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The European Central Bank (ECB) left is key policy rates steady, as widely expected, but raised the prospect of changing its policy measures in December by underscoring that risks to economic growth "remain tilted to the downside" and it will continue to use all available instruments to ensure that inflation continues to rise.
The ECB, which in March cut its benchmark refinancing rate to zero, confirmed that monthly asset purchases of 80 billion euros were still intended to run until the end of March 2017, or beyond if necessary to ensure that inflation is moving toward the target of just below, but close to 2 percent.
But ECB President Mario Draghi said the ECB remained "committed to preserving the very substantial degree of monetary accommodation," a sign the ECB may either extend its asset purchases beyond March next year or adjust it to encompass other securities or loosen some of its restrictions.
In December the ECB will update its economic forecasts through to 2019 while the governing council will also hear from committees about the options for ensuring that its purchase program is proceeding smoothly, addressing concerns the ECB is running out of bonds to buy.
Draghi said the euro area economy in the third quarter had continued to expand at a rate that was "around the pace" of the second quarter and further ahead growth should proceed at a "moderate but steady pace."
In the second quarter the euro zone economy grew by 0.3 percent from the first quarter for annual growth of 1.6 percent, down from 1.7 percent in the first quarter.
In September the ECB revised upwards its 2016 growth forecast to 1.7 percent from 1.6 percent, but lowered its outlook for 2017 growth to 1.6 percent from 1.7 percent and its 2017 forecast to 1.6 percent from 1.7 percent.
Domestic demand will continue to be supported by the ECB's easy policy and largely neutral fiscal policy in 2017 but Draghi said the recovery was still being dampened by subdue foreign demand, the necessary adjustments of balance sheets in a number of sectors and the sluggish pace of structural reforms, which he once again called on governments to accelerate to reduce unemployment and boost the potential growth.
"Structural reforms are necessary in all euro area countries," said Draghi.
Inflation in the euro area rose to 0.4 percent in September from 0.2 percent in August.
In its latest forecast, the ECB expects inflation to average 0.2 percent this year, 1.2 percent in 2017 and 1.6 percent in 2018.
The European Central Bank issued the following statement and ECB President Mario Draghi's introductory statement to a press conference:
Turkey's central bank left its benchmark one-week repo rate steady at 7.50 percent but surprised financial markets by pausing in its policy of lowering the overnight funding rate, saying "recent developments in exchange rates and other cost factors restrain the improvement in the inflation outlook and thus necessitate the maintenance of a cautious monetary policy stance."
The Central Bank of the Republic of Turkey (CBRT) has cut the overnight funding rate by 250 basis points to 8.25 percent since March, most recently last month, as part of a simplification of its monetary policy framework and efforts to stimulate demand and economic growth.
But the benchmark rate, the one-week repo rate, has been maintained since February 2015 as the central bank tries to push down inflation.
"The Committee stated that the direction and the timing of the next step in the monetary policy simplification process will be data dependent," the central bank said, adding its usual guidance that it will maintain a cautious policy stance and the outlook for inflation will determine its decisions.
Turkey's headline inflation rate eased to 7.28 percent in September from 8.05 percent in August as food prices declined for the first on a monthly basis since 2003. The CBRT has forecast year-end inflation of 7.5 percent.
While the exchange rate of the lira has weakened this year - on Tuesday it hit a record low of 3.11 to the U.S. dollar - it rose in response to the central bank's decision today.
The lira was trading at 3.06 to the U.S. dollar shortly after news of the CBRT's decision to maintain rates, up from 3.07. But it is still down 4.6 percent compared with the the start of this year.
Turkey's economy decelerated in the third quarter, the CBRT said, noting the decline in tourism revenue and moderate consumer lending. But the central bank said it expected domestic demand to start to recover in the fourth quarter, helped by recent supportive measures and incentives.
Turkey's Gross Domestic Product grew by an annual rate of 3.1 percent in the second quarter, down from 4.7 percent in the first quarter.
The Central Bank of the Republic of Turkey issued the following statement:
Indonesia's central bank cut is new benchmark interest rate by 25 basis points for the second month in a row to stimulate domestic demand, including credit, to stimulate domestic demand at a time that inflation will remain close to the floor of its target range and economic growth is slightly weaker than expected.
Bank Indonesia (BI) cut its BI 7-day Reverse Repo Rate (BI 7-day RR Rate) to 4.75 percent from 5.0 percent, brining the total cut in that rate to 50 basis points following the cut in September.
BI adopted the 7-day rate as its new benchmark rate in August to improve the transmission of its monetary policy decisions to money markets. Prior to August BI cut its previous benchmark rate, the BI rate, four times from January through June by a total of 100 points.
Indonesia's inflation rate rose to 3.07 percent in September from 2.79 percent in August but BI reiterated that inflation is expected to fall towards the floor of its target corridor of 3 - 5 percent.
Indonesia's economy in the third quarter was slightly weaker than BI had expected and the impact of government spending is now seen as "somewhat limited" as spending is adjusted in the second half of this year.
Sluggish world trade has also undermined the country's exports while the rupiah's exchange rate has continued to appreciate, making the country's exports less competitive.
Economic growth this year is therefore expected to be around the lower end of the 4.9 percent to 5.3 percent range that BI has forecast, a slight downgrade in its forecast.
In August BI cut its growth forecast to 4.9-5.3 percent from a previous 5.0-5.4 percent and last month confirmed that expectation.
Indonesia's Gross Domestic Product grew by an annual rate of 5.18 percent in the second quarter, up from 4.91 percent in the first quarter, but BI said consumption in the third quarter had remained limited and private investment, particularly non-construction investment, had remained weak.
After being hit hard in 2013 - the year of the "taper tantrum" when the rupiah fell by 21 percent - the rupiah continued to depreciate until October 2015.
Since then it has been rising on positive sentiment about the economy along with a tax amnesty that encouraged Indonesians abroad to repatriate funds.
The rupiah was trading at 13,003 to the U.S. dollar today, up 6.1 percent this year.
Bank Indonesia issued the following statement:
Gasoline was the weak part of the EIA Report today, along with what appears to be an outlier in Oil Imports, which tapered any enthusiasm for the market at the close. Do we get a big build next week as Imports hit the calendar week?
Canada's central bank left its benchmark target for the overnight rate at 0.50 percent, as widely expected, but lowered its growth forecast for this year and next year due to a slowdown in housing sales and a lower-than-expected increase in exports.
The Bank of Canada (BOC), which cut its rate twice last year by a total of 50 basis points, said it considers the risks around its latest inflation forecast to be "roughly balanced, albeit in a context of heightened uncertainty."
In September the BOC said that the risks to inflation had "titled somewhat to the downside" since its previous Monetary Policy Report in July.
The BOC has often been concerned about the impact of rising home prices in parts of the country but said new housing measures should help cushion the risks to financial stability.
The central bank lowered its forecast for Canada's Gross Domestic Product to grow by 1.1 percent this year, down from 1.3 percent forecast in July, and to 2.0 percent in 2017, down from 2.2 percent. In 2018 the country's economy is still seen expanding by 2.1 percent.
"This projection implies that the economy returns to full capacity around mid-2018, materially later than the Bank had anticipated in July," the BOC said.
The Bank of Canada issued the following statement:
Chile's central bank left its monetary policy interest rate 3.50 percent, confirming its neutral guidance that future rate changes depend on the inflationary outlook.
The Central Bank of Chile, which has maintained its rate this year after raising it by 50 basis points in 2015, most recently in December, noted that inflation in September was "unexpectedly low" so inflation approached its 3.0 percent target sooner than expected.
Chile's inflation rate eased further to 3.1 percent in September from 3.4 percent in August and the central bank said expectations revolve around the bank's target. The central bank targets inflation of 3.0 percent within a 2 - 4 percent range.
In August the central bank dropped its tightening bias that it had maintained since December as inflation continued to decline, with inflation in August falling below the central bank's upper limit for the first time since November 2015.
The Central Bank of Chile issued the following statement:
We go over the price action in the oil and related product`s markets after the close to illustrate that somebody had the API Report ahead of time. API needs to clean these obvious Report leaks up!
Cross-border lending to emerging market economies rose for the first time in a year during the second quarter of 2016 against a backdrop of overall stagnant international banking activity, according to the Bank for International Settlements (BIS).
International bank lending data from the end of June showed that cross-border claims on borrowers from emerging markets rose by $110 billion to an outstanding stock of $3.3 trillion, partially offsetting a $379 billion decline seen in the previous three quarters.
A $61 billion increase in second quarter lending to China dominated a $70 billion rise in lending to emerging Asia but total claims on China were still down 24 percent year-on-year while claims on emerging markets in Asia were down 15 percent.
Cross-border lending to Latin America and the Caribbean also grew in the second quarter, up by $11 billion, with claims on Mexico and Brazil growing by $6 billion and $4 billion, respectively. BIS said Spanish banks accounted for a substantial share of lending to Brazil.
Lending to Africa and the Middle East also rose in the second quarter - up by $33 billion - pushing the annual growth growth to 12 percent to a record $573 billion in outstanding claims. Most of the loans went to the United Arab Emirates (a rise of $17 billion), Saudi Arabia (up by $9 billion) and Qatar, up by $4 billion.
But overall data for global cross-border credit showed that outstanding claims at the end of June were largely unchanged from June last year at $27.4 trillion, with claims on lenders from advanced economies of $19.7 trillion
Although global cross-border claims were up by $464 billion in the second quarter, intragroup banking activity accounted for most of this increase so BIS said that on a consolidated basis, claims were virtually unchanged.