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  • Monetary Policy Week In Review – Nov 10-15, 2014: Serbia, Pakistan Cut Rates As Commodity Prices Drop

    The central banks of Serbia and Pakistan cut their rates last week as the fall in global commodity prices from waning demand is leading to disinflation.
    The drop in commodity prices picked up speed in October with the International Monetary Fund's (NYSE:IMF) index down a sharp 6.42 percent, continuing the decline seen since June.
    Nevertheless, the central banks of Ghana and Ukraine raised their rates last week in response to the continued decline in their currencies that is leading to accelerating inflation.

    Through the first 46 weeks of this year, the 90 central banks followed by Central Bank News have cut their policy rates 57 times, or 13.9 percent of this year's 417 policy decisions, up from 13.5 percent at the end of the third quarter and 12 percent at the end of the first half, and 12 percent at the end of the first quarter.

    Meanwhile, rates have been raised 44 times, or 10.4 percent of all policy decisions, up from 10.2 percent at the end of September, 9.3 percent at the end of June and 8.7 percent at the end of March.

    Boosted by Ghana's and Ukraine's large rate rises, the Global Monetary Policy Rate - the average rate of the 90 central banks followed by Central Bank News - rose to 5.60 percent, up from 5.54 percent at the end of the third quarter and 5.53 percent at the end of the second and first quarters.

    LIST OF LAST WEEK'S CENTRAL BANK DECISIONS:

     


    TABLE WITH LAST WEEK'S MONETARY POLICY DECISIONS:

    COUNTRYMSCINEW RATEOLD RATE1 YEAR AGO
    ARMENIA 6.75%6.75%8.00%
    GHANA 21.00%19.00%16.00%
    UKRAINEFM14.00%12.50%6.50%
    SERBIAFM8.00%8.50%10.00%
    INDONESIAEM7.50%7.50%7.50%
    SOUTH KOREAEM2.00%2.00%2.50%
    PERUEM3.50%3.50%4.00%
    PAKISTANFM9.50%10.00%10.00%

    This week (Week 47) six central banks or monetary authorities are scheduled to decide on monetary policy: Chile, Japan, Georgia, South Africa, Turkey and Zambia.

    TABLE WITH THIS WEEK'S MONETARY POLICY DECISIONS:

    COUNTRYMSCIDATECURRENT RATE1 YEAR AGO
    CHILEEM18-Nov3.00%4.50%
    JAPANDM19-NovN/AN/A
    GEORGIA 19-Nov4.00%3.75%
    SOUTH AFRICAEM20-Nov5.75%5.00%
    TURKEYEM20-Nov8.25%4.50%
    ZAMBIA 21-Nov12.00%9.75%

    www.CentralBankNews.info

    Nov 17 1:49 AM | Link | Comment!
  • Monetary Policy Week In Review – Nov 3-7, 2014: ECB Joins Fed, BOE, BOJ In Focusing On Balance Sheet Growth

    The fact that the 24 members of the European Central Bank's (ECB) governing council - including Germany - agree that further unconventional measures should be deployed if necessary to boost inflation, was clearly the main news in global monetary policy last week.
    Whatever differences were behind the ECB's split decision in September to cut rates and purchase asset-backed securities along with covered bonds have now been set aside.
    Although the ECB didn't expand its stimulus measures last week, its president, Mario Draghi, went to great lengths to emphasize to that the ECB's guidance and emphasis on expanding its balance sheet had been "signed by the whole Governing Council unanimously."
    In his prepared statement, Draghi reiterated the guidance from recent months that the council was unanimous in its commitment to using additional unconventional instruments if necessary to address the risk of too prolonged a period of low inflation.
    But Draghi then went one major step further, saying the council had "tasked ECB staff and the relevant Eurosystem committees with ensuring the timely preparation of further measures to be implemented, if needed."
    The implication is clearly that the ECB is preparing markets for further stimulus in December when a likely downward revision in its latest economic forecasts provides it with solid reasons.
    This mirrors the situation in September when the ECB cut its rate to essentially zero at 0.05 percent and embarked on quantitative easing (QE) by purchasing assets.
    In September, ECB staff cut its 2014 growth forecast to 0.9 percent from 1.0 percent and the 2015 forecast to 1.6 percent from 1.7 percent. The forecast for inflation this year was revised downward to 0.6 percent from a June forecast of 0.7 percent while the 2015 forecast was maintained at 1.1 percent.
    Since then, the European Commission has cut its 2014 growth forecast to 0.8 percent and the 2015 forecast to 1.1 percent. Euro area inflation in October was a mere 0.4 percent, well below the ECB's objective of inflation that is just under 2 percent.
    In addition to the reality of the worsening outlook, it seems the ECB council has taken a hard look at how the use of QE has been associated with accelerating growth and rising inflation in the United States and the United Kingdom.
    While the balance sheets of the Federal Reserve and the Bank of England (NYSE:BOE) have tripled or quadrupled in recent years, the ECB's balance sheet has contracted.
    The initial aim of the ECB's current asset purchases is to reverse this trend and boost it by around 1 billion euros so it returns to the level in March 2012 when it was 2.96 trillion euros.
    Next up for the ECB in December is likely to be a more ambitious target for expanding its balance sheet, either by purchasing sovereign bonds, supranational bonds or even corporate bonds, as the Bank of Japan (BOJ) has been doing.
    "The lessons from other countries and other jurisdictions are very important in the sense that they make us think about how to make the most of the measures we may be taking," Draghi said.

    Through the first 45 weeks of this year, the 90 central banks followed by Central Bank News have cut their policy rates 57 times, or 13.7 percent of this year's 417 policy decisions, up from 13.5 percent at the end of the third quarter and 12 percent at the end of the first half, and 12 percent at the end of the first quarter.

    Meanwhile, rates have been raised 42 times, or 10.0 percent of all policy decisions, slightly down from 10.2 percent at the end of September, but up from 9.3 percent at the end of June and 8.7 percent at the end of March.

    Boosted by Malawi's 250 basis point rate rise, the Global Monetary Policy Rate - the average rate of the 90 central banks followed by Central Bank News - rose to 5.57 percent, up from 5.54 percent at the end of the third quarter and 5.53 percent at the end of the second quarter and first quarters.

    LIST OF LAST WEEK'S CENTRAL BANK DECISIONS:

     


    LIST OF OTHER STORIES:

     

    TABLE WITH LAST WEEK'S MONETARY POLICY DECISIONS:

    COUNTRYMSCINEW RATEOLD RATE1 YEAR AGO
    MALAWI 25.00%22.50%25.00%
    EAST. CARRIB. C.BANK 6.50%6.50%6.50%
    AUSTRALIADM2.50%2.50%2.50%
    ROMANIAFM2.75%3.00%4.00%
    KENYAFM8.50%8.50%8.50%
    THAILANDEM2.00%2.00%2.25%
    ICELAND 5.75%6.00%6.00%
    POLANDEM2.00%2.00%2.50%
    MALAYSIAEM3.25%3.25%3.00%
    UNITED KINGDOMDM0.50%0.50%0.50%
    EURO AREADM0.05%0.05%0.25%
    CZECH REPUBLICEM0.05%0.05%0.05%
    MOZAMBIQUE 7.50%8.25%8.25%

    This week (Week 46) six central banks or monetary authorities are scheduled to decide on monetary policy: Armenia, Croatia, Serbia, Indonesia, South Korea and Peru.

    TABLE WITH THIS WEEK'S MONETARY POLICY DECISIONS:

    COUNTRYMSCIDATECURRENT RATE1 YEAR AGO
    ARMENIA 11-Nov6.75%8.00%
    CROATIAFM12-Nov5.00%5.00%
    SERBIAFM13-Nov8.50%10.00%
    INDONESIAEM13-Nov7.50%7.50%
    SOUTH KOREAEM13-Nov2.00%2.50%
    PERUEM13-Nov3.50%4.00%

    www.CentralBankNews.info

    Nov 10 12:50 AM | Link | Comment!
  • Monetary Policy Week In Review – Oct 27-31, 2014: Japan And Sweden Ease As U.S., Russia Tighten Policy Stance

    The central banks of Japan and Sweden pulled rabbits out of their hats last week, surprising financial markets with their audacious moves to ease monetary policy, while the United States, Brazil and Russia tightened their policy stance, underscoring the precarious state of the global economy.
    The U.S. Federal Reserve stuck to its commitment to end its third round of asset purchases in the last six years, opening a new chapter in global monetary policy and starting the countdown to its first rate rise since June 2006.
    But just as the Fed gingerly steps into the world of post-QE (Quantitative Easing), the Bank of Japan (BOJ) delves deeper into QE, boosting its target for expanding the monetary base by 10-20 trillion yen to about 80 trillion.
    Despite months of denial that it would undertake additional easing, the BOJ decided it had to take firm action to avoid 15 years of "deflationary mindset" again grabbing hold of the Japanese psyche.
    The Riksbank is facing a similar challenge in pulling Sweden out of a deflationary grip - it forecast deflation of 0.2 percent this year - and cut its benchmark repurchase rate to zero percent and pledged to keep it there until mid-2016.
    But while Sweden and Japan are combating deflation - and have been criticized for being slow to counter the threat of deflation - Brazil and Russia are in the opposite camp, fighting inflation that continues to accelerate despite already very high interest rates.
    The Central Bank of Brazil raised its benchmark Selic rate by 25 basis points to 11.25 percent, restarting its tightening campaign that was paused in May after nine rate rises.
    The Bank of Russia, which is combating the twin challenges of international sanctions and falling oil prices, raised its policy rate by 150 basis points to 9.50 percent and now expects inflation to remain above 8 percent in the next several months while the economy is expected to stagnate in the current quarter and in the first quarter of next year.

    Through the first 44 weeks of this year, the 90 central banks followed by Central Bank News have cut their policy rates 54 times, or 13.4 percent of this year's 404 policy decisions, down from 13.5 percent at the end of the third quarter but 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 41 times, or 10.1 percent of all policy decisions, down from 10.2 percent at the end of September, but up from 9.3 percent at the end of June and 8.7 percent at the end of March.
    Boosted by last week's three rate rises, the Global Monetary Policy Rate - the average rate of the 90 central banks followed by Central Bank News - jumped to 5.56 percent, up from 5.54 percent at the end of the third quarter and 5.53 percent at the end of the second quarter and first quarters.

    LIST OF LAST WEEK'S CENTRAL BANK DECISIONS:

     


    TABLE WITH LAST WEEK'S MONETARY POLICY DECISIONS:

    COUNTRYMSCINEW RATEOLD RATE1 YEAR AGO
    ANGOLA 9.00%8.75%9.75%
    ISRAELDM0.25%0.25%1.00%
    MAURITIUSFM4.65%4.65%4.65%
    SWEDENDM0.00%0.25%1.00%
    HUNGARYEM2.10%2.10%3.40%
    UNITED STATESDM0.25%0.25%0.25%
    BRAZILEM11.25%11.00%9.50%
    ALBANIA 2.50%2.50%3.50%
    NEW ZEALANDDM3.50%3.50%2.50%
    FIJI 0.50%0.50%0.50%
    COLOMBIAEM4.50%4.50%3.25%
    JAPANDMN/AN/AN/A
    RUSSIAEM9.50%8.00%5.50%
    MEXICOEM3.00%3.00%3.50%

    This week (Week 45) 11 central banks or monetary authorities are scheduled to decide on monetary policy: Australia, Romania, Kenya, Thailand, Iceland, Poland, Malaysia, United Kingdom, euro area, Czech Republic and Zambia.

    TABLE WITH THIS WEEK'S MONETARY POLICY DECISIONS:

    COUNTRYMSCIDATECURRENT RATE1 YEAR AGO
    AUSTRALIADM4-Nov2.50%2.50%
    ROMANIAFM4-Nov3.00%4.00%
    KENYAFM4-Nov8.50%8.50%
    THAILANDEM5-Nov2.00%2.25%
    ICELAND 5-Nov6.00%6.00%
    POLANDEM5-Nov2.00%2.50%
    MALAYSIAEM6-Nov3.25%3.00%
    UNITED KINGDOMDM6-Nov0.50%0.50%
    EURO AREADM6-Nov0.05%0.25%
    CZECH REPUBLICEM6-Nov0.05%0.05%
    ZAMBIA 6-Nov12.00%9.75%

    www.CentralBankNews.info

    Nov 02 10:55 PM | Link | Comment!
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