Russia's central bank left its key interest rate steady at 6.0 percent despite a plunge in the ruble's exchange rate, saying any rise in inflation will be temporary as slower global and domestic growth will limit price hikes and inflation will return to its target in 2021.
The Bank of Russia, which has cut rates six times since May 2019 by a total of 175 basis points, added the spread of the coronavirus - which had led to restrictions in international trade and travel, and a rapid deterioration of commodity and financial markets - may lead to a downturn in already-moderate economic activity in coming quarters.
And while the growth path will depend on the scale of the fallout from the spread of the virus, Covid-19, and the actions taken to counter it, the central bank said the economy will be supported by measures taken by itself and the government.
So far Russia has reported relatively few infections and only one death from the coronavirus, but on the government on Monday announced a $4 billion package of measures to help businesses that are facing lower demand, and has banned foreigners from entering the country, shut its land borders with neighboring countries, closed schools, and restricted outdoor and indoor gatherings.
In addition, domestic demand is to receive a boost from additional social policy measures announced in January along with national projects that are being implemented.
Russia's ruble plunged 26 percent from Jan. 12 to March 18, hit by the collapse in oil prices from the dispute with Saudi Arabia and the flight to the safe-haven U.S. dollar amid the fallout from the spread of the coronavirus worldwide.
In recent days the ruble has bounced back slightly though it fell in response today to trade at 79.6 to the U.S. dollar, down 23 percent since Jan. 12 and 22 percent this year.
Russia's inflation rate eased to 2.3 percent in February from 2.4 percent in January but the central bank said it may temporarily exceed its 4.0 percent target due to the weaker ruble.
This rise in consumer prices may also trigger a temporary rise in inflation expectations but slowing domestic and external demand will be a "significant disinflationary factor," and inflation should return to 4 percent in 2021.
Russia's economy has been slowly recovering since a deep recession in 2015 and 2016 and in February the central bank forecast growth this year of 1.5 to 2.5 percent, up from 1.3 percent in 2019, helped by infrastructure projects.
Showing posts with label Banco de Capo Verde. Show all posts
Showing posts with label Banco de Capo Verde. Show all posts
Friday, March 20, 2020
Monday, February 16, 2015
Cape Verde cuts rate 25 bps to fight deflation
Cape Verde's central bank cut its policy rates along with its reserve requirement to increase the flow of credit to the economy and thus provide "an additional boost to real GDP growth," help raise the rate of inflation and fight "the scenario of deflation."
The Bank of Cape Verde, which reduced its policy rate by 200 basis points in 2014, cut its policy rate by 25 basis points to 3.50 percent, which lowers the standing lending facility rate to 6.50 percent from 3.75 percent and the absorption facility rate to 0.25 percent from 0.50 percent.
The reserve requirement was also cut by 300 basis points to 15.00 percent. The bank's decision was announced on Feb. 13 and the new rates will take effect on Feb. 16.
After relatively high inflation rates in 2011 and 2012, Cape Verde's inflation has been on a downward trajectory from the second quarter of 2013 and the central bank is projected persistent deflation in 2015 due to the fall in international oil prices.
The deflation in consumer prices is compounded by a slowdown in demand and could exacerbate the inefficiency of the monetary transmission and have a very negative effect on economic activity, the central bank said.
Cape Verde's inflation rate was minus 0.4 percent in December, the ninth month in a row of deflation, but the bank said there was no evidence that consumers were postponing consumption in the expectation that prices will continue to fall, one of the negative effects of persistent deflation.
Cape Verde comprises an archipelago of 10 volcanic islands off the coast of Western Africa.
www.CentralBankNews.info
The Bank of Cape Verde, which reduced its policy rate by 200 basis points in 2014, cut its policy rate by 25 basis points to 3.50 percent, which lowers the standing lending facility rate to 6.50 percent from 3.75 percent and the absorption facility rate to 0.25 percent from 0.50 percent.
The reserve requirement was also cut by 300 basis points to 15.00 percent. The bank's decision was announced on Feb. 13 and the new rates will take effect on Feb. 16.
After relatively high inflation rates in 2011 and 2012, Cape Verde's inflation has been on a downward trajectory from the second quarter of 2013 and the central bank is projected persistent deflation in 2015 due to the fall in international oil prices.
The deflation in consumer prices is compounded by a slowdown in demand and could exacerbate the inefficiency of the monetary transmission and have a very negative effect on economic activity, the central bank said.
Cape Verde's inflation rate was minus 0.4 percent in December, the ninth month in a row of deflation, but the bank said there was no evidence that consumers were postponing consumption in the expectation that prices will continue to fall, one of the negative effects of persistent deflation.
Cape Verde comprises an archipelago of 10 volcanic islands off the coast of Western Africa.
www.CentralBankNews.info
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