Fiji's central bank left its Overnight Policy Rate (OPR) unchanged at 0.50 percent and said "the positive outlook for inflation, foreign reserves and growth lends support to the continuation of an accommodative monetary policy stance."
The Reserve Bank of Fiji (RBF), which has maintained its rate since October 2011, added its monetary policy objectives remain intact, with foreign reserves hitting new records and inflation subsiding following the temporary acceleration in the wake of Tropical Cyclone Winston.
Fiji's economy was hit hard last year by Winston - the worst ever cyclone in the Southern Hemisphere - along with other adverse weather, with growth slowing to 2.0 percent from 3.6 percent in 2015 and inflation rising above 4 percent most of the year as supply of some food items was affected.
But headline inflation was steady at 2.0 percent in July and June, and core inflation at 1.7 percent, said Acting RBF Governor Ariff Ali.
Fiji's foreign reserves had risen further to a new record of $2.349 billion, up from $2.307 billion on July 20, due to strong tourism and capital inflows.
Economic activity remains firm due to expanding demand in improvements in the sugar and tourism industries, with total investment forecast to improve to around 26 percent of Gross Domestic Product the year from public and private sector projects and recovery activity related to Winston.
In is June quarterly review, RBF projected year-end inflation of 3.0 percent and economic growth this year of 3.8 percent.
Thursday, August 31, 2017
Wednesday, August 30, 2017
South Korea maintains rate, growth in line with forecast
South Korea's central bank kept its base rate unchanged at 1.25 percent, as widely expected, saying economic growth is expected to be in line with the forecast from July, with consumption continuing its moderate recovery while a decline in foreign tourists will lead to slower services exports.
The Bank of Korea (BOK), which has maintained its rate since June last year, also reiterated its guidance from July that it was maintaining its accommodative monetary policy stance "as the inflationary pressures on the demand side are not expected to be high although the domestic economy is expected to show solid growth."
In July the BOK raised its growth forecast for this year to 2.8 percent from 2.6 percent, adding fiscal stimulus from the government could further boost growth.
But while consumption is recovering and investment in facilities is likely to be above the level forecast in July, BOK said exports were likely to fall below forecasts due to the decline in tourists and construction investment is also likely to be below forecasts as the real estate market stabilizes.
South Korea's Gross Domestic Product decelerated in the second quarter from the first quarter, with quarterly growth of 0.6 percent and annual growth of 2.7 percent, down from 2.9 percent in the first quarter.
South Korea's headline inflation rose to a higher-than-expected 2.2 percent in July from 1.9 percent in June, above the BOK's 2.0 percent target, while core inflation rose to 1.8 percent from 1.3 percent.
The BOK confirmed it expects consumer price inflation to fluctuate around the 2.0 percent level and average 1.9 percent this year, as forecast in July.
Volatility in domestic financial markets has expanded, the central bank noted, with stock prices and the won fluctuating in line with an increase in geopolitical risks.
Despite nervousness over North Korea's missile tests, South Korea's won has firmed this year on optimism over growth and was trading at 1,124 to the U.S. dollar today, up 7.4 percent this year.
The Bank of Korea (BOK), which has maintained its rate since June last year, also reiterated its guidance from July that it was maintaining its accommodative monetary policy stance "as the inflationary pressures on the demand side are not expected to be high although the domestic economy is expected to show solid growth."
In July the BOK raised its growth forecast for this year to 2.8 percent from 2.6 percent, adding fiscal stimulus from the government could further boost growth.
But while consumption is recovering and investment in facilities is likely to be above the level forecast in July, BOK said exports were likely to fall below forecasts due to the decline in tourists and construction investment is also likely to be below forecasts as the real estate market stabilizes.
South Korea's Gross Domestic Product decelerated in the second quarter from the first quarter, with quarterly growth of 0.6 percent and annual growth of 2.7 percent, down from 2.9 percent in the first quarter.
South Korea's headline inflation rose to a higher-than-expected 2.2 percent in July from 1.9 percent in June, above the BOK's 2.0 percent target, while core inflation rose to 1.8 percent from 1.3 percent.
The BOK confirmed it expects consumer price inflation to fluctuate around the 2.0 percent level and average 1.9 percent this year, as forecast in July.
Volatility in domestic financial markets has expanded, the central bank noted, with stock prices and the won fluctuating in line with an increase in geopolitical risks.
Despite nervousness over North Korea's missile tests, South Korea's won has firmed this year on optimism over growth and was trading at 1,124 to the U.S. dollar today, up 7.4 percent this year.
Moldova cuts rate 50 bps, slow economy offsets inflation
Moldova's central bank lowered its basic interest rate by 50 basis points to 7.50 percent, along with its other key rates, saying upward pressure on inflation will be offset by slower economic activity and a rise in the exchange rate of the leu.
The National Bank of Moldova (NBM) has now cut its rate by 150 basis points this year following a cut in June, and by 1,200 points since February 2016 when it began its easing cycle.
Moldova's inflation rate was steady at 7.3 percent in July from June, above the central bank's target of 5.0 percent, plus/minus 1.5 percentage points.
But core inflation was 5.0 percent, up from 4.7 percent, in line with the bank's forecast as inflation has been accelerating due to supply factors and a rise in the tariffs on some regulated services along with the effect of a low base in 2016 from changes in the excise duty on some goods.
"The aggregate demand is moderate and will not create additional inflationary pressures," the NBM said.
In its August inflation report the central bank said the country's output gap will remain negative over the next four quarters and while it should turn positive in the following four quarters inflationary pressures will remain insignificant and the exchange rate will have a restrictive effect on conditions.
Inflation in the third quarter of this year was forecast to remain high and reach a maximum of 7.4 percent but then fall to a minimum of 3.5 percent in the fourth quarter of 2018 and in the first quarter of 2019.
Moldova's economy showed signs of a slowdown in the second quarter, the bank said, after first quarter Gross Domestic Product shrank by 0.7 percent from the previous quarter for annual growth of 3.1 percent, down from 6.7 percent.
Exports in April-May rose by an annual 8.7 percent while imports rose 19.8 percent while industrial output fell by 0.2 percent and retail trade turnover fell by 1.2 percent, the NBM said. Volume of transported goods rose by 20.8 percent in the same period while services activity rose by 8.0 percent.
Moldova's leu has firmed steadily this year and was trading at 17.7 to the U.S. dollar today, up 12.2 percent this year.
The National Bank of Moldova (NBM) has now cut its rate by 150 basis points this year following a cut in June, and by 1,200 points since February 2016 when it began its easing cycle.
Moldova's inflation rate was steady at 7.3 percent in July from June, above the central bank's target of 5.0 percent, plus/minus 1.5 percentage points.
But core inflation was 5.0 percent, up from 4.7 percent, in line with the bank's forecast as inflation has been accelerating due to supply factors and a rise in the tariffs on some regulated services along with the effect of a low base in 2016 from changes in the excise duty on some goods.
"The aggregate demand is moderate and will not create additional inflationary pressures," the NBM said.
In its August inflation report the central bank said the country's output gap will remain negative over the next four quarters and while it should turn positive in the following four quarters inflationary pressures will remain insignificant and the exchange rate will have a restrictive effect on conditions.
Inflation in the third quarter of this year was forecast to remain high and reach a maximum of 7.4 percent but then fall to a minimum of 3.5 percent in the fourth quarter of 2018 and in the first quarter of 2019.
Moldova's economy showed signs of a slowdown in the second quarter, the bank said, after first quarter Gross Domestic Product shrank by 0.7 percent from the previous quarter for annual growth of 3.1 percent, down from 6.7 percent.
Exports in April-May rose by an annual 8.7 percent while imports rose 19.8 percent while industrial output fell by 0.2 percent and retail trade turnover fell by 1.2 percent, the NBM said. Volume of transported goods rose by 20.8 percent in the same period while services activity rose by 8.0 percent.
Moldova's leu has firmed steadily this year and was trading at 17.7 to the U.S. dollar today, up 12.2 percent this year.
Tuesday, August 29, 2017
Israel holds rate, inflation fall not due to lower demand
The Bank of Israel (BOI) kept its key interest rate unchanged at 0.1 percent, saying the sharp drop in inflation was not due to a fall in demand but rather due to the method for measuring prices of clothing and footwear along with the accumulated impact of a rise in the shekel's exchange rate and increased competition that has curbed price hikes in some industries.
The BOI, which has maintained its rate since March 2015, also repeated its guidance that it would maintain its current accommodative policy "as long as necessary in order to entrench the inflation environment within the target range."
Israel's inflation rate fell to minus 0.7 percent in July from minus 0.2 percent in June - well below the BOI's 1 -3 percent target range - pushing down one-year inflation expectations but medium and long-term expectations remain stable.
"The wage increases in the economy and the change in the trend of the exchange rate, to the extent that it persists, will support inflation, while the effect of additional initiated price reductions and the moderation of inflation worldwide act to reduce inflation," BOI said.
Supported by an improving global economy and world trade, Israel's services sector is expanding strongly although initial estimates for overall growth in the first half of this year show a slowdown compared with accelerated growth in 2016 as goods exports are affected by the strong shekel.
Israel's Gross Domestic Product grew by an annual rate of 2.9 percent in the second quarter, down from 3.6 percent in the first quarter, with the BOI last month raising its 2017 growth forecast to 3.4 percent from 2.8 percent.
"The most recent data indicated continued growth of economic activity at a similar rate in the beginning of the third quarter," BOI said.
After steadily rising since March 2015, the shekel has lost some steam since July, with the BOI saying it depreciated by 3.2 percent in nominal terms since its previous policy meeting on July 10.
But compared with the start of this year, the shekel is still up by 4.1 percent in terms of the effective exchange rate, it added.
The shekel was trading at 3.58 to the U.S. dollar today, up 7.5 percent this year.
The BOI, which has maintained its rate since March 2015, also repeated its guidance that it would maintain its current accommodative policy "as long as necessary in order to entrench the inflation environment within the target range."
Israel's inflation rate fell to minus 0.7 percent in July from minus 0.2 percent in June - well below the BOI's 1 -3 percent target range - pushing down one-year inflation expectations but medium and long-term expectations remain stable.
"The wage increases in the economy and the change in the trend of the exchange rate, to the extent that it persists, will support inflation, while the effect of additional initiated price reductions and the moderation of inflation worldwide act to reduce inflation," BOI said.
Supported by an improving global economy and world trade, Israel's services sector is expanding strongly although initial estimates for overall growth in the first half of this year show a slowdown compared with accelerated growth in 2016 as goods exports are affected by the strong shekel.
Israel's Gross Domestic Product grew by an annual rate of 2.9 percent in the second quarter, down from 3.6 percent in the first quarter, with the BOI last month raising its 2017 growth forecast to 3.4 percent from 2.8 percent.
"The most recent data indicated continued growth of economic activity at a similar rate in the beginning of the third quarter," BOI said.
After steadily rising since March 2015, the shekel has lost some steam since July, with the BOI saying it depreciated by 3.2 percent in nominal terms since its previous policy meeting on July 10.
But compared with the start of this year, the shekel is still up by 4.1 percent in terms of the effective exchange rate, it added.
The shekel was trading at 3.58 to the U.S. dollar today, up 7.5 percent this year.
Monday, August 28, 2017
Kyrgyz Rep. maintains rate, inflation seen in target range
Kyrgyzstan's central bank kept its benchmark discount rate at 5.0 percent, saying the current rate should help stimulate the economy while inflation is expected to remain within the target range of 5.0 to 7.0 percent.
The National Bank of the Kyrgyz Republic (NBKR) has kept its rate steady since December 2016 when it last cut it as part of a 500-basis-point easing cycle that began in March 2016.
Kyrgyzstan's inflation rate eased to 3.6 percent in July from 4.1 percent in June, in line with the central bank's forecast, and will trend toward the lower boundary of the inflation target, the NBKR said.
It added improving domestic growth and external demand were the main factors affecting prices.
The country's economy continues to develop positively, with Gross Domestic Product in the first 7 months of the year up by an annual 6.9 percent, the bank said. Excluding output from the Kumtor gold mine, GDP rose 3.6 percent.
In order to maintain positive growth, the central bank pointed to its main trading partners along with higher remittances from abroad. Net inflow of money transfers in the January-July period rose by 28.8 percent, it added.
The foreign exchange market also remains stable, with the exchange rate of the som up by 0.9 percent from the start of this year to Aug. 25, the central bank said, adding it had not participated in the foreign exchange market this month.
The Kyrgyzstani som, which fell sharply in 2014 and 2014, has been relatively stable since May 2016 and was trading at 68.5 to the U.S. dollar today, up 1 percent this year.
In April the International Monetary Fund forecast 2017 growth of 3.5 percent growth as external and internal demand continue to improve.
www.CentralBankNews.info
The National Bank of the Kyrgyz Republic (NBKR) has kept its rate steady since December 2016 when it last cut it as part of a 500-basis-point easing cycle that began in March 2016.
Kyrgyzstan's inflation rate eased to 3.6 percent in July from 4.1 percent in June, in line with the central bank's forecast, and will trend toward the lower boundary of the inflation target, the NBKR said.
It added improving domestic growth and external demand were the main factors affecting prices.
The country's economy continues to develop positively, with Gross Domestic Product in the first 7 months of the year up by an annual 6.9 percent, the bank said. Excluding output from the Kumtor gold mine, GDP rose 3.6 percent.
In order to maintain positive growth, the central bank pointed to its main trading partners along with higher remittances from abroad. Net inflow of money transfers in the January-July period rose by 28.8 percent, it added.
The foreign exchange market also remains stable, with the exchange rate of the som up by 0.9 percent from the start of this year to Aug. 25, the central bank said, adding it had not participated in the foreign exchange market this month.
The Kyrgyzstani som, which fell sharply in 2014 and 2014, has been relatively stable since May 2016 and was trading at 68.5 to the U.S. dollar today, up 1 percent this year.
In April the International Monetary Fund forecast 2017 growth of 3.5 percent growth as external and internal demand continue to improve.
www.CentralBankNews.info
Sunday, August 27, 2017
This week in monetary policy: Kyrgyzstan, Malawi, Israel, Moldova, South Korea, Fiji, Colombia, Bulgaria, Dominican Rep. and Angola
This week (August 27 through September 2) central banks from 10 countries or
jurisdictions are scheduled to decide on monetary policy: Kyrgyz Republic, Malawi, Israel, Moldova, South Korea, Fiji, Colombia, Bulgaria, Dominican Republic and Angola.
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 35 | ||||||
| AUG 27 - SEP 2, 2017: | ||||||
| COUNTRY | DATE | RATE | LATEST | YTD | 1 YR AGO | MSCI |
| KYRGYZSTAN | 28-Aug | 5.00% | 0 | 0 | 6.00% | |
| MALAWI | 28-Aug | 18.00% | -400 | -800 | 27.00% | |
| ISRAEL | 29-Aug | 0.10% | 0 | 0 | 0.10% | DM |
| MOLDOVA | 30-Aug | 8.00% | 0 | -100 | 10.00% | |
| SOUTH KOREA | 31-Aug | 1.25% | 0 | 0 | 1.25% | EM |
| FIJI | 31-Aug | 0.50% | 0 | 0 | 0.50% | |
| COLOMBIA | 31-Aug | 5.50% | -25 | -200 | 7.75% | EM |
| BULGARIA | 31-Aug | 0.00% | 0 | 0 | 0.00% | FM |
| DOMINICAN REP. | 31-Aug | 5.25% | -50 | -25 | 5.00% | |
| ANGOLA | 1-Sep | 16.00% | 0 | 0 | 16.00% | |
Saturday, August 26, 2017
Jamaica cuts rate 25 bps as inflation seen in target
Jamaica's central bank cut its new policy rate, the rate on overnight deposits, by a further 25 basis points to 3.50 percent, and confirmed that it expects "inflation will be within BOJ's inflation target of 4.0 percent to 6.0 percent for fiscal year 2017/18."
The Bank of Jamaica (BOJ) on July 1 adopted the overnight deposit rate as its new signal rate instead of the rate paid on 30-day certificates of deposit, and on that occasion reduced the rate by 25 basis points to 3.75 percent. In April the BOJ cut the 30-day CD rate by 25 points to 4.75 percent.
The central bank said its outlook was reinforced by the government's commitment to maintaining a 7.0 percent budget surplus for the 2017/18 financial year, which began April 1, and to meet the overall public sector fiscal targets under the agreement with the International Monetary Fund.
"The continued tight fiscal policy posture supports a further easing in monetary conditions," the BOJ said in a statement from Aug. 24.
In its quarterly press briefing from Aug. 16, BOJ Governor Brian Wynter said the central bank would maintain a generally accommodative policy stance in light of the outlook for inflation over the next four quarters though it "remains poised to address any undesirable risks to inflation that may emerge" as it ensures the benefits of low and stable inflation expectations.
Wynter also said interest rates on bank loans in Jamaica remained too high, with lending rates adjusted for inflation around 7.5 percent, which effectively excludes many businesses from successfully approaching financial institutions for a loan.
In its latest statement, the BOJ said Jamaica's main economic indicators continue to improve, with economic activity expanding although at a slower pace than its potential rate of growth.
Inflation has been following a generally positive trend with expectations firmly anchored in single digits, international reserves have continued to rise, the current account is projected to remain at sustainable levels, private sector credit is expanding strongly and market interest rates are trending downwards.
Jamaica's inflation rate inched up to 4.5 percent in July from 4.4 percent in June, with the BOJ on Aug. 16 saying the persistently low level of core inflation was reflecting lower exchange rate pass-through to domestic prices coupled with continued fiscal restraint.
In its statement from Aug. 16, the BOJ also said inflation was forecast to end within the 4 - 6 percent target range in 2017/18, with risks seen balanced, due to improved demand, a tempered rise in crude oil prices and administered price changes in connection with tax measures.
After shrinking in 2014, Jamaica's economy has slowly been improving and grew for the 10th consecutive quarter in the second quarter due to improving macroeconomic fundamentals through structural reforms along with higher foreign and domestic investor confidence.
In the first quarter of this year Jamaica's Gross Domestic Product grew by an annual rate of 0.1 percent, down from 1.4 percent in the previous quarter, with the BOJ forecasting growth in 2017/18 of 1.5 to 2.5 percent.
The country's growth prospects are also seen improving based on improved external competitiveness due to structural reforms as part of the IMF agreement, which is also helping strengthen the credibility of its reform agenda.
In November 2016 the IMF approved a 3-year, US$1.64 billion stand-by agreement with Jamaica to support the government's economic reforms, with about $412 million made immediately available and the rest to be distributed in six tranches following reviews.
The financial aid was aimed at providing insurance to Jamaica against adverse external shocks during the period of reform, which includes a move to inflation targeting by the BOJ along with a strengthening of its autonomy, refining the policy signaling, the liquidity provision framework and macroeconomic forecasting.
The IMF also said the BOJ was committed to maintaining exchange rate flexibility and building international reserves through market-based purchases.
After depreciating steadily from 2010, the Jamaican dollar has been relatively stable since November last year and was trading at 127.5 to the U.S. dollar, up 0.7 percent this year.
The Bank of Jamaica (BOJ) on July 1 adopted the overnight deposit rate as its new signal rate instead of the rate paid on 30-day certificates of deposit, and on that occasion reduced the rate by 25 basis points to 3.75 percent. In April the BOJ cut the 30-day CD rate by 25 points to 4.75 percent.
The central bank said its outlook was reinforced by the government's commitment to maintaining a 7.0 percent budget surplus for the 2017/18 financial year, which began April 1, and to meet the overall public sector fiscal targets under the agreement with the International Monetary Fund.
"The continued tight fiscal policy posture supports a further easing in monetary conditions," the BOJ said in a statement from Aug. 24.
In its quarterly press briefing from Aug. 16, BOJ Governor Brian Wynter said the central bank would maintain a generally accommodative policy stance in light of the outlook for inflation over the next four quarters though it "remains poised to address any undesirable risks to inflation that may emerge" as it ensures the benefits of low and stable inflation expectations.
Wynter also said interest rates on bank loans in Jamaica remained too high, with lending rates adjusted for inflation around 7.5 percent, which effectively excludes many businesses from successfully approaching financial institutions for a loan.
In its latest statement, the BOJ said Jamaica's main economic indicators continue to improve, with economic activity expanding although at a slower pace than its potential rate of growth.
Inflation has been following a generally positive trend with expectations firmly anchored in single digits, international reserves have continued to rise, the current account is projected to remain at sustainable levels, private sector credit is expanding strongly and market interest rates are trending downwards.
Jamaica's inflation rate inched up to 4.5 percent in July from 4.4 percent in June, with the BOJ on Aug. 16 saying the persistently low level of core inflation was reflecting lower exchange rate pass-through to domestic prices coupled with continued fiscal restraint.
In its statement from Aug. 16, the BOJ also said inflation was forecast to end within the 4 - 6 percent target range in 2017/18, with risks seen balanced, due to improved demand, a tempered rise in crude oil prices and administered price changes in connection with tax measures.
After shrinking in 2014, Jamaica's economy has slowly been improving and grew for the 10th consecutive quarter in the second quarter due to improving macroeconomic fundamentals through structural reforms along with higher foreign and domestic investor confidence.
In the first quarter of this year Jamaica's Gross Domestic Product grew by an annual rate of 0.1 percent, down from 1.4 percent in the previous quarter, with the BOJ forecasting growth in 2017/18 of 1.5 to 2.5 percent.
The country's growth prospects are also seen improving based on improved external competitiveness due to structural reforms as part of the IMF agreement, which is also helping strengthen the credibility of its reform agenda.
In November 2016 the IMF approved a 3-year, US$1.64 billion stand-by agreement with Jamaica to support the government's economic reforms, with about $412 million made immediately available and the rest to be distributed in six tranches following reviews.
The financial aid was aimed at providing insurance to Jamaica against adverse external shocks during the period of reform, which includes a move to inflation targeting by the BOJ along with a strengthening of its autonomy, refining the policy signaling, the liquidity provision framework and macroeconomic forecasting.
The IMF also said the BOJ was committed to maintaining exchange rate flexibility and building international reserves through market-based purchases.
After depreciating steadily from 2010, the Jamaican dollar has been relatively stable since November last year and was trading at 127.5 to the U.S. dollar, up 0.7 percent this year.
Wednesday, August 23, 2017
Paraguay cuts rate 25 bps to counter a slowing economy
Paraguay's central bank cut its monetary policy rate by 25 basis points to 5.25 percent, the first rate cut since July 2016, as recent data show slowing economic activity while inflation remains favorable.
The Central Bank of Paraguay (BCP) has now cut its rate 75 basis points since embarking on an easing cycle in April 2016.
The bank's open markets operation committee (CEOMA) said the decision to lower its benchmark rate was unanimous and economic indicators since its previous meeting in May indicated slower economic expansion in the short term with leading indicators showing activity below the month of July.
On the other hand, inflation remains favorable and inflation expectations remain well anchored, with different inflation measures following a downward trajectory and the gauge for core inflation stabilizing below the target.
Paraguay's headline inflation rose to 4.0 percent in July from 2.9 percent in June while core inflation declined to 5.3 percent from 5.7 percent.
For 2017 BCP is targeting inflation of 4.0 percent, plus/minus 2 percentage points, down from 4.5 percent in 2016.
Paraguay's economy grew by an annual rate of 6.6 percent in the first quarter of this year, up from 3.4 percent in the previous quarter, in line with the central bank's April forecast for 4.2 percent growth for the full year, up from a previous forecast of 3.7 percent.
After falling sharply in 2014 and 2015, Paraguay's guarani has been relatively stable since 2016 and was trading at 5,615 to the U.S. dollar today, up 3.8 percent this year.
www.CentralBankNews.info
The Central Bank of Paraguay (BCP) has now cut its rate 75 basis points since embarking on an easing cycle in April 2016.
The bank's open markets operation committee (CEOMA) said the decision to lower its benchmark rate was unanimous and economic indicators since its previous meeting in May indicated slower economic expansion in the short term with leading indicators showing activity below the month of July.
On the other hand, inflation remains favorable and inflation expectations remain well anchored, with different inflation measures following a downward trajectory and the gauge for core inflation stabilizing below the target.
Paraguay's headline inflation rose to 4.0 percent in July from 2.9 percent in June while core inflation declined to 5.3 percent from 5.7 percent.
For 2017 BCP is targeting inflation of 4.0 percent, plus/minus 2 percentage points, down from 4.5 percent in 2016.
Paraguay's economy grew by an annual rate of 6.6 percent in the first quarter of this year, up from 3.4 percent in the previous quarter, in line with the central bank's April forecast for 4.2 percent growth for the full year, up from a previous forecast of 3.7 percent.
After falling sharply in 2014 and 2015, Paraguay's guarani has been relatively stable since 2016 and was trading at 5,615 to the U.S. dollar today, up 3.8 percent this year.
www.CentralBankNews.info
Iceland maintains rate as booming economy seen cooling
Iceland's central bank kept its benchmark 7-day deposit rate at 4.50 percent as it lowered its forecast for economic growth this year and next year while inflation is seen exceeding the bank's target range in 2019.
The Central Bank of Iceland (CBI), which has cut its key rate by 50 basis points this year, also said demand pressures in the economy call for a tight monetary stance to ensure price stability but reiterated that future changes to its monetary policy would be determined "by economic developments and actions taken in other policy spheres."
Iceland's economy is booming due to tourism, which has fired up private consumption. But inflation has remained under control due to the strong exchange rate of the krona, which has kept down import prices, and low global inflation.
But the CBI noted the foreign exchange market had been volatile and while "changes in external trade and the housing market could be in the offing," it added that it was too early to draw any conclusions about the scope and implications of such changes.
Since the previous meeting of the central bank's monetary committee in June, when the CBI cut its rate for the second time this year, the Icelandic krona has depreciated, pushing up short-term inflation expectations slightly.
But the krona still remains 5.2 percent higher than at the start of this year and was trading at 107.4 to the U.S. dollar today, with long-term inflation expectations largely unchanged.
In an update to its forecast, the CBI lowered its projection for 2017 growth to 5.2 percent from May's forecast of 6.3 percent on lower growth in exports while private consumption is seen rising 7.1 percent, up from a previous forecast of 6.7 percent.
In 2018 Iceland's economy is seen cooling, with Gross Domestic Product forecast to rise by 3.3 percent, down from the previous forecast of 3.5 percent, and then by 2.5 percent in 2019, unchanged from May. In 2016 Iceland's economy grew by 7.2 percent as private consumption rose 6.9 percent.
In the first quarter of this year, Iceland's GDP expanded by 5.0 percent on an annual basis, down from 11.3 percent in the previous quarter.
Inflation in Iceland rose in July to 1.8 percent from June's 1.5 percent with inflation forecast by the CBI to average 1.8 percent this year, slightly up from 2016's 1.7 percent, and down from its previous forecast of 1.9 percent.
Next year inflation is seen accelerating to 2.5 percent, in line with CBI's 2.50 percent target, and up from its previous forecast of 2.2 percent. In 2019 inflation is seen rising further to 3.3 percent.
"The gap between domestic price developments - housing costs in particular - and external factors has continued to wide in recent months, exacerbating uncertainty about the near-term inflation outlook," the CBI said.
The Central Bank of Iceland (CBI), which has cut its key rate by 50 basis points this year, also said demand pressures in the economy call for a tight monetary stance to ensure price stability but reiterated that future changes to its monetary policy would be determined "by economic developments and actions taken in other policy spheres."
Iceland's economy is booming due to tourism, which has fired up private consumption. But inflation has remained under control due to the strong exchange rate of the krona, which has kept down import prices, and low global inflation.
But the CBI noted the foreign exchange market had been volatile and while "changes in external trade and the housing market could be in the offing," it added that it was too early to draw any conclusions about the scope and implications of such changes.
Since the previous meeting of the central bank's monetary committee in June, when the CBI cut its rate for the second time this year, the Icelandic krona has depreciated, pushing up short-term inflation expectations slightly.
But the krona still remains 5.2 percent higher than at the start of this year and was trading at 107.4 to the U.S. dollar today, with long-term inflation expectations largely unchanged.
In an update to its forecast, the CBI lowered its projection for 2017 growth to 5.2 percent from May's forecast of 6.3 percent on lower growth in exports while private consumption is seen rising 7.1 percent, up from a previous forecast of 6.7 percent.
In 2018 Iceland's economy is seen cooling, with Gross Domestic Product forecast to rise by 3.3 percent, down from the previous forecast of 3.5 percent, and then by 2.5 percent in 2019, unchanged from May. In 2016 Iceland's economy grew by 7.2 percent as private consumption rose 6.9 percent.
In the first quarter of this year, Iceland's GDP expanded by 5.0 percent on an annual basis, down from 11.3 percent in the previous quarter.
Inflation in Iceland rose in July to 1.8 percent from June's 1.5 percent with inflation forecast by the CBI to average 1.8 percent this year, slightly up from 2016's 1.7 percent, and down from its previous forecast of 1.9 percent.
Next year inflation is seen accelerating to 2.5 percent, in line with CBI's 2.50 percent target, and up from its previous forecast of 2.2 percent. In 2019 inflation is seen rising further to 3.3 percent.
"The gap between domestic price developments - housing costs in particular - and external factors has continued to wide in recent months, exacerbating uncertainty about the near-term inflation outlook," the CBI said.
Tuesday, August 22, 2017
Argentina maintains rate as core inflation still too high
Argentina's central bank maintained its monetary policy rate at 26.25 percent, as expected, confirming its view that disinflation is continuing but core inflation remains too high.
The Central Bank of Argentina (BCRA) has kept its rate steady since a surprise 150 basis point hike in April after inflation expectations rose.
As in its previous policy statement from Aug. 8, the BCRA said inflation in August is expected to be lower than in July as the process of disinflation continues but core inflation is still above its targeted level.
Last month Argentina's national statistics institute for the first time published a national consumer price index for the month of June. The new index is used by BCRA to judge compliance of prices with it target of reducing inflation to between 12 percent and 17 percent this year and 10.0 percent, plus/minus 2 percentage points in 2018.
As expected by the central bank, general consumer prices rose by 1.7 percent in July from June due to changes in regulated prices while core inflation was up 1.8 percent.
However, the BCRA also said the annual general inflation rate declined to 21.4 percent in July from 21.8 percent in June and the core inflation rate eased to 22.5 percent from 22.6 percent.
Argentina's inflation rate rose to a 2017-high of 40.5 percent in April, with prices driven higher by the government's removal of energy and transport subsidies to reduce the federal deficit.
Argentina's peso has been firming in the last week after falling from May to early August. Today the peso was trading at 17.2 to the U.S. dollar today, down 7.8 percent this year.
The country's president, Mauricio Marcri, let the peso float shortly after taking office in December 2015, removing many of the controls that previous governments had used to prop up the currency and protect foreign reserves.
www.CentralBankNews.info
The Central Bank of Argentina (BCRA) has kept its rate steady since a surprise 150 basis point hike in April after inflation expectations rose.
As in its previous policy statement from Aug. 8, the BCRA said inflation in August is expected to be lower than in July as the process of disinflation continues but core inflation is still above its targeted level.
Last month Argentina's national statistics institute for the first time published a national consumer price index for the month of June. The new index is used by BCRA to judge compliance of prices with it target of reducing inflation to between 12 percent and 17 percent this year and 10.0 percent, plus/minus 2 percentage points in 2018.
As expected by the central bank, general consumer prices rose by 1.7 percent in July from June due to changes in regulated prices while core inflation was up 1.8 percent.
However, the BCRA also said the annual general inflation rate declined to 21.4 percent in July from 21.8 percent in June and the core inflation rate eased to 22.5 percent from 22.6 percent.
Argentina's inflation rate rose to a 2017-high of 40.5 percent in April, with prices driven higher by the government's removal of energy and transport subsidies to reduce the federal deficit.
Argentina's peso has been firming in the last week after falling from May to early August. Today the peso was trading at 17.2 to the U.S. dollar today, down 7.8 percent this year.
The country's president, Mauricio Marcri, let the peso float shortly after taking office in December 2015, removing many of the controls that previous governments had used to prop up the currency and protect foreign reserves.
www.CentralBankNews.info
Botswana maintains rate, inflation seen staying in range
Botswana's central bank kept its Bank Rate unchanged at 5.50 percent, saying its "supportive monetary policy stance remains consistent with maintaining inflation within the 3 - 6 percent objective range" based on the current state of the economy and the domestic and foreign outlook.
The Bank of Botswana (BB), which last cut its rate by 50 basis points in August 2016, added moderate domestic demand pressures and a modest rise in foreign prices contributed to a positive outlook for inflation, with downside risks from lower commodity prices and upside risks from higher administered prices and higher than expected commodity prices.
Botswana's inflation rate eased to 3.4 percent in July from 3.5 percent in the previous two months while the exchange rate of its pula continued to slowly appreciate after hitting lows around 12 to the U.S. dollar in January 2016.
The pula was trading at 10.2 to the dollar today, up almost 5 percent this year.
Botswana's economy grew by 3.9 percent in the 12 months to March, up from a contraction of 1.8 percent in the same period that ended March 2016, BB said.
After shrinking by 1.7 percent in 2015, Botswana's economy grew 4.3 percent last year as diamond sales rebounded and easy fiscal and monetary policies helped non-mining activities.
In the first quarter of this year, Botswana's Gross Domestic Product grew by an annual 0.8 percent, down from 4.2 percent in the previous quarter.
Higher economic activity is supported by the non-mining sector while the mining sector contracted by 10.3 percent in the year to March, BB said, adding non-mining output is projected to be below trend in the short to medium-term due to modest growth in household incomes and subdued economic expansion in trading partners.
"However, gradual economic recovery is expected in the medium term in response to anticipated improvement in external economic conditions," BB said.
Earlier this month the International Monetary Fund said Botswana's economy was undergoing a cyclical recovery with a broadly positive outlook, supported by a rebound in the global diamond market and public investment, and appropriate macroeconomic policies.
"At present, the authorities' neutral monetary policy stance is appropriate as there does not seem to be room to lower interest rates," the IMF said, adding the exchange rate regime continued to serve the country well.
The IMF forecast growth this year of 4.5 percent and 4.8 percent in 2018, with inflation seen averaging 3.7 percent this year and next year.
The Bank of Botswana (BB), which last cut its rate by 50 basis points in August 2016, added moderate domestic demand pressures and a modest rise in foreign prices contributed to a positive outlook for inflation, with downside risks from lower commodity prices and upside risks from higher administered prices and higher than expected commodity prices.
Botswana's inflation rate eased to 3.4 percent in July from 3.5 percent in the previous two months while the exchange rate of its pula continued to slowly appreciate after hitting lows around 12 to the U.S. dollar in January 2016.
The pula was trading at 10.2 to the dollar today, up almost 5 percent this year.
Botswana's economy grew by 3.9 percent in the 12 months to March, up from a contraction of 1.8 percent in the same period that ended March 2016, BB said.
After shrinking by 1.7 percent in 2015, Botswana's economy grew 4.3 percent last year as diamond sales rebounded and easy fiscal and monetary policies helped non-mining activities.
In the first quarter of this year, Botswana's Gross Domestic Product grew by an annual 0.8 percent, down from 4.2 percent in the previous quarter.
Higher economic activity is supported by the non-mining sector while the mining sector contracted by 10.3 percent in the year to March, BB said, adding non-mining output is projected to be below trend in the short to medium-term due to modest growth in household incomes and subdued economic expansion in trading partners.
"However, gradual economic recovery is expected in the medium term in response to anticipated improvement in external economic conditions," BB said.
Earlier this month the International Monetary Fund said Botswana's economy was undergoing a cyclical recovery with a broadly positive outlook, supported by a rebound in the global diamond market and public investment, and appropriate macroeconomic policies.
"At present, the authorities' neutral monetary policy stance is appropriate as there does not seem to be room to lower interest rates," the IMF said, adding the exchange rate regime continued to serve the country well.
The IMF forecast growth this year of 4.5 percent and 4.8 percent in 2018, with inflation seen averaging 3.7 percent this year and next year.
Indonesia cuts rate 25 bps as C/A deficit in safe limits
Indonesia's central bank cut its benchmark 7-day reversed repurchase rate (RR) by 25 basis points to 4.50 percent, noting that economic growth was lower than expected in the second quarter and a lowering of interest rates was consistent with inflation seen within its target range over the next two years while the current account deficit was within "a healthy range"
It is Bank Indonesia's (BI) first rate cut since since October 2016. From January through June last year BI lowered its previous benchmark rate four times by a total of 100 basis points and then cut the current RR rate by a total of 50 basis points in August and October 2016.
The rate cut surprised most economists, who expected BI to continue to maintain its rate despite a hint by Governor Agus Martowardojo last week that he favored a rate cut if data supported it.
In addition to lower than expected growth, BI said external risks from the U.S. Federal Reserve's plan to raise rates and normalize its balance sheet had eased so its own interest rates remained attractive and lower rates should help support higher economic growth.
Indonesia's economy grew by a lower-than-expected 4.0 percent in the second quarter, the first quarterly expansion since the third quarter of last year, for annual growth of 5.01 percent, unchanged from the first quarter and below forecasts of 5.10 percent growth and second quarter 2016 growth of 5.18 percent.
While growth was supported by rising investment from faster government spending on infrastructure, BI said household consumption contracted in the second quarter and exports slowed due to lower growth in the export volume of manufactured products.
But BI confirmed its 2017 forecast for growth of between 5.0 and 5.4 percent, up from 5.02 percent last year, while the government is targeting growth of 5.2 percent.
For 2018 BI said it expects growth to accelerate to 5.1-5.5 percent on the back of rising investment and consumption from more expansive government spending and as monetary easing continues.
Indonesia's current account deficit rose to US$4.962 billion in the second quarter of 2017 from $2.363 billion in the first quarter but was down from the second quarter of 2016's deficit of $4.974 billion.
But BI said a large capital and financial account surplus of US$5.9 billion was financing the current account deficit, which amounted to 1.96 percent of Gross Domestic Product in the second quarter and is expected to remain in a range of 1.5-2.0 percent of GDP this year and 2.0-2.5 percent in 2018, below the safe limit of 3.0% of GDP.
Indonesia's foreign exchange reserves end-July were US$127.8 billion, for 9 months of imports.
Indonesia's headline inflation rate declined to 3.88 percent in July from a 2017-high of 4.37 percent in June as the rise in raw food prices slowed while the rupiah has been relatively stable since late last year and was trading at 13,348 to the U.S. dollar after the rate cut, up 1.13 percent this year.
BI said the stable rupiah exchange rate was supported by continued confidence in the country's macroeconomic stability and the exchange rate is expected to remain stable, supported by its balance of payments and a deepening of its domestic foreign exchange market.
It is Bank Indonesia's (BI) first rate cut since since October 2016. From January through June last year BI lowered its previous benchmark rate four times by a total of 100 basis points and then cut the current RR rate by a total of 50 basis points in August and October 2016.
The rate cut surprised most economists, who expected BI to continue to maintain its rate despite a hint by Governor Agus Martowardojo last week that he favored a rate cut if data supported it.
In addition to lower than expected growth, BI said external risks from the U.S. Federal Reserve's plan to raise rates and normalize its balance sheet had eased so its own interest rates remained attractive and lower rates should help support higher economic growth.
Indonesia's economy grew by a lower-than-expected 4.0 percent in the second quarter, the first quarterly expansion since the third quarter of last year, for annual growth of 5.01 percent, unchanged from the first quarter and below forecasts of 5.10 percent growth and second quarter 2016 growth of 5.18 percent.
While growth was supported by rising investment from faster government spending on infrastructure, BI said household consumption contracted in the second quarter and exports slowed due to lower growth in the export volume of manufactured products.
But BI confirmed its 2017 forecast for growth of between 5.0 and 5.4 percent, up from 5.02 percent last year, while the government is targeting growth of 5.2 percent.
For 2018 BI said it expects growth to accelerate to 5.1-5.5 percent on the back of rising investment and consumption from more expansive government spending and as monetary easing continues.
Indonesia's current account deficit rose to US$4.962 billion in the second quarter of 2017 from $2.363 billion in the first quarter but was down from the second quarter of 2016's deficit of $4.974 billion.
But BI said a large capital and financial account surplus of US$5.9 billion was financing the current account deficit, which amounted to 1.96 percent of Gross Domestic Product in the second quarter and is expected to remain in a range of 1.5-2.0 percent of GDP this year and 2.0-2.5 percent in 2018, below the safe limit of 3.0% of GDP.
Indonesia's foreign exchange reserves end-July were US$127.8 billion, for 9 months of imports.
Indonesia's headline inflation rate declined to 3.88 percent in July from a 2017-high of 4.37 percent in June as the rise in raw food prices slowed while the rupiah has been relatively stable since late last year and was trading at 13,348 to the U.S. dollar after the rate cut, up 1.13 percent this year.
BI said the stable rupiah exchange rate was supported by continued confidence in the country's macroeconomic stability and the exchange rate is expected to remain stable, supported by its balance of payments and a deepening of its domestic foreign exchange market.
Sunday, August 20, 2017
This week in monetary policy: Kazakhstan, Indonesia, Hungary, Botswana, Argentina, Iceland, Paraguay and Malawi
This week (August 20 through August 26) central banks from 8 countries or
jurisdictions are scheduled to decide on monetary policy: Kazakhstan, Indonesia, Hungary, Botswana, Argentina, Iceland, Paraguay and Malawi.
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 34 | ||||||
| AUG 20 - AUG 26, 2017: | ||||||
| COUNTRY | DATE | RATE | LATEST | YTD | 1 YR AGO | MSCI |
| KAZAKHSTAN | 21-Aug | 10.50% | 0 | -150 | 13.00% | FM |
| INDONESIA | 22-Aug | 4.75% | 0 | 0 | 5.25% | EM |
| HUNGARY | 22-Aug | 0.90% | 0 | 0 | 0.90% | EM |
| BOTSWANA | 22-Aug | 5.50% | 0 | 0 | 5.50% | |
| ARGENTINA | 22-Aug | 26.25% | 0 | 150 | 28.25% | FM |
| ICELAND | 23-Aug | 4.40% | -25 | -50 | 5.25% | |
| PARAGUAY | 23-Aug | 5.50% | 0 | 0 | 5.50% | |
| MALAWI | 24-Aug | 18.00% | -400 | -800 | 27.00% | |
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