This week in monetary policy: Honduras, Japan, Armenia, Poland, Morocco, Chile, Namibia, Brazil, Costa Rica, Mozambique, Taiwan, Indonesia, Norway, Switzerland, UK, Botswana, Russia, Azerbaijan & Mongolia

    This week - June 15 through June 20 - central banks from 19 countries or jurisdictions are scheduled to decide on monetary policy: Honduras, Japan, Armenia, Poland, Morocco, Chile, Namibia, Brazil, Costa Rica, Mozambique, Taiwan, Indonesia, Norway, Switzerland, United Kingdom, Botswana, Russia, Azerbaijan and Mongolia.

    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 25
JUN 15 - JUN 20, 2020:
HONDURAS	15-Jun	4.50%	0	-100	5.75%	FM
JAPAN	16-Jun	-0.10%	0	0	-0.10%	DM
ARMENIA	16-Jun	5.00%	-25	-50	5.75%
POLAND	16-Jun	0.10%	-40	-140	1.50%	EM
MOROCCO	16-Jun	2.00%	0	-25	2.25%	FM
CHILE	16-Jun	0.50%	0	-125	2.50%	EM
NAMIBIA	17-Jun	4.25%	-100	-225	6.75%
BRAZIL	17-Jun	3.00%	-75	-150	6.50%	EM
COSTA RICA	17-Jun	1.25%	0	-150	4.50%
MOZAMBIQUE	17-Jun	11.25%	-150	-150	13.25%
TAIWAN	18-Jun	1.125%	-25	-25	1.375%	EM
INDONESIA	18-Jun	4.50%	0	-50	6.00%	EM
NORWAY	18-Jun	0.00%	-25	-150	1.25%	DM
SWITZERLAND	18-Jun	-0.75%	0	0	-0.75%	DM
UNITED KINGDOM	18-Jun	0.10%	0	-65	0.75%	DM
BOTSWANA	18-Jun	4.25%	-50	-50	5.00%
RUSSIA	19-Jun	5.50%	-50	-75	7.50%	EM
AZERBAIJAN	19-Jun	7.25%	0	-25	8.50%
MONGOLIA	19-Jun	9.00%	-100	-200	11.00%

    
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US Fed slashes rate another 100 bps, to buy assets

     The U.S. Federal Reserve slashed its rate by another 100 basis points to effectively zero and launched a new round of quantitative easing (QE) worth $700 billion to counter the risk to the economy from the outbreak of the coronavirus and said it expects to maintain the rate at this level "until it is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals.
     In its second unscheduled policy decision in less than two weeks, the Fed cut the target range for its benchmark federal funds rate to 0.0 to 0.25 percent and has now cut it five times by a total of 2.25 percentage points in the last eight months.
      In addition to its surprise rate cut, the Fed - in coordination with five other central banks; the Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank and the Swiss National Bank - cut the price of standing U.S. dollar liquidity swap arrangements by 25 basis points to "enhance the provision of liquidity.
      The Fed's policy rate is now back to the level it was from December 2008 to December 2015 when it slowly began raising rates until it was forced to reverse course early last year and then cut its rate three times from July 2019 until October due to slowing global growth.
      But the outbreak of the coronavirus, or Covid-19, is dealing a heavy blow to the global economy and on March 3 the Fed cut its rate by 50 basis points in its first emergency rate since Oct. 8, 2008.
      Although the Fed said the U.S. economy recently was on a strong footing, it said global financial conditions have been "significantly affected," and the energy sector has come under stress while inflation is running below 2 percent and inflation expectations have declined.
     "This action will help support economic activity, strong labor market conditions, and inflation returning to the Committee's symmetric 2 percent objective," the Federal Open Market Committee (FOMC), the Fed's policy-making body said.
     It said it was prepared to use its full range of tools to support the flow of credit to households and business, and launched a new round of asset purchases to support the "smooth functioning" of markets for Treasury securities and agency mortgage-backed securities.
      Over the coming months the Fed will increase its holdings of Treasuries by at least $500 billion and its holdings of agency mortgage-backed securities by at least $200 billion. It will also reinvest all principal payments from its current holdings of agency debt and agency mortgage-backed securities.
      It noted the New York Fed's open market desk has recently expanded its overnight and term repo operations and the FOMC is "prepared to adjust its plans as appropriate."
      Nine FOMC members agreed on the policy moves while Loretta Mester preferred to only cut the fed funds rate by 50 basis points. She supported the actions to promote the smooth functioning of financial markets and the flow of credit to households and businesses.
      To provide easier access to funds from financial institutions, the Fed cut the primary credit rate by 150 basis points to 0.25 percent and said it was encouraging banks to turn to the discount window to help meet demands for credit from households and businesses.
      The discount window helps banks manage their liquidity risks and avoid any actions that may have negative consequences for their customers, such as withdrawing credit "during times of stress."
      To widen the role of the discount window, the Fed said financial institutions could borrow funds for up to 90 days, repayable and renewable by the borrower on a daily basis.
      The Fed also said it was encoring banks to use their capital and liquidity buffers when lending to households and businesses affected by the coronavirus.
      Since the global financial crises, banks have built up capital and liquidity in excess of regulatory minimums and buffers, and the largest firms now have $1.3 trillion in common equity and $2.9 trillion in high quality liquid assets.
     "The Federal Reserve supports firms that chose to use their capital and liquidity buffers to lend and undertake supportive actions in a safe and sound manner," the Fed said.
      As a final move to bolster the financial system, the Fed slashed its reserve requirement ratio to 0.0 percent, reflecting that fact that reserve requirements no longer play a significant role in the implementation of monetary policy following the shift to an "ample reserves" regime in January 2019.

Swiss maintain rates, cautiously optimistic on economy

     The Swiss National Bank (SNB) maintained its expansionary monetary policy stance and said it remains "cautiously optimistic" about the outlook for the Swiss economy while the global economy is  expected to continue to improve, with industrial activity and trade picking up.
    The SNB left its benchmark target range for 3-month Libor rates at minus 1.25 - 0.25 percent along  with a negative 0.75 percent rate on sight deposits at the central bank.
    The rates have remained on hold since the SNB stunned foreign exchange markets in January 2015 by scrapping an upper limit on the exchange rate of the Swiss franc against the euro.
    After the 1.20 cap on the franc against the euro was scrapped, the franc immediately soared but since then it has remained relatively steady. Today the franc was trading at 1.069 to the euro, up 0.4 percent since the start of this year.
    The SNB confirmed that it still considers the franc to be "significantly overvalued" and will remain active in the foreign exchange markets when needed.
    "The negative interest rate and the SNB's willingness to intervene in the foreign exchange market are intended to make Swiss franc investments less attractive, thereby easing pressure on the currency," the SBN said.
      Updating its forecasts, the SNB raised its outlook for inflation in coming quarters due to higher oil prices but in the longer term inflation is expected to be slightly lower than forecast in December.
      For 2017 the SNB now expects inflation to average 0.3 percent, up from 0.1 percent previously forecast, while inflation in 2018 is seen at 0.4 percent, down from 0.5 percent.
     For 2019 inflation is seen at 1.1 percent with the forecast assuming an unchanged 3-month Libor rate of minus 0.75 percent.
     In February Switzerland's headline inflation rate rose to 0.6 percent from 0.3 percent in January for the highest rate since June 2011 and the third consecutive month of zero or positive inflation.
     Although economic growth in the fourth quarter was lower than expected, the SNB said data still point to continued moderate recovery with growth of roughly 1.5 percent for this year.
     In the fourth quarter of last year Switzerland's Gross Domestic Product grew by only 0.1 percent from the third quarter for annual growth of 0.6 percent, down from 1.4 percent in the third quarter.
    "Nonetheless, the forecast for Switzerland, too, is marked by considerable uncertainty emanating from international risks," the SNB said, pointing to the future course of U.S. economic policy, the upcoming elections in Europe and the exit negotiations between the UK and EU.

Swiss hold rates, sees global growth driven by demand

    Switzerland's central bank left its key interest rates steady, along with its commitment to intervene in foreign exchange markets as needed, but voiced a surprisingly optimistic view about the global economy by saying international growth was mainly being driven by domestic demand with growth in China "robust" and the United States "on the cusp of full employment."
    The Swiss National Bank (SNB), which stunned foreign exchange markets in January 2015 by scrapping its upper limit on the exchange rate of the Swiss franc, added that "positive economic signals" had helped calm down financial markets from their volatile period at the start of the year and it expects moderate growth in the global economy to be sustained in coming months.
    However, the SNB also said next week's referendum in the United Kingdom about its membership in the European Union (EU) posed a "significant" risk for the global economy and could trigger another bout of uncertainty and turbulence.
    Due to the pickup in oil prices in recent months, the SNB revised upwards its inflation forecast for this year to an average of minus 0.4 percent from minus 0.8 percent forecast in March but the impact of this will evaporate after the first quarter of next year.
   For 2017 the SNB forecast 0.3 percent inflation, up from its previous forecast of 0.1 percent, while for 2018 inflation is seen unchanged at 0.9 percent.
    In May, Switzerland's inflation rate was unchanged at minus 0.4 percent from April.
    Switzerland's economy and exports were seen benefitting from a "gradual improvement in the international environment," helping stimulate corporate investment and the labour market.
   For 2016 the SNB confirmed that it expects Gross Domestic Product growth of 1-1.5 percent. Annual growth in the first quarter of this year rose to 0.7 percent from 0.3 percent in the fourth quarter of last year.
    In addition to scrapping its 1.20 Swiss franc limit against the euro in January last year, the SNB also cut its benchmark target for the 3-month rate to between minus 1.25 percent and minus 0.25 percent and the interest on banks' deposits to minus 75 percent. The SNB maintained these rates today.
    The SNB also confirmed its view that the "Swiss franc is still significantly overvalued," and its negative interest rates were intended to make franc investments less attractive.
    Since abolishing its cap on the Swiss franc against the euro the franc has been slowly firming though it has slipped back in the last week.
    The franc was trading at 0.92 to the euro today, down from 0.90 at the end of May and largely unchanged since the start of the year.

Swiss maintain rates, inflation outlook largely unchanged

    Switzerland's central bank left its expansionary monetary policy in place, including the deposit rate at minus 0.75 percent, repeating that it still considers the Swiss franc to be "significantly overvalued" and it will remain active in foreign exchange markets as needed.
    The Swiss National Bank (SNB), which shocked financial markets on Jan. 15 by abolishing its cap on the franc's exchange rate to the euro, said its latest forecast for inflation differed little from the September forecast with 2015 inflation seen averaging minus 1.1 percent compared with minus 1.2 percent.
    In November Switzerland's consumer price inflation was steady at minus 1.4 percent from October.
    For 2016 inflation is expected to rise slightly to minus 0.5 percent, unchanged from the previous forecast, while inflation in 2017 is seen at 0.3 percent, down from 0.4 percent due to a slight deterioration in the outlook for the global economy.
    The Swiss franc has been largely steady against the euro in recent months and was trading at 1.08 to the euro today, up 11 percent since the start of this year when the cap of 1.20 francs per euro was in place.
    But against the dollar, the Swiss franc has been more volatile, hitting 1.03 earlier this month compared with 0.86 just after the exchange rate peg was scrapped. Today it was trading at 0.98 to the dollar, up 3 percent on the year.

Switzerland holds rate, franc 'significantly overvalued'

   Switzerland's central bank maintained its target range for benchmark 3-month Libor at minus 1.25 to minus 0.25 percent, along with the deposit rate at minus 0.75 percent, and said the Swiss franc remains "significantly overvalued" and it would "therefore remain active in the foreign exchange market, as necessary, in order to influence monetary conditions."
   The Swiss National Bank (SNB), which shocked financial markets in January by scrapping its cap on the exchange rate of the franc against the euro, said the global economic recovery is expected to gather pace again though the difficult financial situation in Greece and geopolitical tensions could still jeopardize this recovery.
    But low oil prices and expansionary monetary policy should help global growth and thus demand for Swiss products, helping cushion the impact of the exchange rate shock so growth should rebound in the second half of the year, with growth for the full year reaching just under 1.0 percent.
    The Swiss franc jumped around 20 percent against the euro following the SNB's decision to remove its 1.20 euro limit on its exchange rate. Since then it has eased slightly but was still trading around 1.04 to the euro today, up by 15 percent this year.
    Swiss exports took a hit from the strong franc and weaker global trade, and the country's Gross Domestic Product contracted by 0.2 percent in the first quarter from the fourth quarter for annual growth of only 1.1 percent.
    Switzerland remains mired in deflation - headline inflation was minus 1.2 percent in May, the ninth month in a row of deflation or zero inflation - and the SNB said its latest forecast was largely similar to its March forecast with inflation seen reaching its low point in the third quarter at minus 1.2 percent.
    For the full 2015 year the SNB raised its forecast slightly to a fall of 1.0 percent, up from the March forecast of minus 1.1 percent, and for 2016 the forecast was raised to minus 0.4 percent from a previous minus 0.5 percent. For 2017 inflation is seen rising to a positive 0.3 percent, slightly below the March forecast for inflation of a positive 0.4 percent.

This week in monetary policy: Russia, Uganda, Morocco, Georgia, Namibia, U.S., Indonesia, Switzerland, Norway and Japan

    This week (June 15 through June 20) central banks from 10 countries or jurisdictions are scheduled to decide on monetary policy: Russia, Uganda, Morocco, Georgia, Namibia, United States, Indonesia, Switzerland, Norway and Japan.

    Following table includes the name of the country, its MSCI classification, the direction of the latest decision, the date the new policy decision will be announced, the current policy rate, and the rate one year ago.

    The table is updated when the latest decisions are announced and can be accessed by clicking on This Week.

WEEK 25
JUNE 15 - JUNE 20, 2015:
COUNTRY	MSCI	LATEST	DATE	CURRENT  RATE	1 YEAR AGO
RUSSIA	EM	CUT	15-Jun	12.50%	7.50%
UGANDA		RAISE	16-Jun	12.00%	11.00%
MOROCCO	FM	UNCH.	16-Jun	2.50%	3.00%
GEORGIA		RAISE	17-Jun	5.00%	4.00%
NAMIBIA		UNCH.	17-Jun	6.25%	5.75%
UNITED STATES	DM	UNCH.	17-Jun	0.25%	0.25%
INDONESIA	EM	UNCH.	18-Jun	7.50%	7.50%
SWITZERLAND	DM	UNCH.	18-Jun	-0.75%	0.25%
NORWAY	DM	UNCH.	18-Jun	1.25%	1.50%
JAPAN	DM	UNCH.	19-Jun	N/A	N/A

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Switzerland holds rate, prepared to defend FX target

    Switzerland's central bank maintained its key target range at 0.0-0.25 percent along with its 1.20 euro cap on the Swiss franc's exchange rate, confirming that would enforce this "with the utmost determination" and is "prepared to buy foreign currency in unlimited quantities for the purpose."
    The Swiss National Bank (SNB), which imposed a limit on the strength of the franc's exchange rate during the height of the euro area's sovereign debt crises in September 2011, added that the risk of deflation had increased again due to lower oil prices.
    The SNB now expects outright deflation of 0.1 percent in 2015, down from its September forecast of 0.2 percent inflation.
    For 2014 the SNB cut its inflation forecast to zero from 0.1 percent and the 2016 inflation forecast was lowered to 0.3 percent from 0.5 percent. In November Swiss consumer prices fell by 0.1 percent from unchanged in October.
    The Swiss franc has been gradually strengthening this year as the European Central Bank's more aggressive easing has weakened the euro. The franc was trading at 1.201 to the euro today and economists expect the SNB to use intervention and then negative interest rates to defend its ceiling.
     Although the outlook for global economic growth is dominated by downside risks - most importantly the difficulties facing the euro area and possible escalation of geopolitical risks - the SNB  expects global economic growth to gradually firm, helped by the fall in oil prices.

Swiss maintain franc cap, see higher deflation risk

   The Swiss National Bank (SNB) maintained its upper limit on the Swiss franc's exchange rate and the target range for three-month Libor at zero to 0.25 percent, and reduced its inflation forecast due to "the deterioration in the global economic outlook and slower growth in Switzerland."
    The SNB, which imposed a cap on the Swiss franc of 1.20 euros in September 2011, also repeated that it still views the franc's exchange rate as high and it would continue to enforce its exchange rate target "with utmost determination" and is "prepared to purchase foreign currency in unlimited quantities."
    "If necessary, it will take further measures immediately," the SNB said, concerned that rising geopolitical risks are putting upward pressure on the franc from investors seeking safe haven.
    The Swiss franc was trading at 1.208 to the euro today, up from 1.23 at the start of the year. The last time the SNB intervened in currency markets was in September 2012.
    The SNB maintained its forecast for inflation this year of 0.1 percent but cut its 2015 forecast to 0.2 percent from 0.3 percent forecast in June. For 2016 the inflation forecast was slashed to 0.5 percent from 0.9 percent.
    "For Switzerland, the risk of deflation has thus increased again," the SNB said, adding its forecast was based on three-month Libor of zero over the next three years and a weakening Swiss franc.
    The SNB was downbeat about the global economy, saying growth will be weaker in coming quarters than it had expected and it remains vulnerable to setbacks, with the possibility that geopolitical tensions may weigh on confidence.

SNB maintains FX, interest rates, cuts inflation f'cast

    Switzerland's central bank maintained its upper limit for the Swiss franc's exchange rate along with its target for interest rates, as expected, and cut its forecast for inflation this year and 2015.
    The Swiss National Bank (SNB), which imposed a 1.20 euro cap on the franc during the height of Europe's sovereign debt crises in September 2011, also confirmed that it "stands ready to enforce the minimum exchange rate, if necessary, by buying foreign currency in unlimited quantitates."
    The SNB also maintained its target range for three-month Libor of 0.0 to 0.25 percent, the bank's target since April 2009.
    Due to its political stability and independence, the Swiss franc tends to be rise during periods of unrest with the recent rise in geopolitical risks surrounding Ukraine and Russia once again putting upward pressure on the franc. After ending last year around 1.23 to the euro, the franc rose to 1.21 in early March and was trading at 1.22 today.
    Switzerland has been experiencing deflation since late 2011 and consumer prices again fell by 0.1 percent in February after rising 0.1 percent in each of the months of November, December and January.
   "Internationally declining inflation rates and the slightly stronger Swiss franc are delaying the rise of inflation into positive territory," the SNB said.

Switzerland maintains franc cap, rate target, growth higher

    Switzerland's central bank maintained its ceiling on the Swiss franc's exchange rate and its interest rate target, saying it is still "ready to enforce minimum exchange rate, if necessary, by buying foreign currency in unlimited quantities, and to take further measures, as required."
    The Swiss National Bank (SNB), which imposed an upper limit on the franc's exchange rate to the euro in September 2011, said the Swiss franc was still high and despite reduced tensions on financial markets, the minimum exchange rate "remains essential."
    "It prevents an undesired tightening of monetary conditions were the upward pressure on the Swiss franc to intensify once again," the SNB said, adding the target for the 3-month Libor rate would remain at zero to 0.25 percent, the level it has been at since April 2009.
    The Swiss franc was quoted at 1.23 to the euro earlier today, below the SNB's 1.20 upper limit that has been defended by intervention in foreign exchange markets, boosting the bank's holdings.
    The cap on the franc/euro exchange rate was imposed by the SNB two years ago when investors feared a breakup of the euro zone and sought safe haven in the Swiss currency, boosting its value and making Swiss exports uncompetitive worldwide.

Switzerland keeps rate, franc ceiling, cuts inflation and growth forecast

    The Swiss National Bank (SNB) kept its benchmark interest rate target unchanged, as expected, and affirmed its commitment to defend the exchange rate ceiling with "utmost determination," but reduced its growth and inflation forecasts.
    The growth and inflation forecasts were reduced due to weaker growth worldwide and an underutilisation of production capacity in Switzerland along with the fact that the Swiss franc had not depreciated, as the SNB had expected.

    The SNB has kept its target range for the three-month Libor rate unchanged at zero to 0.25 percent since April 2009.

    The Swiss central bank launched its plan to keep the franc above 1.20 euros in September 2011 after it rose to near-parity with the euro as investors sought safe haven from the euro zone's debt crises. 

     "It remains committed to buying foreign currency in unlimited quantities for this purpose. The Swiss franc is still high and is weighing on the Swiss economy. For this reason, the SNB will not permit an appreciation of the Swiss franc, given the serious impact this would have on both prices and economic performance in Switzerland," the SNB said in a statement.