The past week in monetary
policy saw interest rate decisions by 12 central banks around the
world, with three banks (Hungary, the Czech Republic and Trinidad &Tobago) cutting rates, one bank (Uruguay) raising rates, and the remaining 8
(Israel, Georgia, Romania, Mauritius, Sierra Leone, Colombia, Albania and the
Dominican Republic) keeping rates unchanged.
The interest rate cuts were
in response to continued weakness in the global economy with Hungary holding out
the prospect of further cuts if inflation, which is already above the bank’s
target, remains moderate.
Although Israel and
Mauritius kept rates unchanged, both banks cut growth forecasts.
As last week, the impact on
emerging economies from very low interest rates in the United States - flagged to remain close to zero to mid-2015 - is causing
concern.
While the Dominican Republic noted a growing flow of capital to emerging markets, Uruguay took action and
raised rates to dampen inflationary expectations before they threaten growth
prospects.
LAST WEEK'S MONETARY POLICY DECISIONS:
| COUNTRY | NEW RATE | PREVIOUS RATE | RATE 1 YEAR AGO |
| ISRAEL | 2.25% | 2.25% | 3.00% |
| HUNGARY | 6.50% | 6.75% | 6.00% |
| GEORGIA | 5.75% | 5.75% | 7.50% |
| ROMANIA | 5.25% | 5.25% | 6.35% |
| CZECH REPUBLIC | 0.25% | 0.50% | 0.75% |
| MAURITIUS | 4.90% | 4.90% | 5.50% |
| SIERRA LEONE | 20.00% | 20.00% | 23.00% |
| COLOMBIA | 4.75% | 4.75% | 4.50% |
| TRINIDAD & TOBAGO | 2.75% | 3.00% | 3.00% |
| ALBANIA | 4.00% | 4.00% | 5.25% |
| DOMINICAN REPUBLIC | 5.00% | 5.00% | 6.75% |
| URUGUAY | 9.00% | 8.75% | 8.00% |
NEXT WEEK: The central bank calendar next week calls for 7 central bank meetings:
Australia, Poland, Iceland, the European Central Bank (ECB), the United
Kingdom, Japan and Pakistan.
Australia and Poland may
reduce rates while the ECB and the Bank of England are not expected to change
policy. Iceland should raise rates, according to the IMF, while the Bank of
Japan is under pressure to weaken the yen. Pakistan is expected to keep rates
steady.
| COUNTRY | MEETING DATE | CURRENT RATE | RATE 1 YEAR AGO |
| AUSTRALIA | 2-Oct | 3.50% | 4.75% |
| POLAND | 3-Oct | 4.75% | 4.75% |
| ICELAND | 3-Oct | 5.75% | 4.50% |
| EURO AREA (ECB) | 4-Oct | 0.75% | 1.50% |
| UNITED KINGDOM | 4-Oct | 0.50% | 0.50% |
| JAPAN | 5-Oct | 0.10% | 0.10% |
| PAKISTAN | 5-Oct | 10.50% | 13.50% |
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