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March 2012

Central Bank News Website Goes up For Sale

March 18, 2012 by CentralBankNews   Comments (0)

After going from strength to strength since starting in October 2009, we have decided to put the Central Bank News website up for sale in hopes that the right person or organisation can pick up the torch and take Central Bank News to the next level.  Notwithstanding this development Central Bank News will continue to provide timely and insightful updates on global monetary policy and central banking developments for the foreseeable future.  We are presently accepting expressions of interest from those interested in acquiring the Central Bank News website and databases; please email centralbanknews@yahoo.com for a copy of the information memorandum.

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Monetary Policy Week in Review - 17 March 2012

March 17, 2012 by CentralBankNews   Comments (0)

The past week in monetary policy saw 13 central banks reviewing policy settings, with 3 banks changing rates; Vietnam -100bps to 14.00%, Mozambique -125bps to 13.75%, and Norway -25bps to 1.50%.  Meanwhile those that held rates unchanged were: Japan 0-0.10%, Russia 8.00%, USA 0-0.25%, Hong Kong 0.50%, Sri Lanka 7.50%, India 8.50%, Switzerland 0-0.25%, Rwanda 7.00%, Chile 5.00%, and Mexico 4.50%. Japan also announced enhancements to its loan program, and Central Bank News launched a new central banking links list series.

Looking at the central bank calendar, the week ahead features decisions from a number of emerging and frontier market economies; with the central banks of Thailand, Iceland, Nigeria, Egypt, Taiwan, and Colombia all meeting to review policy settings.  Also due out next week is the Reserve Bank of Australia's monetary policy meeting minutes, and the Bank of England's monetary policy committee meeting minutes.   There's also speeches from Fed Chairman Ben Bernanke, and ECB chairman Mario Draghi.

Bank of Thailand
Central Bank of Iceland
Central Bank of Nigeria
Central Bank of Egypt
Central Bank of Taiwan
Central Bank of Colombia

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Banco de Mexico Holds Interest Rate Target at 4.50%

March 17, 2012 by CentralBankNews   Comments (0)

The Banco de Mexico held its overnight interest rate target steady at 4.50%.  The Bank said [Google Translated]: "From the foregoing, the Governing Board considers that the current stance of monetary policy is conducive to achieving the goal of permanent inflation of 3%, so we decided to keep unchanged the target for the interbank interest rate one day. Going forward, the Board will remain attentive to the prospects for growth of the Mexican economy, inflation and financial markets, which in a context of strong monetary laxity in major advanced and emerging countries, could make recommended a relaxation of monetary policy."

The Mexican central bank also kept the overnight interest rate target steady at 4.50% at its previous meeting.  Mexico reported annual inflation of 3.9% in February, up from 3.8% in December, 3.2% in October, 3.14% in September, 3.42% in August, while inflation was 3.28% at the end of June, 3.4% April and 3% in March, and within the Bank's inflation target range of 3% +/- 1%.

The Mexican economy grew 4.5% (3.2% in Q2, 4.5% in Q1) year on year in Q3 last year, up 1.3% (1.3% in Q2, 0.6% in Q1) from the previous quarter, compared to GDP growth of 5.4% in 2010.  The Mexican peso (MXN) is down about 5% against the US dollar over the past year, and the USDMXN exchange rate last traded around 12.67.


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Banco Central de Chile Holds Rate at 5.00%

March 17, 2012 by CentralBankNews   Comments (0)

The Banco Central de Chile kept its monetary policy interest rate unchanged at 5.00%.  The Bank noted: "Domestically, economic activity and domestic demand have tended to outperform forecasts from the latest Monetary Policy Report. The labor market remains tight and nominal wages show increased dynamism. Credit market conditions are stable. Y‐o‐y CPI inflation is above the tolerance range, while core inflation measures are around 3% annually. Short term inflation expectations have risen, but remain around the target over the projection horizon."

Chile's central bank last cut the monetary policy interest rate by 25 basis points to 5.00% at its January meeting.  The Bank last raised its monetary policy interest rate by 25 basis points to 5.25% at its June meeting last year.  Chile reported annual consumer price inflation of 4.2% in January this year, compared to 3.7% in October, 3.3% in September, 3.2% in August, 2.9% in July, 3.4% in June, 3.3% in May and 3.2% in April last year; within the Bank's inflation target of 2-4%.  

The Chilean economy grew 0.6% in the September quarter (1.4% in Q2, 1.6% in Q1), placing annual GDP growth at 4.8% (6.6% in Q2, 9.9% in Q1).  The Chilean Peso (CLP) has gained about 1% against the US dollar over the past year, while the USDCLP exchange rate last traded around 483.

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National Bank of Rwanda Holds Interest Rate at 7.00%

March 17, 2012 by CentralBankNews   Comments (0)

The National Bank of Rwanda held its key repo rate unchanged at 7.00%.  Bank Governor, Claver Gatete, said: "The monetary and exchange rate policy implemented to date continues to sustain Rwanda's macroeconomic stability. The financial sector is sound and resilient to external shocks, inflation remains moderate and the Rwandan Franc is stable.  In the second quarter of 2012, headline inflation is expected to remain stable as a result of pursuing tight monetary policy, good coordination between the monetary and fiscal policies and other Government policy measures aiming at mitigating exogenous supply shocks that include high oil prices and sovereign debt in the Euro zone."

The Bank previously increased the repo rate by 50 basis points in November and October, meanwhile the bank last reduced the interest rate 100bps to 6.00% in November last year.  Rwanda  recorded annual inflation of 7.85% in February, compared to 7.5% in August, 5.82% in June, and just 1.09% in January last year.  According to IMF data Rwanda saw annual GDP growth of 5.39% during 2010, meanwhile the IMF recently scaled down its growth estimate for Rwanda to 7% for 2011, from a previous forecast of 7.5%.  The Rwandan Franc (RWF) last traded around 607 against the US dollar, having weakened about 1% so far this year.

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Swiss National Bank Keeps Monetary, Currency Policy Unchanged

March 15, 2012 by CentralBankNews   Comments (0)

The Swiss National Bank kept its target for the 3-month franc LIBOR steady at 0-0.25 percent, and reaffirmed its commitment to the EURCHF 1.20 floor set on the 6th of September.  The Bank said it "will continue to enforce the minimum exchange rate of CHF 1.20 per euro with the utmost determination. It is prepared to buy foreign currency in unlimited quantities for this purpose. The target range for the three-month Libor will remain unchanged at 0.00–0.25%. The SNB will continue to maintain liquidity on the money market at an exceptionally high level."

The SNB intensified its currency measures late last year.  Switzerland reported annual consumer price inflation of -0.9% in February, -0.5% in November, 0.2% in August, compared to 0.50% in July, meanwhile, the Bank is forecasting inflation of 0.4% during 2011, while 2012 inflation is expected at -0.3% and 0.5% in 2013.  The Swiss economy grew 1.3% on an annual basis in the December quarter (1.6% in Q3, 2.3% in Q2 and 2.5% in Q1).  The Swiss franc (CHF) last traded around 1.21 against the Euro, and 0.92 against the US dollar.

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Reserve Bank of India Holds Repo Rate at 8.50%

March 15, 2012 by CentralBankNews   Comments (0)

The Reserve Bank of India [RBI] held its repo rate at 8.50% and reverse repo rate at 7.50%, Bank Rate at 9.50% and Cash Reserve Ratio (CRR) at 4.75%.  The RBI said: "Recent growth-inflation dynamics have prompted the Reserve Bank to indicate that no further tightening is required and that future actions will be towards lowering the rates. However, notwithstanding the deceleration in growth, inflation risks remain, which will influence both the timing and magnitude of future rate actions."

The Reserve Bank of India previously cut the CRR by 75 basis points to 4.75%, and last increased the repo rate by 25 basis points at its October and September meetings, after hiking a surprise 50 basis points at its previous meeting to 8.00%, having increased 25 basis points in June, and 50 basis points during the May meeting.  India's key inflation measure, the wholesale price index, increased just 7.57% in December, compared to 9.11% in November, 9.36% in October, 9.72% in September, 9.78% in August, 9.22% in July, 9.44% in June, 9.06% in May, 8.66% in April, and 8.98% year on year in March.  

India reported annual GDP growth of 6.9% in the September quarter, down from 7.7% in the June quarter, and 7.8% in the March quarter this year, and 8.3% in the previous quarter.  The RBI revised its growth projections down for 2011-12 to 7.6 percent from 8.0 percent previously, due to downside risks.  The Indian Rupee (INR) has depreciated about 11% against the US dollar over the past year, while the USDINR exchange rate last traded around 50.22

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