The BRCP targets inflation of 1 percent to 3 percent around a 2.0 percent midpoint.
While the central bank revised upwards its 2016 growth forecast, the central bank added the construction and manufacturing sectors suffered setbacks in the last three months due to weak investment.
Peru's Gross Domestic Product grew by an annual 3.7 percent in the second quarter of this year, down from 4.4 percent in the first quarter.
The exchange rate of Peru's sol, which declined against the U.S. dollar from August 2014 until late February this year, was trading at 3.40 to the dollar today, largely unchanged from 3.41 at the start of the year.
The Central Reserve Bank of Peru (BRCP), which paused in its tightening cycle in March after four rate hikes, added that inflation expectations continue to reverse and inflation is expected to remain within the upper level of its inflation target range in coming months before it reaches 2.0 percent by the end of next year.
Peru's inflation rate rose to 3.13 percent in September from 2.94 percent in August. Excluding food and energy, the annual inflation rate rose to 3.01 percent from 2.96 percent.
The BRCP targets inflation of 1 percent to 3 percent around a 2.0 percent midpoint.
While the central bank revised upwards its 2016 growth forecast, the central bank added the construction and manufacturing sectors suffered setbacks in the last three months due to weak investment.
Peru's Gross Domestic Product grew by an annual 3.7 percent in the second quarter of this year, down from 4.4 percent in the first quarter.
The exchange rate of Peru's sol, which declined against the U.S. dollar from August 2014 until late February this year, was trading at 3.40 to the dollar today, largely unchanged from 3.41 at the start of the year.
Subscribe to:
Comments (Atom)