Fiji's central bank maintained its Overnight Policy Rate (OPR) at 0.50 percent, saying the dual mandates of the bank remain intact with inflation expected to be below 3.0 percent at the end of the year due to low global commodity prices, especially for oil, and low inflation in trading partners.
The Reserve Bank of Fiji (RBF), which has held its rate steady since November 2011, added that its foreign reserves were "comfortable" at US$1.969.3 billion as of Aug. 25, sufficient for 4.9 months of imports, and compared with $1.999.8 billion as of July 31.
In a statement from Aug. 27, RBF Governor Barry Whiteside contrasted heightened uncertainty for global economic growth with strong demand in Fiji that is in line with projections for 4.3 percent economic growth for 2015.
"In particular, increased consumption and investment demand continue to be supported by favorable financial and labour market conditions," Whiteside said.
Fiji's inflation rate rose to 1.4 percent in July from 0.8 percent in June and in the RBF's review for July it said receipts for the first month of this year confirmed the current positive outlook for primary industries, such as timber and fish exports, while the output of gold, electricity and wood chip was higher in the year recorded to June.
The Reserve Bank of Fiji issued the following statement:
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Ukraine's central bank lowered its benchmark discount rate by 300 basis points to 27.00 percent in light of easing risks to inflation but cautioned that its policy stance "will remain relatively tight to support the disinflation trend and shield the Ukrainian economy from external shocks currently experienced by global commodity and financial markets."
The National Bank of Ukraine (NBU), which had maintained rates since its last rate hike in March, added that a tight policy stance over the last six months had "helped firmly anchor inflation and devaluation expectations and contributed to the stabilization of the FX market, thus putting inflation firmly on a downward path."
From April last year though March the NBU raised its rate by a total of 23.50 percentage points, including16.00 percentage points this year alone.
The rate cut comes on the same day that Ukraine and about half of its main creditors agreed on a plan to restructure $18 billion of foreign debt that will include a write-off of 20 percent. Press reports said Russia, which was not in the negotiating committee, would continue to demand full repayment of a $3 billion eurobond due in December.
The NBU, which earlier this month held out the promise of lower rates by the end of this year, said it expects the disinflation trend to continue due to a stable foreign exchange market, the fading of major price increases in housing and utilities, and a slow recovery of consumer demand. In addition, a high yield of grain, vegetables and fruit should keep down food prices.
Ukraine' inflation rate eased to 55.3 percent in July from 57.5 percent in June and a 2015-high of 60.9 percent in April.
Ukraine's hryvnia plunged by almost 50 percent against the U.S. dollar in 2014 following the outbreak of armed conflict in Eastern Ukraine and the occupation of the Crimean peninsula by pro-Russian forces.
But a cease-fire agreement in late February, rate hikes by the central bank and administrative measures have helped stabilize the hryvnia, which was trading at 21.1 to the U.S. dollar today, up from a low of 33.7 in late February but still down 25 percent this year.
On July 31 the International Monetary Fund (IMF) disbursed another $1.7 billion of its 4-year $17.5 billion facility to Ukraine, saying its economy remains fragile but encouraging signs were emerging as the exchange rate had stabilized and retail banking deposits had risen.
The IMF added that Ukraine should maintain "an appropriately tight monetary policy" and build up foreign exchange reserves but the policy can be "carefully eased" as disinflation takes root.
The National Bank of Ukraine issued the following statement:
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Moldova's central bank raised its key policy rates by 200 basis points and the reserve ratio on bank's leu and non-convertible liabilities by 300 points to curb rising inflationary pressures from the the depreciation of the leu currency.
The National Bank of Moldova (NMB), which has now raised its benchmark base rate by 13 percentage points this year, said it expects inflation to accelerate in coming quarters due to the comparison with last year's low base as the leu's deprecation since the beginning of the year will push up the prices of imported goods and then by second-round effects.
The central bank said its policy decision was aimed at anchoring inflation expectations but inflation is still expected to temporarily exceed the upper limit of the target range of 6.50 percent to 3.50 percent, with a midpoint of 5.0 percent.
In addition to raising the base rate, the NBM raised its rate on overnight loans by 200 basis points to 22.50 percent and the overnight deposit rate to 16.5 percent from 14.5 percent.
To help sterilize excess liquidity accumulated in recent months, the central bank raised the required reserve ratio on leu and non-convertible deposits by 300 points to 35.0 percent while the ratio on freely convertible currencies was maintained at 14.0 percent.
Moldova's leu currency has been depreciating since July last year and went into near-freefall in January this year. Since February it has continued to slowly decline though it rose in response to the central bank's latest rate hike.
The currency of Moldova - a former Soviet state located between Romania and Ukraine - was trading at 19 to the U.S. dollar today, up from 19.2 prior to news of the bank's decision but still down 18 percent this year.
Moldova's inflation rate rose to 8.6 percent in July from 8.3 percent in June.
The National Bank of Moldova issued the following statement:
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Hungary's central bank left its base rate unchanged at 1.35 percent, living up to its guidance from July, and repeated that it will keep monetary conditions loose "for an extended period" as long as inflation and growth evolves as it expects.
The National Bank of Hungary (MNB), which has cut its rate by 75 basis points this year, also confirmed its statement from last month that there is still a degree on unused capacity in the country's economy and "inflationary pressures are likely to remain moderate."
In July the MNB cut its rate by 15 basis points for the fifth time in a row this year but added that rates had now reached a level that not only would ensure that it would reach its inflation target but they would still support economic activity.
Economic growth in Hungary continued in the second quarter, but slightly lower than the MNB projected in its June inflation report, probably due to weaker agriculture output.
However, underlying growth has not changed "significantly," the central bank said, adding that "growth is likely to continue at a rapid pace" based on retail sales on a wide range of products rising, growing household real income underpinned by low inflation, a reduced need for deleveraging and growing employment.
Hungarian consumer prices continued to rise in July, up by an annual 0.4 percent, but underlying inflation still shows moderate pressures due to subdued imported inflation, falling commodity prices and unused productive capacity, the MNB said.
The MNB first expects inflation to approach its 3.0 percent target level by the end of its forecast horizon.
The National Bank of Hungary issued the following statement:
"At its meeting on 25 August 2015, the Monetary Council reviewed the latest economic and financial developments and voted to maintain the central bank base rate 1.35%.
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China's central bank cut its benchmark one-year lending rate by 25 basis points to 4.60 percent, the deposit rate by a similar 25 points to 1.75 percent and lowered the reserve ratio for major financial institutions by 50 basis points to 18 percent in response to "downward pressure on economic growth."
The People's Bank of China (PBOC) has now lowered its key rate by 100 basis points this year and by 140 points since it embarked on its easing cycle in November 2014.
The PBOC said the rate cuts will take effect on Aug. 26 while the cut in the reserve ratio will take effect Sept. 6.
The central bank of the Kyrgyz Republic left its policy rate unchanged at 8.0 percent, saying increased instability in foreign financial markets had increased pressure on the domestic currency market and this could raise inflationary pressures in the medium term.
The National Bank of the Kyrgyz Republic, which has cut its rate by 250 basis points this year after raising it by 450 points last year to curb inflation, added that inflation had continued to slow, reaching 5.6 percent as of Aug. 14 compared with 11.6 percent at the start of the year.
The central bank also said in a statement from Aug. 24 that economic growth of 7.1 percent in the first seven months of this year was mainly driven by expansion at the Kumtor gold mine as growth in Gross Domestic Product excluding the mine amounted to 4.5 percent.
Kyrgyzstan's inflation rate rose slightly to 5.0 percent in July from 4.5 percent in June, within the central bank's target range of 5-7 percent.
GDP rose by an annual 7.3 percent in the second quarter, up from 7.0 percent in the first quarter.
Kyrgyzstan's som currency has been depreciating since June and was trading at 62.15 to the U.S. dollar today, down 5.2 percent this year.
The Kumtor gold mine is an open-pit mine near Kyrgyzstan's border with China that is owned by the Canadian firm Centerra. It is the largest gold mine operated in Central Asia by a Western-based company and produced 568 ounces of gold in 2014.
The National Bank of the Kyrgyz Republic issued the following statement:
"On August 24, 2015 the Board of the National Bank of the Kyrgyz Republic decided to keep the policy rate at 8.00 percent.
Seasonal factor conditioned slowdown of inflation rate, which came to 5.6 percent in annual term as of the middle of August (as of August 14, 2015) against 11.6 percent as of the beginning of the current year.
High economic growth in January-July 2015 (7.1 percent) was mainly driven by expansion of production at the "Kumtor" gold-mining company. Without “Kumtor”, the real GDP growth was 4.5 percent.
Some decline of market makers activity in the interbank market is observed in recent months, meanwhile weighted average rates at the interbank credit market were lower than the policy rate.
There is a decline in foreign trade and the inflow of remittances, including depreciation of the national currencies of main trading partners of the Kyrgyz Republic. Instability on the foreign financial markets has increased, which together with the current factors is one of the main reasons for increasing the pressure on the domestic currency market of the country, and which could enhance inflation pressure in the medium term.
In view of forecasted dynamics of inflationary developments, the National Bank of the Kyrgyz Republic continues to monitor the situation in the national economy and will take appropriate measures of monetary policy consistent with statutory mandate. The monetary policy will be aimed at achieving and maintaining the inflation rate at the level of 5-7 percent in the medium term, which is determined by the Main directions of monetary policy guidelines of the National Bank of the Kyrgyz Republic for the medium term.
The next meeting of the Board of the National Bank of the Kyrgyz Republic on the monetary policy rate is scheduled for September 28, 2015. "
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Israel's central bank left its benchmark interest rate steady at 0.10 percent, as widely expected, but said "the risks to attaining the inflation target, and to growth, have increased," triggering a sharp rise in the shekel.
The Bank of Israel (BOI), which cut its rate by 15 basis points in February to counter the negative impact on exports and inflation from a rise in the shekel, added that it "will use the tools available to it and will examine the need to use various tools to achieve its objectives of price stability."
Israel's consumer prices continued to fall in July by an annual 0.3 percent, slightly less than the 0.4 percent in June but inflation has now been negative for the last 11 months.
The BOI said short-term inflation expectations had declined sharply this month due to the fall in energy and commodity prices and the scheduled reduction in electricity prices, and average expectations for the next 12 months fell to 0.7 percent from 1.0 percent, below the central bank target range of 1 - 3 percent.
The Telbor curve, the rate on interbank loans, indicates some probability of a rate cut in the next few months, the BOI said, but added that most private forecasts don't expect a rate cut and forecasters' projection of the benchmark rate in one year remains 0.29 percent, on average.
Israel's economy slowed sharply in the second quarter with the BOI attributing this to a moderation in world trade, noting that exports of goods and services contracted by 11.6 percent, partly due to labor disruptions in the chemicals industry.
It added that annual growth in Gross Domestic Product was only 0.3 percent in the second quarter, well below the normal range of growth of 2.5 to 3.0 percent seen in the past two years.
In addition to rate cuts, the BOI is reported to have been intervening in foreign exchange markets to weaken the shekel which has been firming against the U.S. dollar since mid-March.
Today the shekel rose to 3.83 against the dollar after the BOI's policy decision from 3.88, to be largely unchanged since the start of the year.
The BOI noted that since its previous policy decision on July 26, the shekel had weakened by about 1.3 percent against the dollar and by about 4.2 percent against the euro.
The Bank of Israel issued the following statement that included its main considerations behind its policy decision:
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