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Central Bank News Link List - Sep 30, 2014 - Dollar gains bolster Fed’s patience on interest rates

September 30, 2014 by CentralBankNews   Comments (0)

Here's today's Central Bank News' link list, click through if you missed the previous link list. The list comprises news about central banks that is not covered by Central Bank News. The list is updated during the day with the latest developments so readers don't miss any important news.

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Romania cuts rate 25 bps, reserve requirement 200 bps

September 30, 2014 by CentralBankNews   Comments (0)

   Romania's central bank cut its policy rate by a further 25 basis points to 3.0 percent, as expected, to help boost inflation and stimulate domestic demand that has slowed down further.
    The National Bank of Romania (NBR), which has cut its rate by 225 basis points since August 2013,  also cut the minimum reserve requirements on leu-denominated liabilities to 10 percent from 12 percent while it maintained the reserve requirement on foreign currency deposits at 16 percent, both to boost lending and to continue the harmonization with European Union practices.
    To help reduce volatility in Romania's money market, the NBR also narrowed its rate corridor on standing facility to plus/minus 2.75 percentage points from 3.0 percentage points with the lending facility rate cut to 5.75 percent from 6.25 percent while the deposit rate stayed at 0.25 percent.
    "The analysis of the latest macroeconomic data shows the annual inflation rate staying at low levels, on a path lower than previously forecasted," the central bank said, mainly due to changes in agricultural prices and subdued euro area inflation, overlapping with the persistence of the negative output gap and the downward adjustment in inflation expectations.
    "The consolidation over the medium term of the projected inflation path at readings significantly lower than those forecasted previously is still uncertain," the NBR said.

    In August the NBR cut its inflation forecast to 2.2 percent by the end of 2014 and 3.0 percent by the end of 2015, with an average rate of 1.4 percent this year and 2.4 percent next year.
    Romania's headline inflation rate eased to 0.8 percent in August from 1.0 percent in July, with the average annual rate falling to 1.2 percent from 1.5 percent. Based on the euro zone's HICP gauge, average inflation eased to 1.3 percent from 1.4 percent.
    The NBR targets inflation of 2.5 percent, plus/minus one percentage point.
    Economic growth in Romania has been slowing, primarily due to a deceleration in domestic demand with economic sectors slowing or contracting. In the second quarter of the year, Gross Domestic Product contracted by 1.0 percent from the first for annual growth of 1.2 percent, down from a rate of 3.9 percent in the first quarter.
    Domestic currency lending rose amid lower lending rates with the share of foreign exchange loans to total credit to the private sector down to 57.1 percent in August from 58 percent in June and 64.4 percent in May 2012.

    www.CentralBankNews.info

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India holds rate, upside risks to inflation ease slightly

September 30, 2014 by CentralBankNews   Comments (0)

    India's central bank maintained its benchmark repo rate at 8.0 percent, as widely expected, but struck a slightly dovish tone by saying the balance of risks to inflation meeting the bank's target were somewhat lower than in early August though they still remain to the upside.
    The Reserve Bank of India (RBI), which raised its repo rate by 75 basis points from September 2013 to January 2014, said the continuing risks around inflation "warrant policy preparedness to contain pressure if the risks materialize" so the "future policy stance will be influenced by the Reserve Bank's projections of inflation relative to the medium term objective."
    At its previous policy report on Aug. 4, the RBI had warned of upside risks to its inflation target that warranted "a heightened state of policy preparedness" to contain any risks if they materialize.
    The RBI's medium-term objective under Governor Raghuram Rajan is to reduce consumer price inflation to 6 percent by January 2016 with a desired decline to 8 percent by January 2015.
    Since June India's headline inflation rate has dropped below 8 percent and fell to 7.8 percent in August from 7.96 percent in July.
   "The most heartening feature has been the steady decline in inflation excluding food and fuel, by a cumulative 111 basis points since January 2014 to a new low," Rajan said in a statement, adding that softening crude prices and a stable exchange rate had led to a receding of upside risks.

   "Yet, there are risks from food price shocks as the full effects of the monsoon's passage unfold, and from geo-political developments that could materialize rapidly," he added.
   In August, the RBI also trimmed the statutory liquidity ratio (SLR) by a further 50 basis points to 22.5 percent - it had already cut it by 50 basis points in June - but today it left it unchanged, just as the cash reserve ratio (CRR) was maintained at 4.0 percent.
    But the RBI reduced the amount of liquidity that it provides under its export credit finance (ECR) facility to 15 percent from 32 percent.
   (TO BE CONTINUED...)

 
   
   

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Central Bank News Link List - Sep 29, 2014 - India’s Reserve Bank unlikely to cut policy rate

September 29, 2014 by CentralBankNews   Comments (0)

Here's today's Central Bank News' link list, click through if you missed the previous link list. The list comprises news about central banks that is not covered by Central Bank News. The list is updated during the day with the latest developments so readers don't miss any important news.

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Angola maintains rate, kwanza eases, inflation steady

September 29, 2014 by CentralBankNews   Comments (0)

    Angola's central bank maintained its Basic Interest Rate (BNA) at 8.75 percent, noting a slight rise in August inflation, a depreciation in the kwanza's exchange rate, a strong rise in currency sales and a continued increase in credit to the economy.
    The National Bank of Angola (BNA) cut its BNA rate by 50 basis points on July 28 to boost credit to the economy as it expects the recent downtrend in inflation to continue. The BNA also reduced the rate on its standing lending facility by 25 basis points to 9.75 percent while it maintained the rate for absorbing liquidity at 1.75 percent.
   Angola's inflation rate rose slightly to 6.98 percent in August from July's 6.89 percent with an increase in food and non-alcoholic beverages of 0.25 percentage points accounting for the largest contribution to inflation.
    Angola's inflation rate has been trending downward since October 2010 when it topped 16 percent and since August 2012 inflation has been below 10 percent, one of the central bank's long-standing objectives.
    Earlier this month the International Monetary Fund (IMF) said inflation was projected to reach 7.5 percent by the end of this year, well within the BNA's objective. Inflation was expected to rise due to  one-off effects on new tariffs on imports before continuing the downtrend through 2015 and beyond.

    The BNA said credit to the economy hit 3.304 billion kwanza in August, an increase of 18.90 percent in the last 12 months.
    Total sales of currency in the foreign exchange market amounted to US$ 23.953 billion from January through August, an increase of 40.62 percent from the same 2013 period. 
    The average exchange rate of the kwanza depreciated by 0.54 percent in August from July, with a rate of 97.61 to the dollar. Today, the kwanza was quoted at 98.299, down from 97.61 at the beginning of the year.
    Angola's foreign exchange reserves declined to $28.67 billion in July from $29.57 billion in June, according to central bank data.
    Angola's economy, which depends on crude oil exports for over 90 percent of its foreign exchange income, is estimated to expand by 3.9 percent this year despite lower oil output after growth estimated at 6.8 percent in 2013, according to the IMF.
    Rising activity in the country's non-oil sector, including the agricultural sector, is expected to help offset the drop in oil production, with investments in agriculture helping boost production by about 11.5 percent this year.
    The country's medium-term growth prospects are considered favorable by the IMF with the oil sector expected to recover and expand by 2.5 percent on average over the next five years. 
    The non-oil sector is forecast to grow by about 7.75 percent on average over the next five years, helping boost domestic competition and thus reduce inflation further.

    www.CentralBankNews.info

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This week in monetary policy: Angola, India, Romania, Iceland, European Central Bank (ECB)

September 29, 2014 by CentralBankNews   Comments (0)

   This week (September 29 through October 3) five central banks are scheduled to decide on monetary policy: Angola, India, Romania, Iceland and the European Central Bank (ECB).
    Following table includes name of the country, its MSCI classification, the date the policy decision will be announced, the current policy rate, and the rate one year ago.



COUNTRY MSCI              DATE  CURRENT  RATE         1 YEAR AGO
ANGOLA 29-Sep 8.75% 9.75%
INDIA EM 30-Sep 8.00% 7.50%
ROMANIA FM 30-Sep 3.25% 4.25%
ICELAND 1-Oct 6.00% 6.00%
EURO AREA DM 2-Oct 0.05% 0.50%


    www.CentralBankNews.info

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Monetary Policy Week in Review – Sep 22-26, 2014: Trinidad joins central banks adjusting policy pre-Fed rise

September 28, 2014 by CentralBankNews   Comments (0)

    Trinidad and Tobago's central bank became the latest to adjust its policy rate last week ahead of the looming change in U.S. monetary policy, raising its repo rate to prevent capital from seeking higher yields abroad, a move that would put pressure on its exchange rate and spark inflation.
    The growing prospect of a hike in U.S. rates by mid-2015 was also the main feature of global financial markets last week, with volatility jumping, stock markets gyrating and the U.S. dollar extending its gains on the back of an upward revision of U.S. second quarter growth figures.
    Major emerging markets, such as Turkey, India and South Africa, were hit by a change in the flow of global liquidity last summer and this January, and Trinidad’s move this week serves as another reminder of how the Fed’s policy stance reaches into every single crevice of global financial markets.

    The Central Bank of Trinidad and Tobago raised its benchmark repo rate by 25 basis points to 3.0 percent, its first change in rates since September 2012, "to pre-empt a potential rise in inflationary pressures and to mitigate higher portfolio outflows."
    The central bank said the Fed’s statement after the Sept. 17 meeting of its Federal Open Market Committee (FOMC) had altered market expectations about the start to higher U.S. rates as its communication suggested a change in policy stance would come sooner than anticipated, with a gradual increase in rates around mid-2015.
    This had resulted in an immediate rise in U.S. Treasury yields that made U.S. dollar assets more attractive relative to Trinidad and Tobago assets.
    "It has become necessary to enhance the appeal of TT dollar assets which have lower returns in relation to U.S. dollar assets, as returns on the latter will be bolstered the Fed's expected monetary policy actions are realized," Trinidad’s central bank said.

     On Sept. 17 the FOMC had confirmed that it expected to conclude its asset purchase program at its next meeting in October and repeated its guidance that rates would be maintained for “a considerable time” after the asset purchase program ends.

    However, the statement also showed an increase in the number of FOMC participants that expect the first rise in the fed funds rate in 2015 to 14 from 12 members in June. In addition, FOMC members'  median estimate for the fed funds rate – illustrated by the now infamous but slightly confusing dot plot chart - rose to 1.375 percent end-2015 from June’s estimate of 1.125 percent.

    In addition to Trinidad and Tobago, Morocco’s central bank also changed its rate last week, cutting it by 25 basis points for the first time since March 2012, to boost growth while domestic inflation - just as global inflation - remains low, reflecting the recent decline in global commodity prices.
    But the other 12 central banks that deliberated monetary policy last week retained their policy rates, with several pointing to the uneven pace of global economic growth, the escalation of geopolitical conflicts and the uncertainty surrounding the timing of Fed interest rate rises.
    Through the first 39 weeks of this year, the 90 central banks followed by Central Bank News have cut their policy rates 49 times, or 13.5 percent of all policy decisions, up from 12 percent at the end of the first half and 12 percent at the end of the first quarter.
    Meanwhile, rates have been raised 37 times, or 10.2 percent of all policy decisions, up from 9.3 percent at the end of June and 8.7 percent at the end of March.
    The Global Monetary Policy Rate (GMPR), the average nominal rate by 90 central banks, remained at 5.54 percent, up from 5.53 percent at the end of June and 5.53 percent end-March.

LIST OF LAST WEEK’S CENTRAL BANK DECISIONS:

TABLE WITH LAST WEEK’S MONETARY POLICY DECISIONS:


COUNTRY MSCI      NEW RATE            OLD RATE         1 YEAR AGO
ISRAEL DM 0.25% 0.25% 1.00%
SRI LANKA  FM 6.50% 6.50% 7.00%
ARMENIA 6.75% 6.75% 8.50%
HUNGARY EM 2.10% 2.10% 3.60%
MOROCCO FM 2.75% 3.00% 3.00%
ALBANIA 2.50% 2.50% 3.50%
GEORGIA 4.00% 4.00% 3.75%
TURKEY EM 8.25% 8.25% 4.50%
FIJI 0.50% 0.50% 0.50%
CZECH REPUBLIC EM 0.05% 0.05% 0.05%
TAIWAN EM 1.88% 1.88% 1.88%
BOTSWANA 7.50% 7.50% 8.00%
COLOMBIA EM 4.50% 4.50% 3.25%
TRINIDAD & TOBAGO 3.00% 2.75% 2.75%

    This week (Week 40) five central banks are scheduled to decide on monetary policy: Angola, India, Romania, Iceland and the European Central Bank (ECB).

TABLE WITH THIS WEEK’S MONETARY POLICY DECISIONS:


COUNTRY MSCI              DATE  CURRENT  RATE         1 YEAR AGO
ANGOLA 29-Sep 8.75% 9.75%
INDIA EM 30-Sep 8.00% 7.50%
ROMANIA FM 30-Sep 3.25% 4.25%
ICELAND 1-Oct 6.00% 6.00%
EURO AREA DM 2-Oct 0.05% 0.50%



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Trinidad raises rate 25 bps to curb inflation, outflows

September 26, 2014 by CentralBankNews   Comments (0)

    Trinidad and Tobago's central bank raised its benchmark repo rate by 25 basis points to 3.0 percent "to pre-empt a potential rise in inflationary pressures and to mitigate higher portfolio outflows."
    It is the first change in rates by the Central Bank of Trinidad and Tobago since September 2012 when the bank adopted an accommodative policy stance to help stimulate economic growth and encourage business and consumer lending.
    But the central bank said the U.S. Federal Reserve's statement on Sept. 17 had altered market expectations about the start to higher U.S. rates as its communication suggested a change in policy stance would come sooner than anticipated, with a gradual increase in rates around mid-2015.
    This had resulted in an immediate rise in U.S. Treasury yields that made U.S. dollar assets more attractive relative to Trinidad and Tobago assets.
    "It has become necessary to enhance the appeal of TT dollar assets which have lower returns in relation to U.S. dollar assets, as returns on the latter will be bolstered the the Fed's expected monetary policy actions are realized," the central bank said.

    Headline inflation in Trinidad and Tobago accelerated to 7.5 percent in August from 5.9 percent in July and 3.0 percent in June due to a sharp rise in food prices.
    Looking ahead, the central bank said higher public spending through an expansionary 2014/15 budget is likely to add to already elevated liquidity levels of around $7 billion and potentially push up inflation in the coming year.
    Core inflation, which has remained low and stable, could also accelerate due to sustained and strong growth in consumer loans and real estate mortgages, the central bank said.
    Consumer loans rose by 6 percent in July, mainly for motor vehicle purchases, while real estate mortgage lending rose by over 11 percent in July, maintaining its double-digit increases.
    Trinidad and Tobago's non-energy sector continued its slow but steady growth for the 11th consecutive quarter to June despite ongoing supply disruptions.
    "The near-term outlook is for continued steady performance in non-energy production and a return to normalcy in energy output," the central bank said.

    www.CentralBankNews.info

   

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Colombia holds rate on good demand, global uncertainty

September 26, 2014 by CentralBankNews   Comments (0)

    Colombia's central bank maintained its benchmark intervention rate at 4.5 percent, as expected, but said increased uncertainty about the global economy and the cost of external financing could affect aggregate demand.
    The Central Bank of Colombia, which has raised its policy rate five times in a row for a total rise of 125 basis points, said demand was still showing strong growth and the economy was near full utilization of its capacity while inflation expectations remain around 3 percent.
    However, Colombia's terms of trade are also likely to deteriorate due to the decline in international oil prices, with risk premiums rising slightly for several countries as their currencies depreciate against the U.S. dollar.
    "The Board will continue to carefully monitor the performance and projections of economic activity and inflation in the country, asset markets and the international situation," the central bank said.

    Colombia's headline inflation rate rose to 2.94 percent in August from 2.89 percent in July while second quarter Gross Domestic Product expanded by 4.3 percent from the same quarter last year, in line with the central bank's overall expectations.
   However, the bank noted that the actual composition of demand was different to its forecasts with domestic demand up by 7.7 percent, significantly higher than 5.4 percent expected. Net exports fell sharply, partly due to temporary phenomena, the bank added.
    Growth in the second half of the year is expected around 4.5 percent.
    Annual growth in bank lending is continuing to ease but remains above nominal GDP growth with a slow transmission of the central bank's rate increases.
    The central bank did not make any comments about its dollar purchase program which ends this month. Economists expect the bank to once again extend the program but reduce it to $1 billion through the end of 2014 from the current $2 billion.
    The central bank targets inflation at a midpoint of 3.0 percent in a range from 2.0 to 4.0 percent.
     Last month the central bank confirmed that it expects the economy to expand by 5.0 percent in 2014, up from 4.7 percent in 2013.
    On Sept. 1 Colombia's president, Juan Manuel Santos, called on the central bank to pause in its tightening cycle.

    www.CentralBankNews.info

 

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Central Bank News Link List - Sep 26, 2014 - Colombia central bank seen holding rate to bolster slower growth

September 26, 2014 by CentralBankNews   Comments (0)

Here's today's Central Bank News' link list, click through if you missed the previous link list. The list comprises news about central banks that is not covered by Central Bank News. The list is updated during the day with the latest developments so readers don't miss any important news.

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