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 fore. Show all posts
Showing posts with label fore. Show all posts
Friday, March 20, 2020
Thursday, June 30, 2016
Fiji maintains rate, sees no threat from higher inflation
Fiji's central bank left its Overnight Policy Rate (OPR) unchanged at 0.5 percent, saying the recent uptick in world commodity prices, particularly crude oil and food prices, do not pose any immediate threat to domestic inflation and external stability.
Barry Whiteside, chairman of the Reserve Bank of Fiji, which has maintained its rate since October 2011, said the further rise in inflation in May to 5.2 percent from April's 3.8 percent was mainly due to domestic supply shortages and temporary hikes of agricultural products linked to the recent natural disasters.
"Notwithstanding any further shocks, inflation is expected to ease over the coming months," Whiteside added.
Fiji was hit by Tropical Cyclone Winston in February, the worst cyclone ever recorded in the Southern Hemisphere, leaving 42 people dead. The government estimated damage of 1 billion Fijian dollars, or US$460 million. Fiji was also hit by flooding in April.
Fiji's economy has gradually recovered following the natural disasters, with consumption and investment picking up, supported by the accommodative monetary policy, government measures to assist the recovery, higher inward remittances and tourism revenue.
"Nevertheless, downside risks remain particularly to the global growth outlook, as concerns have emerged on the effects of Britain's exit from the European Union," Whiteside said, adding that the 2016/17 national budget should further boost confidence and support growth.
In May the Reserve Bank lowered its forecast for 2016 economic growth to 2.4 percent from a previous estimate of 3.5 percent due to natural disasters. In 2015 Fiji's economy grew by 4.2 percent.
Fiji's foreign reserves as of June 30 amounted to $1.979 billion, or 5.5 months of imports, down from $1.984 billion as of April 28.
Barry Whiteside, chairman of the Reserve Bank of Fiji, which has maintained its rate since October 2011, said the further rise in inflation in May to 5.2 percent from April's 3.8 percent was mainly due to domestic supply shortages and temporary hikes of agricultural products linked to the recent natural disasters.
"Notwithstanding any further shocks, inflation is expected to ease over the coming months," Whiteside added.
Fiji was hit by Tropical Cyclone Winston in February, the worst cyclone ever recorded in the Southern Hemisphere, leaving 42 people dead. The government estimated damage of 1 billion Fijian dollars, or US$460 million. Fiji was also hit by flooding in April.
Fiji's economy has gradually recovered following the natural disasters, with consumption and investment picking up, supported by the accommodative monetary policy, government measures to assist the recovery, higher inward remittances and tourism revenue.
"Nevertheless, downside risks remain particularly to the global growth outlook, as concerns have emerged on the effects of Britain's exit from the European Union," Whiteside said, adding that the 2016/17 national budget should further boost confidence and support growth.
In May the Reserve Bank lowered its forecast for 2016 economic growth to 2.4 percent from a previous estimate of 3.5 percent due to natural disasters. In 2015 Fiji's economy grew by 4.2 percent.
Fiji's foreign reserves as of June 30 amounted to $1.979 billion, or 5.5 months of imports, down from $1.984 billion as of April 28.
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