Monetary Policy Week in Review – Nov. 24, 2012: Three of six central banks ease as global uncertainty continues

    Last week six central banks took monetary policy decisions, with two cutting policy interest rates (Colombia and Georgia) and the remaining four (Japan, Turkey, Nigeria and South Africa) keeping rates unchanged.

     Although Turkey kept is benchmark rate unchanged, it placed itself in the easing camp by reducing the short-term lending rate, further narrowing its interest rate corridor to 4.0 percentage points.

    So far this year, policy rates have been cut four times more often than they have been raised by the 88 central banks followed by Central Bank News. Year-to-date, rates have been reduced 113 times while they have been increased 28 times, demonstrating central banks' concern over growth prospects and the lack of an inflationary threat on a global scale.

     The recurrent theme in central banks’ statements last week was uncertainty about the global economy, primarily due to the lack of political decisions to resolve the threat of the U.S. "fiscal cliff" and the euro area’s debt crises, which is dragging down economic growth.

    The two central banks that cut rates, Georgia and Colombia, cited lower inflation that allowed them to help stimulate economic activity. Nigeria, which held rates despite expectations for a cut, cited high inflation as the reason for its decision.

    South Africa’s central bank was very downbeat, saying recent labor unrest had negatively affected the country’s economic outlook and confidence, aggravating the impact of slow global growth. The bank was now in the tough spot of trying to strike the right balance between inflationary pressures and slowing growth.

LAST WEEK’S (WEEK 47) MONETARY POLICY DECISIONS:

COUNTRY	MSCI	NEW RATE	OLD RATE	1 YEAR AGO
JAPAN	DM	0.10%	0.10%	0.10%
TURKEY	EM	5.75%	5.75%	5.75%
NIGERIA	FM	12.00%	12.00%	12.00%
GEORGIA		5.50%	5.75%	7.00%
SOUTH AFRICA	EM	5.00%	5.00%	5.50%
COLOMBIA	EM	4.50%	4.75%	4.75%

NEXT WEEK (WEEK 48) monetary policy committees at eight central banks are scheduled to meet, including Angola, Israel, Hungary, Albania, Thailand, Brazil, Fiji and Mexico.

COUNTRY	MSCI	DECISION	RATE	1 YEAR AGO
ANGOLA		26-Nov	10.25%	10.50%
ISRAEL	DM	26-Nov	2.00%	2.75%
HUNGARY	EM	27-Nov	6.25%	6.50%
ALBANIA		27-Nov	4.00%	5.00%
THAILAND	EM	28-Nov	2.75%	3.25%
BRAZIL	EM	28-Nov	7.25%	11.00%
FIJI		29-Nov	0.50%	0.50%
MEXICO	EM	30-Nov	4.50%	4.50%

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