This week in monetary policy: China, Hungary, Uzbekistan, Namibia, Mozambique, Sri Lanka, Ukraine, Turkey, Uganda, Israel, Paraguay, Russia & Eastern Caribbean

    This week - October 19 through October 24 - central banks from 13 countries or jurisdictions are scheduled to decide on monetary policy: China, Hungary, Uzbekistan, Namibia, Mozambique, Sri Lanka, Ukraine, Turkey, Uganda, Israel, Paraguay, Russia and East Caribbean.

     Following table includes the name of the country, the date of the next policy decision, the current policy rate, the local time a policy decision is announced, 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 43 OCT 19 - OCT 24, 2020: CHINA 20-Oct 3.85% 0 -30 4.20%          EM HUNGARY 20-Oct 0.60% 0 -30 0.90%          EM UZBEKISTAN 21-Oct 14.00% -100 -200 16.00% NAMIBIA 21-Oct 3.75% -25 -275 6.50% MOZAMBIQUE 21-Oct 10.25% 16:00 0 -250 12.75% SRI LANKA 22-Oct 4.50% 7:30 0 -250 7.00%          FM UKRAINE 22-Oct 6.00% 0 -750 15.50%          FM TURKEY 22-Oct 10.25% 14:00 200 -175 14.00%          EM UGANDA 22-Oct 7.00% 0 -200 9.00% ISRAEL 22-Oct 0.10% 16:00 0 -15 0.25%          DM PARAGUAY 22-Oct 0.75% 0 -325 4.00% RUSSIA 23-Oct 4.25% 13:30 0 -200 6.50%          EM EAST CARIBBEAN 23-Oct 2.00% 0 -450 6.50%

 

    www.CentralBankNews.info                    

Argentina cuts Leliq 2nd week and raises overnight repo

     Argentina's central bank lowered its benchmark Leliq interest rate for the second consecutive week and raised the overnight repo rate, continuing what it says is a harmonization of its monetary policy interest rates to maintain a positive real return on savings in pesos.

     The Central Bank of the Argentine Republic (BCRA) lowered the interest rate on Leliq notes by another 100 basis points to 36.0 percent it said in a statement from Oct. 15 and has now lowered it by 200 points this month following a similar cut on Oct. 8.

     Since December 2019, when BCRA began lowering the Leliq rate it has been cut by 27 percentage points from 63.0 percent, including 19 percentage points this year.

     The bank's overnight repo rate was raised another 300 basis points to 30 percent and this rate has now been raised by 11 percentage points this month following hikes on Oct. 1, Oct. 8 and Oct. 15.

      BCRA also said it was offering 7-day repos with a interest rate of 33.0 percent and "to complete the transmission of the harmonization of rates," it would also increase the minimum guaranteed rate of fixed terms with an annual yield of 34 percent for deposits of under US$1 million and at 32 percent for other deposits.

      The central bank's change in rates is likely to further encourage banks to shift their purchases toward Treasury bonds instead of Leliq notes.

      In September Argentina emerged from its 9th sovereign default since 1816 following an agreement with international creditors over the restructuring of $65 billion of debt.

      Argentina's peso was trading around 77.47 to the U.S. dollar today. down 22.7 percent this year.

     www.CentralBankNews.info

UPDATE-This week in monetary policy: Indonesia, South Korea, Singapore, Belarus and Chile

    (Following item is updated without Sri Lanka as the Central Bank of Sri Lanka on Oct. 14 announced it was rescheduling its monetary policy announcement that was scheduled for Oct. 16 to Thursday, Oct. 22, local time 07:30. The bank did not give any reason for the delay.)

   This week - October 12 through October 17 - central banks from 5 countries or jurisdictions are scheduled to decide on monetary policy: Indonesia, South Korea, Singapore, Belarus and Chile.

   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 42
OCT 12 - OCT 17, 2020:
INDONESIA	13-Oct	4.00%		0	-100	5.00%	EM
SOUTH KOREA	14-Oct	0.50%		0	-75	1.25%	EM
SINGAPORE	14-Oct	N/A	08:00	N/A	N/A	N/A	DM
BELARUS	14-Oct	7.75%		0	-125	9.50%
CHILE	15-Oct	0.50%		0	-125	1.75%	EM

 

    www.CentralBankNews.info                    

Belarus holds rate as inflation rises from falling ruble

      The central bank of the country of Belarus, which continues to see widespread protests over a contested presidential election on Aug. 9, left its benchmark interest rate steady, saying inflation is still expected to decline toward its target despite a recent acceleration due to a weakening of the exchange rate.

     The National Bank of the Republic of Belarus (NBRB) kept its refinancing rate at 7.75 percent, unchanged since June when it was cut following a request by the country's president, Alexander Lukashenko, who has ruled the country since 1994.

     NBRB has cut its refi rate three times this year by a total of 125 basis points and 19 times since April 2016 by a total of 17.25 percentage points.

     On Aug. 12, when the board last met, it decided to meet today, ahead of a previously scheduled meeting on Nov. 11, which also will be held.

     On Monday European Union (EU) foreign ministers agreed to sanction Lukashenko and other senior officials amid worsening police violence against protesters who say the August election, in which Lukashenko said he won with 80 percent of the vote, was rigged.

     Tens of thousands of Belarusians have demonstrated every weekend since August to demand new elections and on Sunday 713 people were detained by police, which now is allowed to use military-style weapons. 

     Exiled Belarusian opposition leader Sviatlana Tsikhanouskya, who protesters say won the election, has set a deadline of Oct. 25 for Lukashenko to leave office or face nationwide strikes that would paralyze the country.

     The EU cited a complete lack of will by Lukashenko to engage in any discussions over holding new elections leaves it will little choice other than to proceed with sanctions.

     Following the election, the Belarusian ruble has continued to weaken though it has recovered in the last month after hitting a record low of 2.68 to the U.S. dollar on Sept. 3. Today it was trading at 2.58 to the dollar, down 18.6 percent this year.

     In January the central bank and government adopted a strategy to improve trust in the Belarusian ruble, which was introduced in July 2016, and reduce reliance on foreign currencies in domestic transactions.

     More than 90 percent of government debt is denominated in foreign currency and the strategy includes full transitioning to inflation targeting by 2021.

     In September the central bank said its reserves had declined by 15.7 percent that month to US$7.5 billion and it paid down $351.7 million in external debt. Belarus has some $3.6 billion of U.S. dollar bonds outstanding and some $8 billion in loans from Russia.

    Inflation in Belarus rose to a higher-than-expected 6.1 percent in September from 5.6 percent in August, with NBRB saying this was due to higher prices for imported goods due to a weakening of the ruble in August against a background of higher demand for foreign currency.

     Inflation by the end of this year is estimated to be around 6 percent, with the weakening of the ruble pushing up inflation in the short term, the central bank said.

     In the medium term NBRB said prolonged disinflationary factors are expected to dominate and push inflation back to its targeted trajectory near 5 percent.

    In the first quarter of this year Belarus' gross domestic product shrank 0.20 percent year-on-year.

    www.CentralBankNews.info

     

This week in monetary policy: Indonesia, South Korea, Singapore, Belarus, Chile and Sri Lanka

    This week - October 12 through October 17 - central banks from 6 countries or jurisdictions are scheduled to decide on monetary policy: Indonesia, South Korea, Singapore, Belarus, Chile and Sri Lanka.

     Following table includes the name of the country, the date of the next policy decision, the current policy rate, the local time a decision is announced, 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 42
OCT 12 - OCT 17, 2020:
INDONESIA	13-Oct	4.00%		0	-100	5.00%	EM
SOUTH KOREA	14-Oct	0.50%		0	-75	1.25%	EM
SINGAPORE	14-Oct	N/A	08:00	N/A	N/A	N/A	DM
BELARUS	14-Oct	7.75%		0	-125	9.50%
CHILE	15-Oct	0.50%		0	-125	1.75%	EM
SRI LANKA	16-Oct	4.50%	07:30	0	-250	7.00%	FM

   

 www.CentralBankNews.info                    

Argentina cuts Leliq rate first time since March

    Argentina's central bank lowered its benchmark Leliq interest rate for the first time since March but also raised its one-day repo rate in a move it said continues the strategy of unifying the reference rates used in its monetary policy.

     The Central Bank of the Argentine Republic (BCRA) cut the interest rate on Leliq notes by 100 basis points to 37.0 percent, the first cut since March 5, which it said would gradually aligning Treasury rates with the rates used by the central bank in its sterilization instruments.

     Since December 2019, when the central bank began cutting the Leliq rate, BCRA has cut it by 26 percentage points from 63.0 percent and by 18 percentage points in 2020.

     The one-day repo rate was raised by 3 percentage points to 27.0 percent, complementing a 5 percentage point hike in the previous week, the central bank said in a statement on Oct. 8.

     The two rates diverged at the start of the COVID-19 pandemic when the government took action to mitigate the economic and financial effects of the health crises, BCRA said.

     It added the raise in the repo rate and the cut to Leliq rate to align it with Treasury rates will gradually lower the cost of the "quasi-cost of sterilization while increasing its effectiveness in influencing short-term rates in the economy."

     The change in rates is likely to further shift banks' purchases of debt toward Treasury bonds instead of Leliq notes, a move BCRA has encouraged by lowering the amount of Leliq notes banks can hold while raising the amount of Treasury bonds.

     In addition to the change in interest rates, BCRA said it would be more flexible about restructuring plans  submitted by companies that have monthly debt maturities in excess of US$1 million as far as their access to foreign exchange markets.

     On October 1, when BCRA raised the one-day repo rate to 24 percent from 19 percent, it also abandoned its uniform devaluation mechanism of the peso as part of a framework of a managed float in which the daily depreciation rate will be gradually adapted to situation in markets.

     In September Argentina emerged from its ninth sovereign default sine 1816 following an agreement to restructure $65 billion of foreign debt.

     www.CentralBankNews.info

Botswana cuts rate 2nd time in 2020 amid recession

    Botswana's central bank cut its policy rate for the second time this year, saying "the current state of the economy and the outlook for both domestic and external economic activity provide scope for further easing monetary policy to support domestic economic activity."

    The Bank of Botswana (BoB) cut its Bank Rate by another 50 basis points to 3.75 percent and has now cut it by 100 points this year following a similar-sized cut in April.

    Since December 2010, when BoB began lowering its key interest rate, the Bank Rate has been cut 12 times and by a total of 6.25 percentage points.

     The rate cut comes against a backdrop of below-target inflation and a sharp contraction in economic activity as both the country's important mining sector and tourism have been hit by the fallout from the COVID-19 pandemic.

      Botswana's gross domestic product shrank 24.8 percent in the second quarter from the first quarter, which also saw a 0.8 percent quarterly decline. Year-on-year the economy shrank 24 percent in the second quarter and in the 12 months to June GDP fell 4.2 percent compared with growth of 3.9 percent last year.

     BoB said the country's finance and economic development ministry had trimmed its estimate for the economy to contract by 8.9 percent this year from an earlier forecast of 13.1 percent, with growth in 2021 of 7.7 percent.

     The International Monetary Fund (IMF) forecast Botswana's economy will shrink 9.6 percent this year, up from its April forecast of 5.4 percent, and then grow 8.6 percent next year.

     "Even with recovery in 2021, the contraction in 2020 equates, approximately, to a two-year loss of output," the central bank said, adding the difference in forecasts reflect the current challenges of making forward projections when there is uncertainty about the duration of constrained economic activity and the pace of recovery.

     Botswana's inflation rate rose marginally to 1.0 percent in August from 0.9 percent in the previous two months, well below BoB's target range of 3 to 6 percent, as consumption and spending are disrupted, leading to subdued domestic demand pressures while foreign prices are also subdued.

     Although the overall risks to inflation are skewed to the downside, the central bank confirmed its outlook from August that inflation is expected to return to its target range in the third quarter of 2021.

India to announce delayed policy decision on Oct. 9

     India's central bank will announce the results of its delayed monetary policy review on Friday, Oct. 9 after the government on Monday appointed three new external members to the Reserve Bank of India's (RBI) monetary policy committee (MPC).

     On Sept. 28 RBI rescheduled its policy meeting that was planned to conclude on Oct. 1 to a future date, but without any explanation for the delay.

     Today RBI announced this review would now take place from Oct. 7 to Oct. 9 after the government on Monday appointed economist Ashima Goyal, Jayanth R. Varma and Shashanka Bhide as members of the central bank's MPC.

     RBI's first monetary policy committee was constituted by the government in September 2016 and the committee held its inaugural meetings on Oct. 3 and Oct. 4 that year. 

     The creation of the MPC came after India's government reshuffled the central bank's monetary policy framework as part of its adoption of inflation targeting.

     Prior to 2016 the governor of the RBI had been solely responsible for taking monetary policy decisions under the advice the bank's technical advisory committee. Since then policy decisions have been taken by the MPC.

      The MPC comprises six members, with three from RBI, including the bank's governor, the deputy governor in charge of monetary policy and an officer of RBI nominated by the bank's central board of directors.

     The other three MPC members are appointed by the government for terms of four years.

     RBI, which targets inflation of 4.0 percent, plus/minus 2 percentage points, is expected to keep its rates on hold for the rest of this year as its balances above-target inflation amid recession.

      RBI has cut its policy rate twice this year by a total of 115 basis points to 4.0 percent following cuts in March and May. 

      Since then the rate has been kept steady, including at its last meeting in early August when it also decided to continue with "an accommodative stance as long as it is necessary to revive growth and mitigate the impact of COVID-19 on the economy while ensuring that inflation remains within the target going forward."

     India's inflation rate eased slightly to 6.69 percent in August from 6.73 percent in July but has remained above RBI's upper limit since April. 

     In August RBI said it expected inflation to remain elevated in the second quarter of the current 2020-21 fiscal year, which began April 1, before moderating in the second half of 2020-21.

     India's gross domestic product shrank a worse-than-expected 23.9 percent year-on-year in the first quarter of 2020-21, and RBI expects growth for the full year to be negative.

      

     www.CentralBankNews.info

This week in monetary policy: Australia, Iceland, Poland, Albania, Peru, Serbia, Botswana and Uganda

    This week - October 5 through October 10 - central banks from 8 countries or jurisdictions are scheduled to decide on monetary policy: Australia, Iceland, Poland, Albania, Peru, Serbia, Botswana and Uganda.

     Sri Lanka's central bank had scheduled a review of monetary policy for Oct. 8 but on Sept. 28 it said this had been rescheduled to Oct. 16 at 07:30 local. 
     Romania's central bank had also originally scheduled a monetary policy meeting for Oct. 5 but decided in March to suspend any previously scheduled meetings due to what it said was elevated uncertainty surrounding economic and financial developments and hold policy meetings whenever necessary.
     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 41
OCT 5 - OCT 10, 2020:
AUSTRALIA	6-Oct	0.25%	0	-50	0.75%	DM
ICELAND	7-Oct	1.00%	0	-200	3.25%
POLAND	7-Oct	0.10%	0	-140	1.50%	EM
ALBANIA	7-Oct	0.50%	0	-50	1.00%
PERU	7-Oct	0.25%	0	-200	2.50%	EM
SERBIA	8-Oct	1.25%	0	-100	2.50%	FM
BOTSWANA	8-Oct	4.25%	0	-50	4.75%
UGANDA	8-Oct	7.00%	0	-200	9.00%

 

    www.CentralBankNews.info                    

Vietnam cuts key rates 3rd time in 2020 to boost growth

     Vietnam's central bank cut its key interest rates for the third time this year to further stimulate economic activity after growth in the third quarter accelerated to an annual 2.62 percent from 0.39 percent in the second quarter, the weakest pace in at least 30 years.

     The State Bank of Vietnam (SBV) cut its refinancing rate by another 50 basis points to 4.0 percent, the rediscount rate to 2.50 percent from 3.0 percent, and the overnight rate for inter-bank payments and clearing transactions between commercial banks and SBV to 5.0 percent.

     It also lowered the maximum interest rate on dong-denominated deposits from one to six months by 25 basis points to 4.0 percent but retained the rate on deposits of less than one month at 0.2 percent.

     Since September 2019, when SBV cut its rate for the first time since July 2017 in response to slowing global growth, the key rates have been cut by 225 basis points.

     "In order to continue to remove the difficulties for the economy, the SBV has decided on new adjustments of the key interest rates, which take effect from October 1, 2020," the bank said in a statement issued on Sept. 30.

      As several countries in Asia, Vietnam has been relatively successful in containing the COVID-19 pandemic and economic growth in the third quarter was boosted by a recovery in exports and manufacturing, with higher public investment and household spending expected to boost growth further in the fourth quarter.

     On Monday Vietnam's general statistics office said growth in the first nine months of this year was 2.12 percent year-on-year as exports rose 4.2 percent, boosted by an annual 18 percent jump in September.

     The head of the statistics office was quoted by Bloomberg as saying full-year growth of above 2.0 percent was quite possible. In 2019 Vietnam's economy grew 7.02 percent.

      Vietnam's inflation rate eased to 2.98 percent in September from 3.18 percent in August while the dong has bounced back after tumbling in March to trade at 23,182 to the U.S. dollar today, largely unchanged since the start of the year.

India reschedules policy decision, new date to come soon

     India's central bank has rescheduled its monetary policy meeting that was planned to conclude on Oct. 1 with a policy decision, adding a new date will be announced shortly.

     The Reserve Bank of India's (RBI) monetary policy committee was scheduled to meet on Sept. 29, 30 and then conclude on Thursday, Oct. 1, according to a statement released by the central bank on its website.

     RBI has cut its benchmark repo rate twice this year, in May and March, by 115 basis points to 4.0 percent, and seven times since February 2019 by a total of 250 points when it began easing its policy stance to boost the economy in response to slowing global growth.

     At its last meeting in August, RBI kept its repo rate steady at 4.0 percent but said it would continue with an accommodative policy stance as long as necessary to revive economic growth after the impact of the COVID-19 pandemic while ensuring inflation remains within the bank's target of 4.0 percent, plus/minus 2 percentage points.

     Analysts had widely expected the RBI to maintain its rate this week in light of inflation that remained above the bank's target range for the fifth month in a row at 6.69 percent in August.

      In August RBI said it expected inflation to remain elevated in the second quarter of the 2020/21 fiscal year but then moderate in the second half of the current fiscal year, which began April 1.

      India's gross domestic product shrank by a larger-than-expected 23.9 percent year-on-year in the second calendar quarter of this year - the largest contraction on record - after growing 3.1 percent in the first quarter.

      

     www.CentralBankNews.info