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Monetary Policy Week In Review – Dec. 1, 2012: Fresh Signs The Global Rate Cutting Cycle May Be Bottoming Out

Last week seven central banks took monetary policy decisions, with only one bank (Hungary) cutting policy interest rates while the remaining six (Angola, Israel, Albania, Thailand, Brazil and Mexico) maintained rates.

Year-to-date, the 88 central banks followed by Central Bank News have cut rates about four times as often as they have raised rates. Policy rates have been cut 114 times and raised rates 28 times.

There were further signs, this week from the major emerging market central banks of Brazil and Thailand, that this year's cycle of interest rate cuts in response to global economic weakness could be starting to bottom out.

After 10 consecutive interest rate cuts, Brazil's central bank signaled that rates would now remain on hold for a long time as the domestic economy was improving.

Thailand issued a surprisingly upbeat statement, saying the downside risks to growth were easing and the export sector, hit by low global demand, was now expected to recover in the first half of 2013 due to better global economic growth.

Despite the more positive tone, it is clear the risks to global growth remain high, mainly from the political uncertainties surrounding the U.S. fiscal cliff and the euro area's continuing efforts to get to solve its debt crises.

Noting these significant risks and slow global growth that is containing inflation, Mexico's central bank said it expects further policy easing in advanced and emerging economies.


ANGOLA   10.25% 10.25% 10.50%
ISRAEL DM 2.00% 2.00% 2.75%
HUNGARY EM 6.00% 6.25% 6.50%
ALBANIA   4.00% 4.00% 5.00%
THAILAND EM 2.75% 2.75% 3.25%
BRAZIL EM 7.25% 7.25% 11.00%
MEXICO EM 4.50% 4.50% 4.50%
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NEXT WEEK (WEEK 49) monetary policy committees at 12 central banks are scheduled to meet, including five developed markets: Canada, Australia, U.K., euro zone and New Zealand, three emerging economies: Morocco, Poland and Peru, and three frontier markets: Croatia, Serbia and Sri Lanka. In addition, Uganda's central bank is also scheduled to decide its policy stance.

CANADA DM 4-Dec 1.00% 1.00%
AUSTRALIA DM 4-Dec 3.25% 4.25%
UGANDA   4-Dec 12.50% 23.00%
MOROCCO EM 4-Dec 3.00% 3.25%
POLAND EM 5-Dec 4.50% 4.75%
CROATIA FM 5-Dec 6.25% 6.25%
UNITED KINGDOM DM 6-Dec 0.50% 0.50%
EURO ZONE DM 6-Dec 0.75% 1.00%
NEW ZEALAND DM 6-Dec 2.50% 2.50%
SERBIA FM 6-Dec 10.95% 9.75%
PERU EM 6-Dec 4.25% 4.25%
SRI LANKA FM 6-Dec 7.75% 7.00%
Click to enlarge