Angola's central bank raised its benchmark Basic Interest Rate (BNA) by another 50 basis points to 10.25 percent, its third rate hike this year, noting that the annual inflation rate rose further to 9.61 percent in June from 8.86 percent in the previous month.
The National Bank of Angola, which has now raised its rate by 125 basis points this year, also raised the rate on its Standing Lending Liquidity Facility to 11.0 percent from 10.50 percent.
The central bank added that preliminary data for June showed that credit to the economy grew by 5.56 percent in cumulative terms since the beginning of the year.
The central bank of the Kyrgyz Republic cut its monetary policy rate by a further 150 basis points to 8.00 percent, saying seasonal factors helped inflation slow down to 5.0 percent as of July 17 compared with 11.6 percent at the start of the year.
The National Bank of the Kyrgyz Republic, which has now cut its rate by 250 basis points this year, repeated it recent statement that it will continue to take appropriate measures to achieve its medium-term inflation rate of 5 to 7 percent.
In June inflation in the Kyrgyz Republic fell to 4.5 percent from 6.0 percent in May.
Earlier this month the International Monetary Fund said Kyrgyzstan's economy had "remained resilient in spite of the economic slowdown in Russia and the region."
The National Bank of the Kyrgyz Republic issued the following statement:
"On July 27, 2015, the Board of the National Bank of the Kyrgyz Republic decided to lower the monetary policy rate by 150 basis points, to 8.00 percent.
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Israel's central bank left its benchmark interest rate at 0.10 percent, saying the recent decline in energy prices along with the appreciation of the shekel "are liable to defer the return of the inflation rate to within the target range."
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, also repeated its guidance from last month that it "will examine the need to use various tools to achieve its objectives of price stability," a sign that it may still resort to unconventional policy tools if considered necessary.
Israel's inflation rate was steady at minus 0.4 percent in June and May, with the BOI saying the rate of increase during the March to June period was consistent with achieving its inflation target of 1.0 to 3.0 percent.
However, measured over the last 12 months, the BOI added that inflation is expected to remain negative "for several more months" and the fall in energy prices that resumed in the last month along with the rise in the shekel was likely to postpone the return of inflation to the target range.
The BOI said short-term inflation expectations from various sources remained around the lower bound of its target range in the last month while private forecasters projections for the next 12 months are for an increase of 1 percent on average. Twelve-month inflation expectations from markets are currently 1.0 percent and expectations for 2 years are 1.3 percent.
However, most private forecasters do not expect a reduction in the BOI's rate, projecting it to be 0.29 percent in one year.
The shekel started falling against the U.S. dollar in August 2014 and continued until mid-March, hitting just over 4 to the dollar. It then strengthened through mid-June to 3.7 before then firming again slightly. Today it was quoted at 3.78 to the dollar for an appreciation of 3.0 percent this year.
The Bank of Israel issued the following statement with its main considerations behind its decision:
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|JUL 27-AUG 1, 2015:|
Pakistan's central bank kept its new policy rate steady at 6.50 percent, as expected, saying the lagged effects of the recent monetary expansion and benign inflation expectations would result in a favorable outlook for inflation.
The State Bank of Pakistan (SBP), which cut its policy rate by a total of 300 basis points in its 2015 fiscal year that ended June 30, expects headline inflation to pick up modestly in the second half of the current fiscal year due to the comparison with low rates and firmer crude oil prices.
However, there are also upside risks to inflation from any upward adjustment in electricity and gas tariffs, a low level of food prices may have an adverse impact on next year's food production, aggregate demand may pick up due to the low interest rates, remittances and overall production may be higher than projected, the central bank added.
"However, there is no major change in SBP's previous inflation forecast," the bank said.
Pakistan's headline inflation rate averaged 4.5 percent in fiscal 2015, down from 8.6 percent in fiscal 2014, with consumer price inflation rate in June rising marginally to 3.2 percent from 3.16 percent in May.
The SBP projects headline inflation of 4.5 to 5.5 percent in fiscal 2016, which began on July 1, below its 8.0 percent target.
In its May statement the SBP introduced a revised interest rate corridor that was aimed at strengthening the transmission of monetary policy. Under the previous regime from 2009, there was no instrument to limit very frequent drops in the repo rate and the money market repo rate also at times exceeded the reverse repo rate, which at that point was the policy rate.
The idea behind the new rate structure was to align the central bank's operational target with a policy rate that was set within the corridor. The SBP Target Rate, or the new policy rate, was set 50 basis points below the ceiling of the corridor, which was cut by 100 basis points in May, while the corridor was narrowed by 50 basis points to 200 points.
The State Bank of Pakistan issued the following executive summary in its July policy statement:
10. The deceleration in broad money (M2) growth from 15.9 percent in FY13 to 12.5 percent in FY14 has slightly reversed in FY15 to 13.2 percent. While Net Domestic Assets (NDA) led the growth in M2, Net Foreign Assets (NFA) decelerated in FY15. Despite better current account balance, deceleration in NFA of the banking system was a result of lower capital and financial inflows. Government reliance on banking system, specifically on scheduled banks, for its financing needs boosted the NDA of the banking system. Scheduled banks’ financing of both commodity operations and PSEs also witnessed higher flow in FY15 against FY14.
14. Given the above macroeconomic considerations, SBP Board of Directors has decided to keep the SBP Policy Rate unchanged at 6.5 percent. "
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Nigeria's central bank maintained its Monetary Policy Rate at 13.0 percent, as expected, citing the need to maintain a tight monetary policy due to high liquidity and a steady rise in inflation against a backdrop of an expected rise in U.S. interest rates that could accentuate capital outflows and thus increase the pressure on the naira's exchange rate.
The Central Bank of Nigeria (CBN), which last raised its rate by 100 basis points in November 2014, clearly agonized over its policy decision, noting "the absence of easy choices in the circumstances" and the limitation of monetary policy to tackle the economic challenges.
Nigeria's economy has been hit hard by the fall in oil prices, cutting into government revenues, and reducing economic growth.
The central bank forecast growth in fiscal 2015 of 5.54 percent, down from 2014's 6.22 percent.
The country's Gross Domestic Product contracted by 11.57 percent in the first quarter from the previous quarter for annual growth of 3.96 percent, down from 5.94 percent, as the oil and gas sector shrank by 8.15 percent in contrast to modest growth of 1.2 percent in the fourth quarter of 2014.
The central bank also noted its concern over the "gradual but steady increase in headline inflation," but added that the drivers were largely of a transient nature and outside its control.
"Consequently, the opportunity for further policy maneuver remains largely constrained in the absence of supporting fiscal measures," the central bank said, urging a coordination of monetary, fiscal and structural policy to stimulate growth and stabilize the exchange rate.
Nigeria's headline inflation rate rose to 9.2 percent in June from 9.0 percent in May, reflecting increases in both core inflation and food.
The naira fell sharply from November last year to March and the central bank has banned some importers from access to hard currency in an attempt to control the rate. The naira was quoted at 199 to the U.S. dollar today, down 8.3 percent since the start of the year.
The Central Bank of Nigeria issued the following statement:
lower commodity prices and tight financial conditions.
Monetary, Credit and Financial Markets Developments
The Committee was concerned about the trends in key macroeconomic indices in the first half of 2015.
On the external front, the adverse effect of the protracted decline in global crude oil prices on the fiscal position of government is becoming increasingly obvious. The expected policy normalization in the US could accentuate capital flow reversals from emerging and developing economies and further tighten global monetary conditions, thus exerting greater pressure on exchange rates in those countries. Given the choice between controlling either quantity or price, the limitations on choosing quantity were evident necessitating the need to employ some flexibility around price while allowing current demand management measures to fully work their way through the economy. The Committee however noted that financial system stability considerations placed key limitations on the extent of considering price flexibility, creating a compelling need to balance measures to address the current vulnerabilities.
dampen transportation costs and improve food distribution across the country while improvements in electricity supply could steady output at lower costs.
at 31 per cent while 4 members voted to remunerate the CRR.
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Global cross-border lending continued to expand in the first quarter of 2015, propelled by a surge in lending to the euro area, while credit to emerging markets, such as China and Russia, fell for the second consecutive quarter, according to the Bank for International Settlements (BIS).
International lending by major international banks to non-banks and other banks rocketed by an estimated $755 billion from January through March this year from end-December compared with an increase of only $16 billion in the final quarter of 2014
The rise in global lending in the first three months of this year amounts to more than half of the entire increase of $1.457 trillion seen in 2014. After contracting by $1.148 trillion in 2013, global cross-border lending has been expanding since the second quarter of 2014.
As in the fourth quarter of last year, major international banks have been extending increasing amount of credit to advanced economies, such as Germany, while lending to emerging economies, especially China, has been slowing.
According to preliminary data, Swiss-based BIS said first quarter lending to advanced economies grew by $743 billion while lending to emerging economies shrank by $50 billion.
Lending to borrowers in euros jumped by $528 billion, for annual growth of euro-denominated claims to 9 percent, said BIS, which collects international banking data worldwide.
In contrast, global claims in U.S. dollars only rose by $58 billion as a $95 billion decline in loans was offset by a $156 billion rise in U.S. debt securities.
Cross-border lending to borrowers in the 19-nation euro area rose by $406 billion in the first quarter, the highest rise seen since the first quarter of 2008. Claims on Germany rose by $153 billion while France also saw a significant rise of $120 billion while lending to Spain, Italy, Ireland and Portugal was largely unchanged.
Reflecting the deep crises in Greece, global banks cut their lending by a further $22 billion in the first quarter, leading to a 28 percent fall on an annual basis. Based on an ultimate risk basis, the outstanding stock of foreign claims on Greek banks amounted to only $2.2 billion at the end of March compared with a recent peak of $31 billion at the end of June 2014.
Continuing the trend seen in recent quarters, global lending to China continued to drop in the first quarter. Lending fell by $56 billion, driven by a $64 billion decline in credit to China's banks. This brought the outstanding stock of global claims on China to $963 billion by the end-March.
After falling in the fourth quarter of last year, lending to several other emerging economies in Asia rose in the first quarter. Global lending to India rose by $8 billion and to Korea by $3 billion.
Lending to emerging Europe continued to decline, albeit at a more moderate pace than in the previous quarter, BIS said.
International claims on Russia dropped by a further $14 billion, following a $19 billion fall in the fourth quarter, but in contrast lending to Hungary and the Czech Republic picked up slightly and credit to Turkey expanded by $4 billion, boosting the annual growth rate to 9 percent.
The recent trend toward increased lending to non-banks also continued in the first three months, with cross-border lending to non-banks accounting for more than three-quarters of the total increase. Lending to non-banks was up by $569 billion in the first quarter compared with a $186 billion increase in lending to banks.
In 2014 international bank lending to non-banks rose by $868 billion while lending to other banks rose by $590 billion.
Click to read "BIS international banking statistics at end-March 2015."
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Sri Lanka's central bank kept its benchmark policy rates steady, saying it expects the current low level of inflation to continue for the next few months due to the downward adjustment in the administered prices for fuel and energy.
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