Central Bank News'  Instablog

Central Bank News
Send Message
Operator and founder of CentralBankNews.info - a trusted and authoritative source on monetary policy developments from around the world. Follow us on Twitter for updates on monetary policy decisions.
My company:
My blog:
  • Monetary Policy Week In Review – Apr 20, 2013: One Central Bank Raises Rate, 1 Cuts As Inflation Remains Sticky  0 comments
    Apr 20, 2013 1:48 PM

    Last week six central banks took policy decisions with two major banks in emerging markets (Turkey and Brazil) changing their rates in opposite direction while the other four central banks (Canada, Sweden, Mozambique and Sri Lanka) kept rates steady as inflation remains sticky despite weak global growth.

    Brazil's 25 basis point rate hike - well-flagged and overdue - was significant because it illustrates that inflationary pressures are building in some emerging markets, specifically Asian countries, and central bankers will defend their inflation-fighting credentials.

    Brazil's move was in contrast to decisions by Canada and Sweden to further push back the time frame for rate rises, showing how the euro area's severe crises is hampering economic recovery throughout advanced economies while growth in many emerging markets is accelerating.

    While inflation remains an issue in many emerging countries, disinflation - or deflation in the case of Japan - haunts many advanced economies as long unemployment lines holds down wage pressure along with excess industrial capacity.

    Sweden's Riksbank specifically cited the need to keep policy rates low for longer than forecast because inflation will take longer to return to target than expected. For 2013 inflation is forecast to average a mere 0.1 percent.

    Weaker-than-expected growth is also holding back inflation in Canada, with the Bank of Canadanow first expecting inflation to return to target by mid-2015, at least six months later than it expected in January.

    Turkey, which bounced back swiftly from the global financial crises but then was hit by slow growth last year, cut its rate by a larger-than-expected 50 basis points despite inflation above the central bank's target.

    The latest central bank decisions came as policy makers gathered in Washington D.C. for the annual meeting of the International Monetary Fund.

    While the IMF trimmed its 2013 global growth forecast, it also said the global economy was taking on the characteristics of a three-speed recovery. Growth in emerging and developing markets is still strong, the U.S. is getting back on its feet, but the euro area is continuing to contract with adverse feedback loops between weak banks, weak sovereigns and low economic activity reinforcing each other.

    Through the first 16 weeks of this year, 77 percent of the 147 policy decisions taken by the 90 central banks followed by Central Bank News have lead to unchanged rates, the same ratio as after 15 weeks.

    Globally, 19 percent of policy decisions this year have lead to rate cuts - largely by central banks in emerging economies - unchanged from last week and slightly down from 20 percent the week before then.




    MOZAMBIQUE   9.50% 9.50% 13.50%
    SRI LANKA FM 7.50% 7.50% 7.75%
    TURKEY EM 5.00% 5.50% 5.75%
    BRAZIL EM 7.50% 7.25% 9.00%
    SWEDEN DM 1.00% 1.00% 1.50%
    CANADA DM 1.00% 1.00% 1.00%

    Next week (week 17) features eight central bank policy decisions, including Hungary, Namibia, New Zealand, Philippines, Fiji, Japan (including the economic outlook), Mexico and Trinidad and Tobago.



    HUNGARY EM 23-Apr 5.00% 7.00%
    NAMIBIA   24-Apr 5.50% 6.00%
    NEW ZEALAND DM 24-Apr 2.50% 2.50%
    PHILIPPINES EM 25-Apr 3.50% 4.00%
    FIJI   25-Apr 0.50% 0.50%
    JAPAN DM 26-Apr 0.00% 0.10%
    TRINIDAD & TOBAGO   26-Apr 2.75% 3.00%
    MEXICO EM 26-Apr 4.00% 4.50%


    Share on print

Back To Central Bank News' Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (0)
Track new comments
Be the first to comment
Full index of posts »
Latest Followers


More »
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.