Entering text into the input field will update the search result below

Monetary Policy Week in Review - 16 April 2011

Apr. 15, 2011 5:11 PM ETSKOR-OLD, EWY, IDX, EIDO, CUD, FXM
Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

Seeking Alpha Analyst Since 2010

A major feature of the past week was continued emerging market monetary policy tightening, but it wasn't all conventional interest rate hikes.  Of those that did increase rates were Chile +50bps to 4.50%, and Armenia +25bps to 8.50%.  Those that held rates steady after reviewing policy were: South Korea 3.00%, Indonesia 6.75%, Canada 1.00%, Rwanda 6.00%, Georgia 8.00%, and Mexico 4.50%.  Meanwhile Angola slashed rates 500bps to 20.00%, and Iran's central bank decreed that Iranian banks should lower their interest rates from 26-28% to 14-17%.  Elsewhere, Vietnam made a series of adjustments to reserve rates to stabalise its currency (the Dong), Sri Lanka raised its reserve requirements by 100bps, and the Singapore Monetary Authority adjusted its currency policy upwards in response to rising inflation.

So it was an interesting week on the monetary policy front.  Aside from the two outliers of Angola and Iran, much of the activity was related to emerging market policy tightening where, of 5 moves, 3 were non-interest rate related.  It is interesting that there has been a few non-interest rate policy moves, particularly as emerging market central banks bring interest rates to higher and higher levels.  But perhaps more interesting is the non-move by a couple of the Banks that held policy unchanged.  For example, Korea and Indonesia arguably could have, and maybe should have, raised rates given their respective inflation situations.  Indeed it is likely that those banks will tighten policy again soon, but it does reflect a due degree of caution that is being applied in the monetary policy inflation fight.  Many economies and central banks are fast approaching a danger zone in policy tightening, where the risk of a policy mistake, e.g. tightening too much, is rising.

There are no major central banks scheduled to review policy next week.  However the Reserve Bank of Australia is due to release its Board Minutes from the previous monetary policy review.  Likewise the Bank of England is due to release the Monetary Policy Committee meeting minutes from its previous decision, which will make for interesting reading given what the ECB did and the inflation situation in the UK.

Source: www.CentralBankNews.info

Article source: http://www.centralbanknews.info/2011/04/monetary-policy-week-in-review-16-april.html

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Recommended For You

To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.