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  • Monetary Policy Week In Review – Dec 23-27, 2013: Tunisia Raises Rate, Armenia Cuts, Year Ends On Quiet Note

    The final week of 2013 provided few fireworks in global monetary policy with financial markets largely in an upbeat mood over the prospects for 2014 - already dubbed 'Year of the Taper' - following the previous week's decision by the U.S. Federal Reserve to start winding down its asset purchases beginning in January in a predictable and calm manner.
    Six central banks took policy decisions last week, with Tunisia raising its rates, Armenia cutting its rates and the other four (Angola, Israel, Taiwan and Zambia) keeping rates on hold.
    The general message from these six central banks was that global economic growth is slowly improving and inflation is largely in check, except in a few hot spots, such as Tunisia and Zambia.
    Tunisia's central bank, which raised its policy rate for the second time this year, embodies the struggle that many emerging and frontier market central banks have been facing most of this year. International investors have withdrawn funds in favor of advanced economies, leading to depreciating currencies, upward pressure on current account deficits and inflation.
    Credible and resolute political leadership is the answer to such troubles, and in the case of Tunisia there are signs that three years of unrest following the political uprisings that gave birth to the Arab Spring may be easing as a caretaker government takes over in early January in the run-up to an election and new constitution.

    Through the 52 weeks of this year, the 90 central banks followed by Central Bank News cut their policy rates 117 times, or 23.2 percent, of this year's 505 policy decisions, steady from the previous week but down from 25.3 percent mid-year.
    Nine percent of this year's rate cuts were carried out by developed market central banks, 18 percent by frontier market central banks, 32 percent by emerging market central banks and 41 percent by central banks in other countries.
    There were 27 rate rises this year, or 5.3 percent of this year's 505 policy decisions, up from 4.7 percent after the first half of this year, reflecting this year's rate rises by Brazil, Indonesia, India and a few other countries, such as Pakistan, Ghana, Gambia and Zambia.
    Of this year's rate rises, 13, or 48 percent, came from emerging market central banks compared with only one rate rise from developed market central banks. Denmark was the lone rate riser among developed market central banks but that move reflected easing upward pressure on its currency rather than a strong economy as investors returned to euro zone assets, allowing the Danish central bank to normalize its policy that is aimed at holding the krone in a narrow band to the euro.

    LIST OF LAST WEEK'S (WEEK 52) STORIES:

     

    TABLE WITH LAST WEEK'S MONETARY POLICY DECISIONS:

     

     

    COUNTRYMSCINEW RATEOLD RATE1 YEAR AGO
    ANGOLA 9.25%9.25%10.25%
    ISRAELDM1.00%1.00%1.75%
    ARMENIA 7.75%8.00%8.00%
    TAIWANEM1.88%1.88%1.88%
    TUNISIAFM4.50%4.00%3.75%
    ZAMBIA 9.75%9.75%9.25%

    This week (week 1) is very quiet on the monetary policy front, with only Sri Lanka's central bank on Jan. 2 presenting its "Road Map," a comprehensive overview of its policy direction and work plan for the coming period. This is the eight consecutive year that the bank has presented its Road Map.

    www.CentralBankNews.info

    Dec 30 7:32 AM | Link | Comment!
  • Monetary Policy Week In Review – Dec 16-20, 2013: Financial Markets Welcome Fed's Change Of Direction

    Financial markets declared 'mission accomplished' this week as the Federal Reserve finally changed the direction of U.S. monetary policy and started to wind down five years of extraordinary accommodation.
    Within hours of its decision, any uncertainty in financial markets over the near-term direction of the U.S economy and monetary policy had evaporated as the Fed succeeding in convincing skeptics that "QE Infinity" is a figment of their imagination and the economy is now strong enough to weather a slow but steady return to normality.
    By combining a "modest" $10 billion reduction in monthly asset purchases to $75 billion with a likely extension of zero percent interest rates beyond expectations, the Fed drilled home its message that a tapering of quantitative easing does not equal a tightening of monetary policy.
    Most importantly, the Fed has changed the global narrative of ultra-easy monetary policy and plotted a course for other major central banks to follow as their time comes to shrink balance sheets.
    A collective cheer echoed through financial markets and the halls of central banks worldwide as it slowly dawned upon them that the global economy is truly healing and moving beyond the ravages of the worst crises since the Great Depression.
    The central banks of Japan, China and Taiwan welcomed the Fed's move as a sign the U.S. economy, and by extension the global economy, is recovering while Hong Kong's monetary authority focused on the reduced risk of asset bubbles and Brazil's finance minister saw a likely reduction in foreign exchange market volatility.
    But amidst the hoopla surrounding the Fed's decision, it is clear that inflation is too low for comfort in most economies.
    Last week all four central banks that cut their rates - Sweden, Serbia, Hungary and Albania - acted in response to lower-than-expected inflation while the Fed said inflation persistently below its target could pose a risk to the economy and the Czech Republic's central bank is using foreign exchange intervention to eliminate the threat of deflation.
    At the same time, economic growth appears to be finding its footing, with the central banks of Sweden, Hungary and Japan seeing stronger growth and Colombia going so far as to say the global economy was now better than expected.

    Through the first 51 weeks of this year, central banks have cut their policy rates 116 times, or 23.25 percent of the 499 policy decisions taken by the 90 central banks followed by Central Bank News, up from 23.0 percent the previous week but down from 25.3 percent after the first half of the year.
    Policy rates have been raised 26 times this year, or 5.2 percent of this year's policy decisions, down from 5.5 percent the previous week but up from 4.7 percent after the first half of the year.

    LIST OF LAST WEEK'S (WEEK 51) STORIES:

     

    TABLE WITH LAST WEEK'S MONETARY POLICY DECISIONS:

     

     

    COUNTRYMSCINEW RATEOLD RATE1 YEAR AGO
    SWEDENDM0.75%1.00%1.00%
    SERBIAFM9.50%10.00%11.25%
    HUNGARYEM3.00%3.20%5.75%
    MOROCCOEM3.00%3.00%3.00%
    TURKEYEM4.50%4.50%5.50%
    CZECH REPUBLICEM0.05%0.05%0.05%
    ALBANIA 3.00%3.25%4.00%
    INDIAEM7.75%7.75%8.00%
    UNITED STATESDM0.25%0.25%0.25%
    GEORGIA 3.75%3.75%5.25%
    RWANDA 7.00%7.00%7.50%
    JAPANDMN/AN/A0.10%
    COLOMBIAEM3.25%3.25%4.25%

    This week (week 52 and the final week of the year) four central banks are scheduled to hold policy meetings, including Angola, Israel, Armenia and Taiwan.

     

     

    COUNTRYMSCIDATECURRENT RATE1 YEAR AGO
    ANGOLA 23-Dec9.25%10.25%
    ISRAELDM23-Dec1.00%1.75%
    ARMENIA 24-Dec8.00%8.00%
    TAIWANEM26-Dec1.88%1.88%

    www.CentralBankNews.info

    Dec 22 6:31 PM | Link | Comment!
  • Monetary Policy Week In Review – Dec 9-13, 2013: New Zealand, Russia, Iceland To Curb Inflation, 1 Bank Cuts

    Last week Botswana's central bank cut rates while 12 banks maintained their rates, waiting with bated breath for the U.S. Federal Reserve to decide when it will start to taper its asset purchases.

    The main takeaway from central banks last week was that inflationary pressures are never from bubbling to the surface despite weak global demand that is keeping a lid of inflation worldwide.

    The Reserve Bank of New Zealand ratcheted up its warning about inflation and is now primed to raise rates in the first half of next year, the Bank of Russia is defying skeptics and proving that it is fully committed to pushing down inflationary expectations while Iceland tightening its previous warnings about rate rises in light of the government's plan to reduce household debt, a move it said would boost demand and thus inflation.

    But countries that are facing inflationary pressures are exceptions. The global trend is sluggish growth and low inflation, illustrated this week by Botswana, South Korea, Switzerland, Chile and Peru.

    Low inflation is making it possible for central banks to continue to cut their policy rates and through the first 50 weeks of this year, rates have been cut 112 times, 23.0 percent, of the 486 policy decisions taken by the 90 central banks followed by Central Bank News.

    This percentage is slightly lower than the previous week despite Botswana's rate cut and down from 25.3 percent after the first six months of the year, reflecting rate rises by major emerging market central banks, such as Brazil and Indonesia.

    In contrast, central banks worldwide have only raised their policy rates 26 times this year, or 5.4 percent of this year's policy decisions, up from 4.7 percent after the first half of the year.

    LIST OF LAST WEEK'S (WEEK 50) STORIES ABOUT MONETARY POLICY:

     

    TABLE WITH LAST WEEK'S MONETARY POLICY DECISIONS:

     

     

    COUNTRYMSCINEW RATEOLD RATE1 YEAR AGO
    SRI LANKAFM6.50%6.50%7.50%
    BOTSWANA 7.50%8.00%9.50%
    ICELAND 6.00%6.00%6.00%
    SOUTH KOREAEM2.50%2.50%2.75%
    NEW ZEALANDDM2.50%2.50%2.50%
    MOZAMBIQUE 8.25%8.25%9.50%
    NAMIBIA 5.50%5.50%5.50%
    PHILIPPINESEM3.50%3.50%3.50%
    INDONESIAEM7.50%7.50%5.75%
    SWITZERLANDDM0.25%0.25%0.25%
    PERUEM4.00%4.00%4.25%
    CHILEEM4.50%4.50%5.00%
    RUSSIAEM5.50%5.50%8.25%

    This week (week 51) 11 central banks are scheduled to hold policy meetings, including Sweden, Morocco, Turkey, the Czech Republic, Hungary, India, Serbia, Georgia, Croatia, the United States and Japan.

     

     

    COUNTRYMSCIDATECURRENT RATE1 YEAR AGO
    SWEDENDM17-Dec1.00%1.00%
    MOROCCOEM17-Dec3.00%3.00%
    TURKEYEM17-Dec4.50%5.50%
    CZECH REPUBLICEM17-Dec0.05%0.05%
    HUNGARYEM17-Dec3.20%5.75%
    INDIAEM18-Dec7.75%8.00%
    SERBIAFM12-Dec10.00%11.25%
    GEORGIA 18-Dec3.75%5.25%
    CROATIAFM18-Dec6.25%6.25%
    UNITED STATESDM18-Dec0.25%0.25%
    JAPANDM20-DecN/A0.10%

    www.CentralBankNews.info

    Dec 15 8:48 AM | Link | Comment!
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