Monetary Policy Week in Review – Sep 8-12, 2014: Chile, Peru continue easing, Philippines ratchets up further

    Last week in global monetary policy the central banks of Chile and Peru continued their easing cycles while the Philippines ratcheted up rates further as geopolitical tensions, including the possible independence of Scotland, dominated sentiment in financial markets.
    Amid the growing prospects of armed intervention by an international coalition in Syria and Iraq, there was uplifting news from the euro area where finance ministers last Friday showed their willingness to support the European Central Bank’s (ECB) plea for fiscal stimulus and structural reforms to help stimulate demand now that its rates are at rock bottom and asset purchases over the coming months will help enlarge its balance sheet.
     Through the first 37 weeks of this year, the 90 central banks followed by Central Bank News have cut their policy rates 48 times, or 14.2 percent of all policy decisions, up from 12 percent at the end of the first half and 12 percent at the end of the first quarter.
    Meanwhile, rates have been raised 36 times, or 10.6 percent of all policy decisions, up from 9.3 percent at the end of June and 8.7 percent at the end of March.

LIST OF LAST WEEK’S CENTRAL BANK DECISIONS:

• New Zealand holds rate, expects further rises after pause
• Indonesia maintains rate, wary of risks to stability
• Serbia maintains rate, cites uncertain environment
• Philippines raises rate 25 bps, sees further rises ahead
• Chile cuts rate again and may consider further stimulus
• Peru cuts rate and will ease policy further if necessary
• Korea holds rate as domestic demand improves a bit
• Russia holds rate but may raise further to curb inflation

OTHER STORIES:

• BIS spotlights home prices as early warning indicator
• Low volatility due to reduced economic uncertainty - BIS

TABLE WITH LAST WEEK’S MONETARY POLICY DECISIONS:

COUNTRY	MSCI	NEW RATE	OLD RATE	1 YEAR AGO
NEW ZEALAND	DM	3.50%	3.50%	2.50%
PHILIPPINES	EM	4.00%	3.75%	3.50%
INDONESIA	EM	7.50%	7.50%	7.25%
SERBIA	FM	8.50%	8.50%	11.00%
CHILE	EM	3.25%	3.50%	5.00%
PERU	EM	3.50%	3.75%	4.25%
SOUTH KOREA	EM	2.25%	2.25%	2.50%
RUSSIA	EM	8.00%	8.00%	8.25%

    This week (Week 38) seven central banks are scheduled to decide on monetary policy: Mozambique, the United States, Thailand, Malaysia, Norway, Switzerland and South Africa.

COUNTRY	MSCI	DATE	CURRENT  RATE	1 YEAR AGO
MOZAMBIQUE		15-Sep	8.25%	8.75%
UNITED STATES	DM	17-Sep	0.25%	0.25%
THAILAND	EM	17-Sep	2.00%	2.50%
MALAYSIA	EM	18-Sep	3.25%	3.00%
NORWAY	DM	18-Sep	1.50%	1.50%
SWITZERLAND	DM	18-Sep	0.25%	0.25%
SOUTH AFRICA	EM	18-Sep	5.75%	5.00%

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