Monetary Policy Week in Review – Aug. 18, 2012: Turkey prepares to loosen, Chile takes note of rising peso

    The past week in monetary policy saw interest rate decisions by two central banks around the world (Turkey and Chile), with neither bank changing rates. Both central banks saw weak global growth.

    Turkey’s central bank signaled that it was ready to loosen its policy stance a bit, saying it may narrow its interest rate corridor in the future. It also raised the portion of lira reserves that banks can hold in foreign exchange, a move that adds liquidity to the banking system.

    Chile’s central bank noted that international financial conditions had improved but growth in advanced economies was weak and emerging markets have slowed more than expected.
    The bank made a specific reference to an appreciating peso, a sign that it may be concerned over the currency, which has risen over 7 percent against the U.S. dollar this year.

    LAST WEEK’S MONETARY POLICY DECISIONS:

COUNTRY	NEW RATE	PREVIOUS RATE	RATE 1 YR AGO
TURKEY	5.75%	5.75%	5.75%
CHILE	5.00%	5.00%	5.25%

    NEXT WEEK:

    The central bank calendar for next week also looks quiet, with only Poland and Iceland scheduled to hold monetary policy meetings.

    Neither bank is expected to change interest rates.

COUNTRY	MEETING	CURRENT RATE	RATE 1 YR AGO
POLAND	21-Aug	4.75%	4.75%
ICELAND	22-Aug	5.75%	4.50%

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