Korea cuts rate 25 bps on weaker inflation pressures

     South Korea's central bank cut its base rate by 25 basis points to 2.0 percent, as expected, saying exports and consumption have improved but investment in new facilities remains sluggish, economic sentiment has not fully recovered and the negative output gap will disappear later than previously forecast.
    The Bank of Korea (BOK), which has cut its rate twice this year by a total of 50 basis points, expects the global economy to continue its modest recovery but added that it may be affected by changes in global financial market conditions stemming from the shift in U.S. monetary policy, prolonged sluggishness in the euro area, weak growth in some emerging markets and geopolitical risks.
     Headline inflation in Korea, which dropped to 1.1 percent in September from 1.4 percent in August, is expected to rise gradually next year but the BOK said pressures from inflation will be somewhat weaker than it previously expected.
      The BOK issued the following statement:

"The Monetary Policy Committee of the Bank of Korea decided today to lower the Base Rate by 25 basis points, from 2.25% to 2.00%.

Uganda holds rate, warns of rate hike if core inflation rises

    Uganda's central bank maintained its Central Bank Rate (CBR) at a neutral 12 percent but warned that it would raise the rate if there are signs that core inflation is starting to accelerate.
    The Bank of Uganda (BOU), which raised its rate by 100 basis points last month to discourage higher food prices from spilling over to overall inflation, said its "policy priority is to ensure that annual core inflation is brought back down to 5 percent over the medium term."
   "As such, if there is any increase in the medium term forecast for core inflation in the months ahead, the BoU will raise the CBR," the bank said.
    Uganda's headline inflation rate rose to 8.0 percent in September from 7.3 percent in August and annual core inflation rose to 6.9 percent from 6.6 percent due to higher food crop prices from drought.
    Economic growth in Uganda has also picked up with the statistics office revising upwards its estimate of growth for financial 2012/13, which ended June 30, to 5.8 percent from 5.1 percent, and banks' lending to the private sector recovering.
    "Given these indicators of stronger economic activity, the 6.0 percent economic growth projection for 2013/13 can be achieved," the bank said.

Uzbekistan holds rate steady at 12.0%

    The Central Bank of the Republic of Uzbekistan held its benchmark refinancing rate steady at 12.0 percent, saying in a brief statement that the board's decision "is based on the main directions of the monetary policy for 2013, as well as actual and expected inflation."
    The central bank has maintained its rate since January 2011, when it was cut by 200 basis points.
    On its website, the central bank said it would be holding a press conference on Aug. 7 but gave no further details about its policy decision.
    Uzbekistan's inflation rate eased to 3.3 percent in the third quarter of 2012 from 3.4 percent the previous quarter while its Gross Domestic Product expanded by 7.5 percent in the first quarter of 2013 from the same quarter in 2012, down from an annual rate of 8.2 percent in the fourth quarter.
    The central Asian republic of Uzbekistan was previously part of the Soviet Union but gained its independence in 1991. The country's economy is mainly based on commodities, such as cotton, gold, uranium and natural gas.

    www.CentralBankNews.info

 
 

BOE holds rate, QE target, but ready to provide stimulus

    The Bank of England (BOE) maintained its Bank Rate at 0.5 percent and the 375 billion pound target for asset purchases, as expected, but added that it was ready to provide additional stimulus and did not want to derail the slow economic recovery by tightening policy to bring inflation back to target.
    The BOE, which has held its rate steady since March 2009, said the pace of economic expansion was likely to remain muted in the near term while inflation has "remained stubbornly above the 2% percent target"and is likely to rise further and may remain above the target for the next two years, partly reflecting a persistent impact of administered and regulated prices, and the decline in pound sterling.
    But the bank still expects the United Kingdom's economy to slowly recover, helped by a further easing in credit conditions from its Funding for Lending Scheme (FLS) and an improvement in the global economic environment.
    "But the risks are weighted to the downside, not least because of the challenges facing the euro area,"the BOE said in a statement after a meeting of its Monetary Policy Council.
    The UK's headline inflation rate has remained sticky at 2.7 percent in December, November and October, which economists say has limited the bank's ability to increase its target for asset purchases, known as quantitative easing.