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  • Monetary Policy Week in Review - 22 Oct 2011
    The past week in monetary policy saw interest rate decisions announced by 7 central banks.  The only bank to announce a change to its main monetary policy  interest rate was the Banco Central do Brasil, which cut its interest rate by another 50 basis points to 11.50%.  Meanwhile the other central banks held their key interest rates unchanged: Botswana 9.50%, Norway 2.25%, Thailand 3.50%, Ghana 12.50%, Philippines 4.50%, and Turkey 5.75%.  A common theme mentioned by the central bankers was concern over signs of slowing global growth and the potential risks arising from the ongoing sovereign debt crisis in Europe.
    Monetary Policy Week in Review
    Some of the key quotes and soundbites from central bankers announcing monetary policy decisions during the past week are included below:
    • Banco Central do Brasil (cut rate -50bps to 11.50%): "Continuing the process of adjusting monetary conditions, the Committee decided unanimously to reduce the Selic rate to 11.50% pa, without bias.  The Monetary Policy Committee believes that the timely mitigate the effects coming from a more restrictive global environment, a moderate adjustment in the level of the base rate is consistent with the scenario of convergence of inflation to the target in 2012."
    • Bank of Thailand (held rate at 3.50%): "The MPC deemed that the current level of the policy rate is appropriate in addressing upcoming inflationary pressure  and supporting economic adjustments amidst heightened uncertainty in the global economy. Meanwhile, with the floods not yet over, their impact on the economy was not fully evident."
    • Central Bank of Turkey (held rate at 5.75%): "Recent data releases suggest that there will be a notable reduction in economic growth in the second half of the year. External demand remains weak, and domestic demand continues to slow down. The deceleration in  credit growth and domestic demand combined with the exchange rate movements have been contributing to the rebalancing of domestic and external demand. Accordingly, the Committee expects a significant improvement in the current account balance in the forthcoming period."
    • Norges Bank (held rate at 2.25%): "The Executive Board is of the view that the outlook and the balance of risks now suggest that the key policy rate should be kept at the current level for some time ahead. If the economic unrest abroad intensifies, money market premiums remain high and the outlook for growth and inflation weakens further, the key rate may be reduced. If financial market turbulence subsides and there are prospects of higher growth and inflation, the key rate may rise."
    • Bank of Botswana (held rate at 9.50%): "While short-term price developments have resulted in inflation remaining above the objective range of 3 - 6 percent, the medium-term outlook for consumer prices is more encouraging. As a result, the Committee judged that maintaining the Bank Rate at the current level is consistent with inflation converging on the objective range in the medium term."
    • Bank of Ghana (held rate at 12.50%): "Looking ahead, wage pressures, payment arrears and recent depreciation of the exchange rate have increased the upside risks to inflation. In the short-term, the impact of these underlying inflationary pressures on the economy remains contained. The Bank's inflation forecasts  show that the end year target will be achieved.  Movements in the exchange rate remain consistent with the delivery of the Bank's inflation target."
    Looking at the central bank calendar, next week will be reasonably busy in monetary policy with 9 central banks scheduled to review monetary policy settings.  Also on the radar is the ECB's bank lending survey, due out on Wednesday (and of course the EU leaders are meeting this weekend to try and agree on a plan to stem contagion from the sovereign debt crisis).  The key announcements to watch will be Canada, India, Japan, and Russia.
      • ILS - Israel (Bank of Israel) expected to hold at 3.00% on the 24th of Oct
      • HUF - Hungary (Magyar Nemzeti Bank) expected to hold at 6.00% on the 25th of Oct
      • CAD - Canada (Bank of Canada) expected to hold at 1.00% on the 25th of Oct
      • INR - India (Reserve Bank of India) expected to hold at 8.25% on the 25th of Oct
      • JPY - Japan (Bank of Japan) expected to hold at 0-0.10% on the 27th of Oct
      • NZD - New Zealand (RBNZ) expected to hold at 2.50% on the 27th of Oct
      • SEK - Sweden (Riksbank) expected to raise 25bps from 2.00% on the 27th of Oct
      • COP - Colombia (Central Bank of Colombia) expected to hold at 4.50% on the 28th of Oct
      • RUB - Russia (Bank Rossii) expected to hold at 8.25% on the 28th of Oct

    Oct 21 10:03 PM | Link | Comment!
  • Monetary Policy Week in Review - 15 October 2011
    The past week in monetary policy featured monetary policy decisions from 12 central banks around the world.  Those that increased interest rates were: Nigeria +275bps to 12.00% and Belarus +500bps to 35.00%.  Meanwhile those that reduced interest rates were: Pakistan -150bps to 12.00%, and Indonesia -25bps to 6.50%.  Those that held interest rates unchanged included: Sri Lanka 7.00%, Kazakhstan 7.50%, South Korea 3.25%, Mozambique 16.00%, Egypt 8.25%, Chile 5.25%, and Mexico 4.50%.  The Monetary Authority of Singapore also eased monetary policy settings, noting that it would continue with a policy of modest and gradual appreciation of its currency.
    Monetary Policy Week in Review
    Following are some of the key quotes from the central banks that meet over the past week:
    • Central Bank of Nigeria (increased rate +275bps to 12.00%): "The global economic horizon remains highly uncertain, with the signs getting more ominous as policy makers find it increasingly difficult to take the necessary economic decisions that may avert a new wave of  recession."
    • Bank Indonesia (cut interest rate -25bps o 6.50%): "We are bringing the policy rate to a level that is more reasonable," further noting "we saw the 6.75 percent rate as too high, unless we estimated inflation next year to be very high."
    • Bank of Korea (held rate at 3.25%): "Based on currently available information, the Committee considers that, while emerging market economies have shown favorable performances, major advanced economies have exhibited signs of sluggishness. Going forward the Committee forecasts that the global economy will show a recovery, albeit a moderate one; nevertheless, the Committee judges that downside risks to growth have expanded."
    • Monetary Authority of Singapore (eased policy): "Given the stresses and fragility in the advanced economies, the prospects for growth in Singapore's major trading partners have deteriorated.  With the slowdown in demand, growth in the Singapore economy could fall below its potential rate of 3-5%.  Thus, core inflation should ease next year, although headline inflation could stay elevated in the near term reflecting the higher imputed rental cost of owner-occupied housing.
    • National Bank of Belarus (increased rate +500bps to 35%): "The move is next step in the consistent implementation of the general economic policy of the National Bank and the Government aimed at macroeconomic stabilization, reducing the pressure on the Belarusian ruble exchange rate and reducing inflation.  The National Bank jointly with the Government of the Republic of Belarus will continue the adoption of stabilization measures in the light of internal and external economic developments."
    • State Bank of Pakistan (cut rate -150bps to 12.00%): "There is a decline in CPI inflation and government borrowing from SBP is lower than its end-June level. Led by consistent inflow of workers' remittances the external current account position is comfortable though there has been some decline in SBP's foreign exchange reserves. Importantly, concerns regarding  weak private sector credit growth and  falling real private investment expenditures remain along with a likelihood of rise in real interest rates."

    Looking at the central bank calendar, next week will see more emerging market central bank action, with the main event looking to be Brazil - last month Brazil unexpectedly cut interest rates, so the market will be watching that decision closely.  Other than policy meetings there's also the Reserve Bank of Australia's October meeting minutes, Ben Bernanke speaks in Boston, the US Fed puts its Beige Book Economic Survey report out, and the Bank of England publishes the minutes from its most recent meeting.

      • THB - Thailand (Bank of Thailand) expected to hold at 3.50% on the 19th of Oct
      • NOK - Norway (Norges Bank) expected to hold at 2.25% on the 19th of Oct
      • BRL - Brazil (Banco Central do Brasil) may cut 25bps from 12.00% on the 19th of Oct
      • PHP - Philippines (Bangko Sentral ng Pilipinas) expected to hold at 4.50% on the 20t of Oct
      • TRY - Turkey (Central Bank of the Republic of Turkey) expected to hold at 5.75% on the 20th of Oct

    Oct 15 3:23 AM | Link | Comment!
  • Monetary Policy Week in Review - 1 October 2011
    The past week in monetary policy was relatively quiet with just 4 central banks announcing interest rate decisions.  Israel cut its rate by 25bps to 3.00%, while Romania held at 6.25%, Taiwan held at 1.875%, and Colombia held at 4.50%.  Also making news in central banking and monetary policy was the announcement from the central bank of Angola, where it said it would launch a new benchmark interest rate.  Elsewhere, Vietnam announced deposit interest rate caps, and Denmark announced a set of emergency bank liquidity provisioning measures.

    Following are some of the key quotes from the central banks that announced monetary policy decisions over the past week:
    • Bank of Israel (cut rate 25bps to 3.00%): "The decision to reduce the interest rate for October to 3 percent is based mainly on the negative turnaround in the global economy, is consistent with the return of inflation to within the target range of price stability, and is intended to support growth while preserving financial stability."
    • Banca Nationala a Romaniei (held rate at 6.25%): "Disinflation is expected to continue in the period ahead, so that annual inflation rate will near the target. The faster disinflation while keeping the monetary policy rate unchanged and amid a moderate leu exchange rate volatility translate into a tightening of real broad monetary conditions aimed at supporting the convergence of inflation towards the medium-term objectives."
    • Central Bank of the Republic of China [Taiwan] (held rate at 1.875%): "A global slowdown and consumer prices stabilizing led to the decision,"... "Taiwan's imported inflation will cool as global prices ease in the next three months after peaking in the third quarter."
    • Central Bank of Colombia (held rate at 4.50%): "The international environment has deteriorated in the weeks after the last Board (meeting). Concerns about sovereign debt problems have grown and growth forecasts in the U.S. and Europe in 2011 and 2012 have been revised downwards. In some of the economies of Asia and Latin America, new information points to a moderation in growth. International prices of commodities have fallen but remain at high levels."

    Looking at the central bank calendar, next week there are eight central banks scheduled to announce monetary policy decisions. The big one will be the ECB, with some speculation on a rate cut - but the more likely outcome being further liquidity measures, also, this will be Jean-Claude Trichet's last meeting before Mario Draghi takes over as ECB president. Attention will also be paid as to whether the Bank of England or Bank of Japan announce further quantitative easing.
      • PEN - Peru (Banco Central de Reserva del Peru) expected to hold at 4.25% on the 3rd of Oct
      • AUD - Australia (Reserve Bank of Australia) - expected to hold at 4.75% on the 4th of Oct
      • PLN - Poland (National Bank of Poland) - expected to hold at 4.50% on the 5th of Oct
      • KES - Kenya (Central Bank of Kenya) - expected to on hold at 7.00% the 5th of Oct
      • RSD - Serbia (National Bank of Serbia) - expected to hold at 11.25% on the 5th of Oct
      • GBP - United Kingdom (Bank of England) - expected to hold at 0.50% on the 6th of Oct
      • EUR - EU (European Central Bank) - expected to hold at 1.50% on the 6th of Oct
      • JPY - Japan (Bank of Japan) - expected to hold at 0.10% on the 7th of Oct

    Oct 01 4:36 AM | Link | Comment!
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