The Central Bank of the Dominican Republic (BCRD) left its monetary policy rate steady at 4.50 percent for the third month, saying domestic demand is continuing to react favorably to the expansive monetary policy measures it has taken since June and energized private credit, which has risen 11 percent so far this year and 12 percent in the last 12 months.
BCRD cut its policy rate three times in a row by a total of 100 basis points in June, July and August and released more than 34 billion Dominican peso in legal reserves to productive sectors.
Economic activity has improved with growth of 5.2 percent year-on-year in October following 5.1 percent growth in September for average growth in the first 10 moths of 4.8 percent.
"The dynamism that economic activity has registered in recent months will contribute to economic growth of around its 5.0 percent potential by the end of the year, " BCRD said, confirming its forecast from September after a monetary policy meeting on Nov. 29.
Inflation in the Dominican Republic rose to 2.48 percent in October from 2.02 percent in September but remains below BCRD's lower limit of its target range of 4.0 percent, plus/minus 1 percentage point.
The Dominican peso fell fast between mid-September and mid-October but since then it has firmed slightly. Today it was trading at 52.9 to the U.S. dollar, down 4.7 percent this year.
The central bank said the exchange rate had been relatively stable, depreciating less than the average Latin American currency and emerging economies due to the strength of macroeconomic fundamentals and the credibility of economic policies.
www.CentralBankNews.info
Saturday, November 30, 2019
Friday, November 29, 2019
Angola holds rate, shrinks footprint in FX market further
Angola's central bank left its key interest rates unchanged, saying disinflation is continuing despite the implementation of value-added-tax (VAT) and the liberalization of the exchange rate in October.
The National Bank of Angola (BNA), which has cut its benchmark BNA rate by 100 points this year to 15.50 percent, added its monetary policy stance will remain restrictive through finer liquidity management by open market operations in order to consolidate the floating exchange rate regime and to ensure greater price stability.
In October BNA's monetary policy committee raised the reserve requirement for kwanza deposits by 500 basis points to 22 percent and set a 10.0 percent interest rate for a new 7-day facility as it completed a transition to a market-determined exchange rate for the kwanza begun in January 2018.
This included scrapping a 2.0 percent trading band margin that had limited the kwanza's move during currency auctions.
After taking over the reins of BNA in October 2017 - part of Angola President Joao Laurenco's move to clean up the country's image as corrupt - Governor Jose Massano began a major overhaul of BNA in January 2018, including ditching a fixed exchange rate regime and adopting the monetary base as a operational variable to better control liquidity.
Continuing BNA's policy of normalizing and reducing its intervention in the foreign exchange market, the bank today said it would stop purchasing foreign currency from oil companies as of Jan. 2, 2020 and in the future they should sell directly to commercial banks.
The limit on the foreign exchange position of commercial banks would also be lowered to 2.5 percent from 5.0 percent, with both measures aimed at raising the number of participants in the foreign exchange market and boosting the interbank foreign exchange market.
Since BNA began liberalizing the foreign exchange market by using auctions to set a reference rate in January last year, the kwanza has lost almost two-third of its value.
Today the kwanza was trading at 491.2 to the U.S. dollar, down 23 percent since October 1, 37 percent since the start of this year and down 66.2 percent since the pre-January 2018 peg of 166.
The monetary base expanded by 6.81 percent in October as compared to an 11.68 percent contraction in September, reflecting an increase in bank reserves by 8.24 percent, and bank notes and coins in circulation by 3.86 percent.
The M2 monetary aggregate, which comprises bank deposits, notes and coins, rose 2.97 percent in October while the stock of credit in local currency expanded 2.6 percent in October from September but on an annual basis credit stock was down 4.62 percent.
Angola's inflation rate was steady at 16.08 percent in October and September, and in September Massano told Bloomberg inflation was expected to fall below 10 percent by 2022, providing scope for interest rates to fall.
www.CentralBankNews.info
The National Bank of Angola (BNA), which has cut its benchmark BNA rate by 100 points this year to 15.50 percent, added its monetary policy stance will remain restrictive through finer liquidity management by open market operations in order to consolidate the floating exchange rate regime and to ensure greater price stability.
In October BNA's monetary policy committee raised the reserve requirement for kwanza deposits by 500 basis points to 22 percent and set a 10.0 percent interest rate for a new 7-day facility as it completed a transition to a market-determined exchange rate for the kwanza begun in January 2018.
This included scrapping a 2.0 percent trading band margin that had limited the kwanza's move during currency auctions.
After taking over the reins of BNA in October 2017 - part of Angola President Joao Laurenco's move to clean up the country's image as corrupt - Governor Jose Massano began a major overhaul of BNA in January 2018, including ditching a fixed exchange rate regime and adopting the monetary base as a operational variable to better control liquidity.
Continuing BNA's policy of normalizing and reducing its intervention in the foreign exchange market, the bank today said it would stop purchasing foreign currency from oil companies as of Jan. 2, 2020 and in the future they should sell directly to commercial banks.
The limit on the foreign exchange position of commercial banks would also be lowered to 2.5 percent from 5.0 percent, with both measures aimed at raising the number of participants in the foreign exchange market and boosting the interbank foreign exchange market.
Since BNA began liberalizing the foreign exchange market by using auctions to set a reference rate in January last year, the kwanza has lost almost two-third of its value.
Today the kwanza was trading at 491.2 to the U.S. dollar, down 23 percent since October 1, 37 percent since the start of this year and down 66.2 percent since the pre-January 2018 peg of 166.
The monetary base expanded by 6.81 percent in October as compared to an 11.68 percent contraction in September, reflecting an increase in bank reserves by 8.24 percent, and bank notes and coins in circulation by 3.86 percent.
The M2 monetary aggregate, which comprises bank deposits, notes and coins, rose 2.97 percent in October while the stock of credit in local currency expanded 2.6 percent in October from September but on an annual basis credit stock was down 4.62 percent.
Angola's inflation rate was steady at 16.08 percent in October and September, and in September Massano told Bloomberg inflation was expected to fall below 10 percent by 2022, providing scope for interest rates to fall.
www.CentralBankNews.info
South Korea holds rate, easy stance, still ready to adjust
South Korea's central bank left its base rate steady at 1.25 percent and said it would maintain its accommodative monetary policy stance as domestic economic growth is expected to be moderate and inflation low, confirming it is still willing to "judge whether to adjust the degree of monetary policy accommodation."
The Bank of Korea (BOK), which has cut its rate twice this year by a total of 50 basis points in October and July, said the pace of domestic economic growth has remained slow but next year the sluggishness in exports and facilities investment is expected to ease and consumption growth to rise moderately although the adjustment in construction investment will continue.
BOK lowered its forecast for 2019 growth to around 2.0 percent from July's forecast of 2.2 percent and forecast 2.3 percent growth in 2020, down from 2.5 percent previously forecast. In 2018 the economy grew 2.7 percent.
"As it is expected that domestic economic growth will be moderate and it is forecast that inflationary pressures on the demand side will remain at a low level, the Board will maintain its accommodative monetary policy stance," BOK said.
Whether to adjust the degree of accommodation, BOK said this would be decided in light of developments in U.S.-China trade talks, the economic and monetary policies of major countries, the rise in household debt, along with geopolitical risks and their impact on the domestic economy and financial stability.
South Korea's economy, considered a bellwether for the global economy and trade due to its reliance on exports, grew 2.0 percent annually in the third and second quarters of this year.
Last month BOK Governor Lee Ju-yeol said higher tariffs and uncertainties from the U.S.-China trade war had probably cut South Korea's growth by 0.4 percentage points in 2019.
Consumer price inflation rose slightly in October to zero percent from a decline of 0.4 percent in September and BOK forecast headline inflation would rise moderately to around 1.0 percent in 2020 while core inflation, which excludes food and energy, would be in the upper zero percent level.
The Bank of Korea (BOK), which has cut its rate twice this year by a total of 50 basis points in October and July, said the pace of domestic economic growth has remained slow but next year the sluggishness in exports and facilities investment is expected to ease and consumption growth to rise moderately although the adjustment in construction investment will continue.
BOK lowered its forecast for 2019 growth to around 2.0 percent from July's forecast of 2.2 percent and forecast 2.3 percent growth in 2020, down from 2.5 percent previously forecast. In 2018 the economy grew 2.7 percent.
"As it is expected that domestic economic growth will be moderate and it is forecast that inflationary pressures on the demand side will remain at a low level, the Board will maintain its accommodative monetary policy stance," BOK said.
Whether to adjust the degree of accommodation, BOK said this would be decided in light of developments in U.S.-China trade talks, the economic and monetary policies of major countries, the rise in household debt, along with geopolitical risks and their impact on the domestic economy and financial stability.
South Korea's economy, considered a bellwether for the global economy and trade due to its reliance on exports, grew 2.0 percent annually in the third and second quarters of this year.
Last month BOK Governor Lee Ju-yeol said higher tariffs and uncertainties from the U.S.-China trade war had probably cut South Korea's growth by 0.4 percentage points in 2019.
Consumer price inflation rose slightly in October to zero percent from a decline of 0.4 percent in September and BOK forecast headline inflation would rise moderately to around 1.0 percent in 2020 while core inflation, which excludes food and energy, would be in the upper zero percent level.
Sri Lanka holds rate as past easing seen reviving growth
Sri Lanka's central bank maintained its accommodative monetary policy stance and key interest rates, as expected, saying the measures it had taken in recent months were being transmitted to the economy and domestic economic activity is expected to gradually revive while inflation should remain within the desired range.
The Central Bank of Sri Lanka (CBS) has lowered its key interest rates by 100 basis points this year following cuts in May and August, and lowered the reserve requirements for banks by 250 points since November 2018, helping boost liquidity.
CBS's Standing Deposit Facility Rate (SDFR) now stands at 7.0 percent and the Standing Lending Facility Rate (SLFR) stands at 8.0 percent.
While taking note of fiscal slippages, the central bank's monetary board said recent tax revisions would support lower inflation and higher economic growth in the short term, but greater clarity with regard to the government's fiscal path is required to assess the impact on the economy.
The decision to maintain rates was widely expected following the recent Nov. 16 election of Gotabaya Rajapaksa as president of Sri Lanka, and Indrajit Coomaraswamy's decision on Nov. 26 to step down as governor of the central bank on Dec. 20.
Coomaraswamy, a Tamil, joined CBS in 1974 and became governor in 2016 and said he was resigning for personal reasons and the age limit for staff at regulated entities.
"The decision of the Monetary Board is consistent with the aim of maintaining inflation in the desired 4-6 percent range while supporting economic growth to reach its potential over the medium term," CBS said, adding monetary policy in several key economies has become increasingly accommodative "in view of the bleak global economic outlook."
Sri Lanka's economy is gradually recovering from the impact of the Easter Sunday suicide bombings, which killed more than 250 people, with the International Monetary Fund (IMF) forecasting growth to strengthen to 3.5 percent in 2020 from 2.7 percent this year as tourism gradually recovers, supported by government action to mitigate revenue shortfalls from the attacks.
Gross domestic product slowed to 1.6 percent year-on-year in the second quarter from 3.7 percent in the first quarter and CBS said growth is expected to be modest during the rest of this year but improving investor confidence supported by political stability and fiscal stimulus should boost domestic demand and drive economic growth in the short term.
Headline inflation has been volatile in recent months due to supply disruptions to food and inflation eased to 4.4 percent in November from 5.4 percent in October.
CBS expects continued volatility in inflation in the near term together with tax revisions and possible revisions to administered prices but still remain within the target range.
The rupee has been volatile in the immediate aftermath of the presidential election but is up 1.1 percent against the U.S. dollar this year, trading at 180.88 to the dollar today.
The Central Bank of Sri Lanka (CBS) has lowered its key interest rates by 100 basis points this year following cuts in May and August, and lowered the reserve requirements for banks by 250 points since November 2018, helping boost liquidity.
CBS's Standing Deposit Facility Rate (SDFR) now stands at 7.0 percent and the Standing Lending Facility Rate (SLFR) stands at 8.0 percent.
While taking note of fiscal slippages, the central bank's monetary board said recent tax revisions would support lower inflation and higher economic growth in the short term, but greater clarity with regard to the government's fiscal path is required to assess the impact on the economy.
The decision to maintain rates was widely expected following the recent Nov. 16 election of Gotabaya Rajapaksa as president of Sri Lanka, and Indrajit Coomaraswamy's decision on Nov. 26 to step down as governor of the central bank on Dec. 20.
Coomaraswamy, a Tamil, joined CBS in 1974 and became governor in 2016 and said he was resigning for personal reasons and the age limit for staff at regulated entities.
"The decision of the Monetary Board is consistent with the aim of maintaining inflation in the desired 4-6 percent range while supporting economic growth to reach its potential over the medium term," CBS said, adding monetary policy in several key economies has become increasingly accommodative "in view of the bleak global economic outlook."
Sri Lanka's economy is gradually recovering from the impact of the Easter Sunday suicide bombings, which killed more than 250 people, with the International Monetary Fund (IMF) forecasting growth to strengthen to 3.5 percent in 2020 from 2.7 percent this year as tourism gradually recovers, supported by government action to mitigate revenue shortfalls from the attacks.
Gross domestic product slowed to 1.6 percent year-on-year in the second quarter from 3.7 percent in the first quarter and CBS said growth is expected to be modest during the rest of this year but improving investor confidence supported by political stability and fiscal stimulus should boost domestic demand and drive economic growth in the short term.
Headline inflation has been volatile in recent months due to supply disruptions to food and inflation eased to 4.4 percent in November from 5.4 percent in October.
CBS expects continued volatility in inflation in the near term together with tax revisions and possible revisions to administered prices but still remain within the target range.
The rupee has been volatile in the immediate aftermath of the presidential election but is up 1.1 percent against the U.S. dollar this year, trading at 180.88 to the dollar today.
Thursday, November 28, 2019
Gambia holds rate, Thomas Cook collapse presents risk
Gambia's central bank left its policy rate steady at 12.50 percent as inflation is has started to decelerate and is expected to continue to trend downwards as long as the exchange rate of the delasi remains stable.
The Central Bank of The Gambia (CBG) added an improving current account along with a comfortable level of international reserves continues to support a stable delasi while the fundamentals of the banking sector remain strong, underpinned by adequate capital, high liquidity, a low level of non-performing loans, robust credit expansion and profitability.
But among the major risks to the economy are shocks to agriculture and food supply from weather-related factors, the impact on tourism from the collapse of Thomas Cook, and high public debt, CBG said.
Gambia's inflation rate decelerated to 7.5 percent in October from 7.6 percent in September but is still able 6.6 percent in October 2018.
Gambia's economy grew 6.5 percent in 2018 from 4.8 percent in 2017, supported by tourism, trade, financial services, insurance, transport and telecommunications, and has been forecast to growth 5.4 percent this year.
"Growth is projected to remain robust in 2019," CBG said, cautioning the collapse of Thomas Cook in September may affect tourism along with the impact of delayed rains on agricultural output.
Tourism accounts for some 30 percent of economic output in the former British colony of Gambia, with the Thomas Cook Group accounting for about 40 percent of annual visitors.
Some 57,000 British customers had already book hotels or seats on charter flights for Gambia for the season that typically starts in October, around one-quarter of all tourists to Gambia in 2018.
The delasi has depreciated since July, with the fall accelerating in October although it has bounced back in recent days and the CBG said the exchange rate "remains broadly stable."
The delasi was trading at 51.13 to the U.S. dollar today, down 3.5 percent this year.
The Central Bank of The Gambia (CBG) added an improving current account along with a comfortable level of international reserves continues to support a stable delasi while the fundamentals of the banking sector remain strong, underpinned by adequate capital, high liquidity, a low level of non-performing loans, robust credit expansion and profitability.
But among the major risks to the economy are shocks to agriculture and food supply from weather-related factors, the impact on tourism from the collapse of Thomas Cook, and high public debt, CBG said.
Gambia's inflation rate decelerated to 7.5 percent in October from 7.6 percent in September but is still able 6.6 percent in October 2018.
Gambia's economy grew 6.5 percent in 2018 from 4.8 percent in 2017, supported by tourism, trade, financial services, insurance, transport and telecommunications, and has been forecast to growth 5.4 percent this year.
"Growth is projected to remain robust in 2019," CBG said, cautioning the collapse of Thomas Cook in September may affect tourism along with the impact of delayed rains on agricultural output.
Tourism accounts for some 30 percent of economic output in the former British colony of Gambia, with the Thomas Cook Group accounting for about 40 percent of annual visitors.
Some 57,000 British customers had already book hotels or seats on charter flights for Gambia for the season that typically starts in October, around one-quarter of all tourists to Gambia in 2018.
The delasi has depreciated since July, with the fall accelerating in October although it has bounced back in recent days and the CBG said the exchange rate "remains broadly stable."
The delasi was trading at 51.13 to the U.S. dollar today, down 3.5 percent this year.
Tajikistan cuts rate another 100 bps as inflation eases
Tajikistan's central bank cut its benchmark refinancing rate by another 100 basis points as inflation continued to decline in October due to the short-term drop in the price of domestic food products.
The National Bank of Tajikistan cut its rate to 12.25 percent and has now cut it by a net 175 basis points this year following a 150-basis point cut in May when it reversed course after raising the rate by 75 points in February.
The central bank said it expects an increase in capital flows and thus the exchange rate partly due to the U.S. Federal Reserve's policy stance which should strengthen the national currency and help stabilize inflation, which is expected to remain within the target level in the medium term.
Tajikistan's inflation rate accelerated in the first half of this year to hit 8.8 percent in May and remained high until September until it dropped to 8.1 percent and then 7.3 percent in October.
Tajikistan's central bank currently targets inflation of 7.0 percent, plus/minus 2 percentage points but has lowered the 2020 target to 6.0 percent, plus/minus 2 percentage points.
Tajikistan's gross domestic product grew 7.2 percent in the first nine months of the year, down from 7.5 percent in the first six months.
Tajikistan's currency the somoni, which replaced the Tajikistani ruble in 2000, has been steadily depreciating since 2014 and was trading at 9.69 to the U.S. dollar today, down 2.7 percent this year and down 9 percent since the start of 2018.
Dollarization of citizens deposits has been declining in recent years and has fallen to around 50 percent of deposits this year from over 70 percent in 2016.
www.CentralBankNews.info
The National Bank of Tajikistan cut its rate to 12.25 percent and has now cut it by a net 175 basis points this year following a 150-basis point cut in May when it reversed course after raising the rate by 75 points in February.
The central bank said it expects an increase in capital flows and thus the exchange rate partly due to the U.S. Federal Reserve's policy stance which should strengthen the national currency and help stabilize inflation, which is expected to remain within the target level in the medium term.
Tajikistan's inflation rate accelerated in the first half of this year to hit 8.8 percent in May and remained high until September until it dropped to 8.1 percent and then 7.3 percent in October.
Tajikistan's central bank currently targets inflation of 7.0 percent, plus/minus 2 percentage points but has lowered the 2020 target to 6.0 percent, plus/minus 2 percentage points.
Tajikistan's gross domestic product grew 7.2 percent in the first nine months of the year, down from 7.5 percent in the first six months.
Tajikistan's currency the somoni, which replaced the Tajikistani ruble in 2000, has been steadily depreciating since 2014 and was trading at 9.69 to the U.S. dollar today, down 2.7 percent this year and down 9 percent since the start of 2018.
Dollarization of citizens deposits has been declining in recent years and has fallen to around 50 percent of deposits this year from over 70 percent in 2016.
www.CentralBankNews.info
Fiji holds rate, easy policy needed to boost slower growth
Fiji's central bank left its benchmark Overnight Policy Rate (OPR) steady at 0.5 percent, saying the current easy monetary policy stance remains appropriate as "accommodative macroeconomic policies are needed to raise growth whilst maintaining price and external stability."
The Reserve Bank of Fiji (RBF), which has not changed its rate since October 2011, said its monetary policy objectives, which include adequate foreign exchange reserves and price stability, remain intact and its current accommodative policy stance is supported by surplus bank liquidity of more than $600 million at the end of November.
Earlier this month RBF slashed its forecast for economic growth this year to 1.0 percent, the slowest growth rate in a decade, from May's forecast of 2.7 percent and down from 3.5 percent in 2018.
In today's statement, Ariff Ali, governor and chairman of RBF, said aggregate demand had softened as expected and private sector credit growth had slowed further in October.
Data for the first 9 months of the year show demand was weakening due to weak business and investor sentiment as well as lower government spending, with most business sectors expected to decelerate, RBF said on Nov. 7.
On the upside, commercial banks' profitability has improved, visitor arrivals are up along with the fishing sector and education, health and information and communications sectors.
Growth in 2020 is expected to pick up to 1.7 percent as both domestic and global economic sentiments are expected to improve, with growth in 2021 seen rising to 2.9 percent and then to 3.0 percent in 2022.
The growth in tourism and remittances is underpinning stable foreign reserves but inflation turned negative in October, falling to minus 0.9 percent from a positive 0.4 percent in September, the first deflation since November 2014, with prices declining in all major categories.
"Given that aggregate demand is forecast to remain soft, demand side inflationary pressures are forecast to be broadly muted in the near-term," RBF said.
Fiji's foreign reserves amounted to $2.190 billion at the end of November, enough to cover 5 months of imports, and are forecast to remain at comfortable levels in the medium term.
The Reserve Bank of Fiji (RBF), which has not changed its rate since October 2011, said its monetary policy objectives, which include adequate foreign exchange reserves and price stability, remain intact and its current accommodative policy stance is supported by surplus bank liquidity of more than $600 million at the end of November.
Earlier this month RBF slashed its forecast for economic growth this year to 1.0 percent, the slowest growth rate in a decade, from May's forecast of 2.7 percent and down from 3.5 percent in 2018.
In today's statement, Ariff Ali, governor and chairman of RBF, said aggregate demand had softened as expected and private sector credit growth had slowed further in October.
Data for the first 9 months of the year show demand was weakening due to weak business and investor sentiment as well as lower government spending, with most business sectors expected to decelerate, RBF said on Nov. 7.
On the upside, commercial banks' profitability has improved, visitor arrivals are up along with the fishing sector and education, health and information and communications sectors.
Growth in 2020 is expected to pick up to 1.7 percent as both domestic and global economic sentiments are expected to improve, with growth in 2021 seen rising to 2.9 percent and then to 3.0 percent in 2022.
The growth in tourism and remittances is underpinning stable foreign reserves but inflation turned negative in October, falling to minus 0.9 percent from a positive 0.4 percent in September, the first deflation since November 2014, with prices declining in all major categories.
"Given that aggregate demand is forecast to remain soft, demand side inflationary pressures are forecast to be broadly muted in the near-term," RBF said.
Fiji's foreign reserves amounted to $2.190 billion at the end of November, enough to cover 5 months of imports, and are forecast to remain at comfortable levels in the medium term.
UPDATE-This week in monetary policy: Israel, Ghana, Kenya, Colombia, Kyrgyzstan, Nigeria, Lesotho, Cape Verde, Mauritius, Fiji, Tajikistan, Gambia, South Korea, Sri Lanka, Angola, Bulgaria, Zimbabwe & Dominican Rep.
(UPDATE - Angola's central bank changed the scheduled Nov. 28 session of its monetary policy committee to Nov. 29 but said the agenda - which includes an analysis of the macroeconomic indicators, money and exchange markets - was unchanged.
The last meeting of the bank's monetary policy committee was held on Oct. 23, with the committee keeping the BNA rate steady at 15.5 percent while it raised the reserve requirement, relaxed some of the limits on payments for imports and implemented a floating exchange rate regime for the kwanza.)
This week - November 24 through November 30 - central banks from 18 countries or jurisdictions are scheduled to decide on monetary policy: Israel, Ghana, Kenya, Colombia, Kyrgyz Republic, Nigeria, Lesotho, Cape Verde, Mauritius, Fiji, Tajikistan, Gambia, South Korea, Sri Lanka, Angola, Bulgaria, Zimbabwe and Dominican Republic.
Following table includes the name of the country, the date of the next policy decision, the current policy rate, the result of the last policy decision, the change in the policy rate year to date, and the rate one year ago.
The last meeting of the bank's monetary policy committee was held on Oct. 23, with the committee keeping the BNA rate steady at 15.5 percent while it raised the reserve requirement, relaxed some of the limits on payments for imports and implemented a floating exchange rate regime for the kwanza.)
This week - November 24 through November 30 - central banks from 18 countries or jurisdictions are scheduled to decide on monetary policy: Israel, Ghana, Kenya, Colombia, Kyrgyz Republic, Nigeria, Lesotho, Cape Verde, Mauritius, Fiji, Tajikistan, Gambia, South Korea, Sri Lanka, Angola, Bulgaria, Zimbabwe and Dominican Republic.
Following table includes the name of the country, the date of the next policy decision, the current policy rate, the result of the last policy decision, the change in the policy rate year to date, and the rate one year ago.
The table is updated when the latest decisions are announced and can always accessed by clicking on This Week.
| WEEK 48 | ||||||
| NOV 24 - NOV 30, 2019: | ||||||
| ISRAEL | 25-Nov | 0.25% | 0 | 0 | 0.25% | DM |
| GHANA | 25-Nov | 16.00% | 0 | -100 | 17.00% | FM |
| KENYA | 25-Nov | 8.50% | -50 | -50 | 9.00% | FM |
| COLOMBIA | 25-Nov | 4.25% | 0 | 0 | 4.25% | EM |
| KYRGYZSTAN | 25-Nov | 4.25% | 0 | -50 | 4.75% | |
| NIGERIA | 26-Nov | 13.50% | 0 | -50 | 14.00% | FM |
| LESOTHO | 26-Nov | 6.50% | 0 | -25 | 6.75% | |
| CAPE VERDE | 26-Nov | 3.50% | 0 | 0 | 3.50% | |
| MAURITIUS | 27-Nov | 3.35% | 0 | -15 | 3.50% | FM |
| FIJI | 28-Nov | 0.50% | 0 | 0 | 0.50% | |
| TAJIKISTAN | 28-Nov | 13.25% | 0 | -75 | 14.00% | |
| GAMBIA | 28-Nov | 12.50% | 0 | -100 | 13.50% | |
| SOUTH KOREA | 29-Nov | 1.25% | -25 | -50 | 1.75% | EM |
| SRI LANKA | 29-Nov | 7.00% | 0 | -100 | 8.00% | FM |
| ANGOLA | 28-Nov | 15.50% | 0 | -100 | 16.50% | |
| BULGARIA | 29-Nov | 0.00% | 0 | 0 | 0.00% | FM |
| ZIMBABWE | 29-Nov | 35.00% | -3,500 | 2,000 | N/A | |
| DOMINICAN REP. | 29-Nov | 4.50% | 0 | -100 | 5.50% | |
Wednesday, November 27, 2019
Mauritius maintains rate but lowers 2019 growth forecast
Mauritius' central bank left its Key Repo Rate (KRR) unchanged at 3.35 percent but lowered its growth forecast for this year, saying economic developments since August "have been less favorable than expected and downside risks to the growth outlook have increased."
The Bank of Mauritius (BOM), which cut its rate by 15 basis points in August in a pre-emptive move against the risks of weaker global growth, lowered its growth forecast for 2019 to 3.7 percent from an earlier 3.9 percent but maintained the forecast for 2020 growth of around 4.0 percent.
Mauritius' gross domestic product grew an annual 3.4 percent in the second quarter of this year, up from 3.3 percent in the first quarter but BOM said the risks to the global economic outlook continue to tilt to the downside.
Inflation in Mauritius remains low, with headline inflation falling to 0.7 percent in October from 0.0 percent in July, according to BOM.
Bank staff maintained their forecast for inflation to average 0.5 percent this year and 1.5 percent in 2020.
Today's decision was decided by a majority as in August when the monetary policy committee also was split in its decision. Today's minutes of the meeting will be released Dec. 11.
At the August meeting 6 members voted for the cut, one member voted for a 25-basis-point cut and one voted to keep the rate unchanged.
The Mauritian rupee has been depreciating since February and was trading at 36.6 to the U.S. dollar today, down 6 percent this year.
The Bank of Mauritius (BOM), which cut its rate by 15 basis points in August in a pre-emptive move against the risks of weaker global growth, lowered its growth forecast for 2019 to 3.7 percent from an earlier 3.9 percent but maintained the forecast for 2020 growth of around 4.0 percent.
Mauritius' gross domestic product grew an annual 3.4 percent in the second quarter of this year, up from 3.3 percent in the first quarter but BOM said the risks to the global economic outlook continue to tilt to the downside.
Inflation in Mauritius remains low, with headline inflation falling to 0.7 percent in October from 0.0 percent in July, according to BOM.
Bank staff maintained their forecast for inflation to average 0.5 percent this year and 1.5 percent in 2020.
Today's decision was decided by a majority as in August when the monetary policy committee also was split in its decision. Today's minutes of the meeting will be released Dec. 11.
At the August meeting 6 members voted for the cut, one member voted for a 25-basis-point cut and one voted to keep the rate unchanged.
The Mauritian rupee has been depreciating since February and was trading at 36.6 to the U.S. dollar today, down 6 percent this year.
Tuesday, November 26, 2019
Lesotho holds rate as economy picks up in third quarter
Lesotho's central bank left its benchmark CBL rate unchanged at 6.50 percent and reiterated the risks to the domestic economic outlook include exposure to global economic developments and weak domestic economic activity on the back of structural rigidities and policy uncertainty.
The Central Bank of Lesotho (CBL), which cut its rate in July by 25 basis points, said economic activity had picked up slightly in the third quarter, with the CBL measure of economic activity indicating output had expanded at a rate of 0.3 percent in the third quarter compared with a 1.0 percent contraction in the second quarter.
Consumer demand had improved in the third quarter while the supply side had remained weak, CBL added.
Lesotho's inflation rate has decelerated for the last 5 months and fell to 4.9 percent in October from 5.1 percent in October and 5.9 percent in May, but CBL said prevailing drought present a risk to the inflation outlook.
The Central Bank of Lesotho (CBL), which cut its rate in July by 25 basis points, said economic activity had picked up slightly in the third quarter, with the CBL measure of economic activity indicating output had expanded at a rate of 0.3 percent in the third quarter compared with a 1.0 percent contraction in the second quarter.
Consumer demand had improved in the third quarter while the supply side had remained weak, CBL added.
Lesotho's inflation rate has decelerated for the last 5 months and fell to 4.9 percent in October from 5.1 percent in October and 5.9 percent in May, but CBL said prevailing drought present a risk to the inflation outlook.
Monday, November 25, 2019
Kenya cuts rate 50 bps after interest rate cap is scrapped
Kenya's central bank lowered its benchmark interest rate only weeks after a controversial limit on commercial banks' interest rates was scrapped, saying inflation expectations remain well anchored, the economy is operating below its potential level, and the continuing tightening of fiscal policy has made room for an accommodative monetary policy to support economic activity.
The Central Bank of Kenya (CBK) cut its Central Bank Rate (CBR) by 50 basis points to 8.50 percent and has now cut it by 300 basis points since it embarked on an easing cycle in May 2016.
But since July 2018 the monetary easing has been paused against a backdrop of an impaired transmission of CBK's monetary policy after the government imposed a cap on commercial banks' interest rates in September 2016, arguing lenders were not passing on the falling interest rates to borrowers.
But the rate cap, which was opposed by the International Monetary Fund (IMF) and found to have stifled lending growth and reduced the effectiveness of monetary policy, was annulled by the Nairobi High Court in March and scrapped earlier this month after Kenya's parliament approved President Uhuru Kenyatta's proposal.
CBK said its monetary policy committee "welcomed" the repeal of the interest rate cap, adding this had led to "a significant rationing of credit, particularly to the most vulnerable," and removing it should "restore the clarity of monetary policy decisions and strengthen the transmission of monetary policy."
In September CBK Governor Patrick Njoroge said there was scope to loosen its policy if the government sustains its efforts to reduce the budget deficit and earlier this month he then told Reuters the lifting of the cap on banks' lending rates had removed one of the concerns the bank had about cutting interest rates.
The finance ministry has targeted a fiscal deficit in the current fiscal year of July 2019 - June 2020 year of 5.9 percent, down from 7.6 percent in 2018/19.
After rising to almost 12 percent in May 2017, Kenya's inflation rate has decelerated and remains within the central bank's target range of 5.0 percent, plus/minus 2.50 percentage points.
In October inflation rose to 4.95 percent from 3.83 percent, mainly due to temporary rise in maize grain and sifted flour while non-food inflation remains below 5 percent, "indicative of muted demand pressures and limited spillover effects of the excise tax indexation in July," CBK said.
It added another adjustment in excise taxes in November are expected to have only a marginal impact on inflation, which is expected to remain within the target range in the near term.
Kenya's shilling, which has been more stable in recent years after plunging in 2015, fell in the first part of the year but since early October it has bounced back.
Following the rate cut, the shilling dropped 0.45 percent to trade at 102.06 to the U.S. dollar, up 1.7 percent since October 1 but marginally down since the start of this year.
"The foreign exchange market has remained stable, supported by the narrowing current account deficit and increased portfolio and other investment inflows," CBK said, adding the current account deficit had narrowed to 4.1 percent of gross domestic product in the 12 months to September from 5.1 percent in September 2018 and is expected to narrow to 4.3 percent of GDP in 2019 from 5.0 percent in 2018.
Despite a hit to agricultural production in the first half of the year from a delayed onset and below average rain fall, CBK said the economy was resilient and GDP grew 5.6 percent in the first half and leading indicators suggest stronger growth in the second half, helped by growth in private sector credit to micro, small and medium-sized enterprises due to the deployment of innovative credit products and the repeal of the interest rate caps.
The Central Bank of Kenya (CBK) cut its Central Bank Rate (CBR) by 50 basis points to 8.50 percent and has now cut it by 300 basis points since it embarked on an easing cycle in May 2016.
But since July 2018 the monetary easing has been paused against a backdrop of an impaired transmission of CBK's monetary policy after the government imposed a cap on commercial banks' interest rates in September 2016, arguing lenders were not passing on the falling interest rates to borrowers.
But the rate cap, which was opposed by the International Monetary Fund (IMF) and found to have stifled lending growth and reduced the effectiveness of monetary policy, was annulled by the Nairobi High Court in March and scrapped earlier this month after Kenya's parliament approved President Uhuru Kenyatta's proposal.
CBK said its monetary policy committee "welcomed" the repeal of the interest rate cap, adding this had led to "a significant rationing of credit, particularly to the most vulnerable," and removing it should "restore the clarity of monetary policy decisions and strengthen the transmission of monetary policy."
In September CBK Governor Patrick Njoroge said there was scope to loosen its policy if the government sustains its efforts to reduce the budget deficit and earlier this month he then told Reuters the lifting of the cap on banks' lending rates had removed one of the concerns the bank had about cutting interest rates.
The finance ministry has targeted a fiscal deficit in the current fiscal year of July 2019 - June 2020 year of 5.9 percent, down from 7.6 percent in 2018/19.
After rising to almost 12 percent in May 2017, Kenya's inflation rate has decelerated and remains within the central bank's target range of 5.0 percent, plus/minus 2.50 percentage points.
In October inflation rose to 4.95 percent from 3.83 percent, mainly due to temporary rise in maize grain and sifted flour while non-food inflation remains below 5 percent, "indicative of muted demand pressures and limited spillover effects of the excise tax indexation in July," CBK said.
It added another adjustment in excise taxes in November are expected to have only a marginal impact on inflation, which is expected to remain within the target range in the near term.
Kenya's shilling, which has been more stable in recent years after plunging in 2015, fell in the first part of the year but since early October it has bounced back.
Following the rate cut, the shilling dropped 0.45 percent to trade at 102.06 to the U.S. dollar, up 1.7 percent since October 1 but marginally down since the start of this year.
"The foreign exchange market has remained stable, supported by the narrowing current account deficit and increased portfolio and other investment inflows," CBK said, adding the current account deficit had narrowed to 4.1 percent of gross domestic product in the 12 months to September from 5.1 percent in September 2018 and is expected to narrow to 4.3 percent of GDP in 2019 from 5.0 percent in 2018.
Despite a hit to agricultural production in the first half of the year from a delayed onset and below average rain fall, CBK said the economy was resilient and GDP grew 5.6 percent in the first half and leading indicators suggest stronger growth in the second half, helped by growth in private sector credit to micro, small and medium-sized enterprises due to the deployment of innovative credit products and the repeal of the interest rate caps.
Sunday, November 24, 2019
This week in monetary policy: Israel, Ghana, Kenya, Colombia, Kyrgyzstan, Nigeria, Lesotho, Cape Verde, Mauritius, Fiji, Tajikistan, Gambia, Angola, South Korea, Sri Lanka, Bulgaria, Zimbabwe & Dominican Rep.
This week - November 24 to November 30 - central banks from 18 countries or jurisdictions are scheduled to decide on monetary policy: Israel, Ghana, Kenya, Colombia, Kyrgyz Republic, Nigeria, Lesotho, Cape Verde, Mauritius, Fiji, Tajikistan, Gambia, Angola, South Korea, Sri Lanka, Bulgaria, Zimbabwe and Dominican Republic.
Following table includes the name of the country, the date of the next policy decision, the current policy rate, the result of the last policy decision, the change in the policy rate year to date, and the rate one year ago.
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, and the rate one year ago.
The table is updated when the latest decisions are announced and can always accessed by clicking on This Week.
| WEEK 48 | ||||||
| NOV 24 - NOV 30, 2019: | ||||||
| ISRAEL | 25-Nov | 0.25% | 0 | 0 | 0.25% | DM |
| GHANA | 25-Nov | 16.00% | 0 | -100 | 17.00% | FM |
| KENYA | 25-Nov | 9.00% | 0 | 0 | 9.00% | FM |
| COLOMBIA | 25-Nov | 4.25% | 0 | 0 | 4.25% | EM |
| KYRGYZSTAN | 25-Nov | 4.25% | 0 | -50 | 4.75% | |
| NIGERIA | 26-Nov | 13.50% | 0 | -50 | 14.00% | FM |
| LESOTHO | 26-Nov | 6.50% | 0 | -25 | 6.75% | |
| CAPE VERDE | 26-Nov | 3.50% | 0 | 0 | 3.50% | |
| MAURITIUS | 27-Nov | 3.35% | -15 | -15 | 3.50% | FM |
| FIJI | 28-Nov | 0.50% | 0 | 0 | 0.50% | |
| TAJIKISTAN | 28-Nov | 13.25% | 0 | -75 | 14.00% | |
| GAMBIA | 28-Nov | 12.50% | 0 | -100 | 13.50% | |
| ANGOLA | 28-Nov | 15.50% | 0 | -100 | 16.50% | |
| SOUTH KOREA | 29-Nov | 1.25% | -25 | -50 | 1.75% | EM |
| SRI LANKA | 29-Nov | 7.00% | 0 | -100 | 8.00% | FM |
| BULGARIA | 29-Nov | 0.00% | 0 | 0 | 0.00% | FM |
| ZIMBABWE | 29-Nov | 35.00% | -3,500 | 2,000 | N/A | |
| DOMINICAN REP. | 29-Nov | 4.50% | 0 | -100 | 5.50% | |
Friday, November 22, 2019
Paraguay maintains policy rate 'for time being'
Paraguay's central bank left its monetary policy rate steady at 4.0 percent for the second time in a row, saying the current accommodative policy stance is "for the time being" compatible with inflation hitting the target and future monetary policy decisions will continue to based on the evolution of domestic and external data.
The Central Bank of Paraguay (BCP), which left its rate steady in October after five rate cuts from February to September by a total of 125 basis points, added data for local economic activity and consumption show signs of recovery but there is still a high level of uncertainty surrounding trade talks and Brexit, who'll could affect the expected economic recovery in 2020.
Inflation is still in the lower end of the target range, BCP added.
Paraguay's economy has been hit hard by several shocks this year, including drought and then flooding that affected agricultural output, along with economic weakness in Argentina and Brazil, which affected exports.
Earlier this month the International Monetary Fund said it expected growth in Paraguay this year of close to zero but this should bounce back to 4 percent next year, supported by agriculture.
Paraguay's inflation rate fell to 2.4 percent in October, the lowest this year, from 2.6 percent in September, below the bank's mid-target of 4.0 percent, plus/minus 2 percentage points.
Gross domestic product shrank 3 percent year-on-year in the second quarter of this year, larger than the 2.1 percent decline in the first quarter.
www.CentralBankNews.info
The Central Bank of Paraguay (BCP), which left its rate steady in October after five rate cuts from February to September by a total of 125 basis points, added data for local economic activity and consumption show signs of recovery but there is still a high level of uncertainty surrounding trade talks and Brexit, who'll could affect the expected economic recovery in 2020.
Inflation is still in the lower end of the target range, BCP added.
Paraguay's economy has been hit hard by several shocks this year, including drought and then flooding that affected agricultural output, along with economic weakness in Argentina and Brazil, which affected exports.
Earlier this month the International Monetary Fund said it expected growth in Paraguay this year of close to zero but this should bounce back to 4 percent next year, supported by agriculture.
Paraguay's inflation rate fell to 2.4 percent in October, the lowest this year, from 2.6 percent in September, below the bank's mid-target of 4.0 percent, plus/minus 2 percentage points.
Gross domestic product shrank 3 percent year-on-year in the second quarter of this year, larger than the 2.1 percent decline in the first quarter.
www.CentralBankNews.info
Pakistan keeps rate for 2nd time as inflation seen easing
Pakistan's central bank left its policy rate steady for the second time, saying the current monetary policy stance was appropriate to bring inflation down to its target range as the recent uptick in inflation was temporary, the currency had risen and domestic demand was still soft.
The State Bank of Pakistan (SBP), which raised rates nine times between January 2018 and July 2019, said its projection for average inflation in FY20, which began on July 1, was broadly unchanged at 11 to 12 percent, up from an average of 7.3 percent in fiscal 2019.
Pakistan's consumer prices rose a higher-than-expected 1.8 percent in October from September but on an annual basis, inflation eased to 11.08 percent in October from 12.55 percent in September, and SBP said the rise largely reflected higher administered prices and a rise in food prices.
If the rise in prices were sustained, the central bank said this could affect inflation expectations but it expects inflationary pressures to recede in the second half of the fiscal year and expects inflation to decline to its target range of 5 - 7 percent over the next 24 months.
After raising its rate by a total of 7.50 percentage points from January 2018 to curb rising inflation from a plunging rupee, SBP said in July that it was finished raising rates in response to the fall in the rupee and from now on interest rates would be set in response to the outlook for inflation.
Following an agreement with the International Monetary Fund (IMF) in May, which included a $6.0 billion support package and $38 billion from international partners, the rupee has steadied and trended upward since late July and was trading at 155.3 to the U.S dollar today, up 3.3 percent since August 1 but still down 10 percent since the start of this year.
Prior to the IMF deal, which included the introduction of a market-based exchange rate system, Pakistan followed a "strong rupee" exchange rate policy and effectively fixed it against the U.S. dollar at a rate that was too high, forcing SBP to burn through reserves to defend it.
Since the SBP's previous monetary policy meeting in September, it noted three key developments: A current account surplus in October, an estimated surplus in the government's primary balance in the first quarter of fiscal 2020, and expectations by businesses for inflation to fall in the near term, suggesting that inflation expectations remain anchored.
SBP also said recent economic data suggests that economic activity was strengthening in the export oriented and import-competing sectors while inward oriented sectors still see a slowdown.
It retained its forecast for GDP growth in FY20 of around 3.5 percent, up from 3.3 percent in FY19 but down from 5.2 percent in FY18.
The State Bank of Pakistan (SBP), which raised rates nine times between January 2018 and July 2019, said its projection for average inflation in FY20, which began on July 1, was broadly unchanged at 11 to 12 percent, up from an average of 7.3 percent in fiscal 2019.
Pakistan's consumer prices rose a higher-than-expected 1.8 percent in October from September but on an annual basis, inflation eased to 11.08 percent in October from 12.55 percent in September, and SBP said the rise largely reflected higher administered prices and a rise in food prices.
If the rise in prices were sustained, the central bank said this could affect inflation expectations but it expects inflationary pressures to recede in the second half of the fiscal year and expects inflation to decline to its target range of 5 - 7 percent over the next 24 months.
After raising its rate by a total of 7.50 percentage points from January 2018 to curb rising inflation from a plunging rupee, SBP said in July that it was finished raising rates in response to the fall in the rupee and from now on interest rates would be set in response to the outlook for inflation.
Following an agreement with the International Monetary Fund (IMF) in May, which included a $6.0 billion support package and $38 billion from international partners, the rupee has steadied and trended upward since late July and was trading at 155.3 to the U.S dollar today, up 3.3 percent since August 1 but still down 10 percent since the start of this year.
Prior to the IMF deal, which included the introduction of a market-based exchange rate system, Pakistan followed a "strong rupee" exchange rate policy and effectively fixed it against the U.S. dollar at a rate that was too high, forcing SBP to burn through reserves to defend it.
Since the SBP's previous monetary policy meeting in September, it noted three key developments: A current account surplus in October, an estimated surplus in the government's primary balance in the first quarter of fiscal 2020, and expectations by businesses for inflation to fall in the near term, suggesting that inflation expectations remain anchored.
SBP also said recent economic data suggests that economic activity was strengthening in the export oriented and import-competing sectors while inward oriented sectors still see a slowdown.
It retained its forecast for GDP growth in FY20 of around 3.5 percent, up from 3.3 percent in FY19 but down from 5.2 percent in FY18.
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