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Econ Grapher's connections' blogs

Argentina holds rate as '18 inflation expectations inch up

October 11, 2017 by CentralBankNews   Comments (0)

     Argentina's central bank kept its monetary policy rate at 26.25 percent, saying inflation expectations for 2018 rose slightly to 15.8 percent from 15.7 percent in the bank's latest survey of market expectations.
      The Central Bank of Argentina (BCRA), which has kept its rate steady since a surprise 150 basis point hike in April after inflation expectations rose, added inflation expectations for 2017 were steady at 22 percent while expected 12-month inflation eased to 16.9 percent.
     In its statement from Sept. 12, the central bank said its survey showed 2018 inflation expectations had risen to 15.7 percent from 15.5 percent.
      As in previous policy statements in recent months, the BCRA said it would continue to maintain a "clear anti-inflationary bias to ensure that the disinflation process continues towards its inflation target of 10% +/-2% by 2018."
      For this year the central bank aims to reduce inflation to between 12 and 17 percent and for 2019 it is targeting inflation of 5.0 percent, plus/minus 1.5 percentage points.
      Last week Federico Sturzenegger, central bank governor, was quoted as saying inflation was continuing to decelerate but expectations remain above the bank's target and this credibility gap needs to closed in coming months.
      Argentina's national consumer prices rose 1.4 percent in August from July for an 8-month rate of 15.4 percent and an annual rate of 22.8 percent, up from 21.4 percent in July. Core inflation also rose 1.4 percent in August for an annual rate of 22.2 percent, down from 22.4 percent in July.
      A national consumer price index was first published in July and is now used by the BCRA to gauge inflation in relation to its target.  Argentina's inflation rate rose to a 2017-high of 40.5 percent in April, with prices driven higher by the government's removal of energy and transport subsidies to reduce the federal deficit.
      For September the central bank said it did not expect core inflation to show a significant change in  the values seen since May, and while it will be slightly lower in the third quarter than in previous quarters, it remains above the levels sought by the monetary authority.
     Argentina's peso has depreciated slightly in the last few weeks after firming in August and September, reversing some of the sharp decline seen from May through August.
      Today the peso was trading at 17.4 to the U.S. dollar, down 8.9 percent this year.
      The country's president, Mauricio Marcri, let the peso float shortly after taking office in December 2015, removing many of the controls that previous governments had used to prop up the currency and protect foreign reserves.

     www.CentralBankNews.info

     

Kazakh holds rate, limited room for further cuts this year

October 9, 2017 by CentralBankNews   Comments (0)

     Kazakhstan's central bank kept its base rate steady at 10.25 percent and said inflationary risks and increased volatility in the exchange rate of the tenge were limiting the potential for further rate cuts for the rest of this year.
      Today's guidance that further monetary easing this year looks unlikely hardens the National Bank of Kazakhstan's (NBK) shift in policy stance in August.
      Following a rate cut in August, the NBK changed its dovish stance and said it was reconsidering the possibility of further cuts in the short term.
      The NBK has cut its rate by 150 basis points this year following cuts in February, June and August, bringing total rate cuts since embarking on an easing cycle in May 2016 to 650 points.
      "The continuing risks on the account of the supply factors and the increased volatility in the FX market limit the potential for further reduction of the base rate until the end of the current year," NBK said.

     After firming from January 2016 to May 2017, the Kazakhstani tenge has been depreciating in the last four months and was trading at 341.3 to the U.S. dollar today, down almost 9 percent since May 28 and down 2.3 percent since the start of this year.

      Inflation in the former Soviet republic of Kazakhstan, which stretches from the Caspian Sea to Mongolia, rose slightly to 7.1 percent in September from 7.0 percent in August but the central bank said inflationary expectations remain stable, with external forces seen favorable, and inflation is still forecast to remain with the bank's target range in 2017 and 2018.
      The NBK targets inflation of 6-8 percent this year but next year the range will be lowered to 5-7 percent.
      On top of the declining tenge, which tends to raise import prices and thus inflation, the central bank said inflationary pressure was coming from higher prices of non-food products due to higher demand along with higher tariffs on services.
     Demand in Kazakhstan is rising due to growth in consumer credit and fiscal stimulus, with economic activity at a high level, the central bank said.
      But inflation was held back by a seasonal fall in the prices of food products and inflationary pressures will remain moderated until the end of this year, with risks from an uncertain harvest, the situation in the petrol, oil and lubricant market, and insufficient work on the regional fund for stabilizing food prices.
     Kazakhstan's Gross Domestic Product grew by an annual rate of 4.2 percent in the first half of this year compared with only 0.1 percent a year ago. In August the short-term economic indicator rose 7.8 percent, the central bank said, adding industrial output, external demand and retail trade was up while construction and agriculture decelerated and investing remained weak.
      In August the NBK raised its 2017 growth forecast to 3.1 percent from a previous 2.8 percent and the government is hoping to raise growth to 5.5 percent by 2021 on the back of higher oil production and foreign investments.

     The National Bank of Kazakhstan issued the following statement:

"The National Bank of Kazakhstan has decided to keep the base rate on the level of 10.25% with a corridor of +/-1%.
The actual and forecasted levels of the annual inflation (on the horizon of a year and a half) remain within the target range for 2017 and 2018. The inflationary expectations get formed on the stable level. The inflationary factors in the external sector are evaluated as favorable. The monetary conditions are neutral.
However, the continuing risks on the account of the supply factors and the increased volatility in the FX market limit the potential for the further reduction of the base rate until the end of the current year.

The annual inflation in September has amounted to 7.1%, the monthly inflation - 0.3%. The rise in prices of the nonfood products due to increased demand in the current year, as well as the increase of the tariffs for the paid services contribute to the inflationary pressures. Even so, the increase of the inflation was restricted by the seasonal decrease of the food products prices.
The core inflation (without taking into the account the volatile and regulated components) in the annual terms, which has been demonstrating the deceleration of the growth rate since the beginning of the year, in August remained unchanged.

The inflationary pressures until the end of the current year will remain moderate. The inflationary risks remain persistent due to the uncertainty regarding the harvest, the insufficient workload of the regional stabilizing funds of the food products, the situation in the market of petrol, oil and lubricants and specific foodstuffs. Even so, the estimates of the National Bank show that the inflation will remain within the target range in both 2017 (6-8%) and 2018 (5-7%).

The inflationary expectations keep remaining stable. The quantitative assessment of the inflation for the year ahead has not changed (6.5%) and is within the target range for 2018.
The consumer credit growth and the stimulating fiscal policy are the main drivers of the increased aggregate demand. However, the further expansion of the credit is restricted by the decrease of the real wages and households’ income, also by the limited capital of the banks.
The index of the economic activity in the real terms stays on the high level. In August the increase of the short-term economic indicator, which characterizes the aggregate supply in the country, amounted to 7.8% in the annual terms. However, the growth in the industrial output, the external demand and the retail trade is observed along with the decelerating activity in the construction, agriculture, and in the weak investing activity.

In the external sector, the situation in the commodities market may influence favorably. The observed oil price formation on the level above 55 US dollars per 1 barrel, the dynamics of the world food prices due to the expected record level of the world cereal output and the overproduction of sugar may impact to the inflation decline in Kazakhstan in short and medium perspective.

The monetary conditions remain neutral. The insignificant increase of the deposits dollarization level in August 2017 happened mainly due to the currency reevaluation. The structure of the interest rates on deposits stays favorable to savings in tenge. The decline of interest rates on business loans since the beginning of the year follows the dynamics of the base rate, yet the level of the interest rates on loans to individuals remains unchanged, which can be explained by the high level of the risks estimated by the banks due to the low growth rates of the income of households.

The next decision on the base rate will be announced on November 27, 2017 at 17:00 Astana time"

    www.CentralBankNews.info

Serbia cuts rate by 25 bps, wrong-foots investors again

October 9, 2017 by CentralBankNews   Comments (0)

     Serbia's central bank wrong-footed analysts for the second consecutive month by cutting its rate by another 25 basis points to 3.50 percent to provide "additional support to credit activity and economic growth."
      The National Bank of Serbia (NBS) has now cut its rate by 50 basis points this year as it extends an easing cycle that began in May 2013 when the rate was cut from 11.75 percent. Last month's rate cut was the first since July 2016.
      As in September, the NBS said today's decision to lower the rate further was guided by inflation projections and changes in key inflation factors, such as "subdued dinar import prices and the fact that the country's risk premium fell to its lowest level on record for Serbia."
      Serbia's headline inflation rate eased to 2.5 percent in August from 3.2 percent in September while the NBS said core inflation fell to 1.5 percent along with inflation expectations one- and two-year ahead, signaling "the persistently low inflationary pressures."
     In addition, the negative effects of drought on food prices were weaker than expected, the fiscal situation is better than expected, and inflation will slow in early 2018 as certain products that were subject to one-off price hikes, along with high petroleum prices, drop-out of the annual comparison.
     Countering these downward pressures on inflation are higher prices of agricultural commodities and a gradual rise in aggregate demand.
      However, the central bank said that it still expects inflation to remain within its target tolerance range of 3.0 percent, plus/minus 1.5 percentage points, in the period ahead.
      As in last month's statement, the NBS described international commodity and financial markets as "fraught with uncertainty" from the diverging monetary policies of leading central banks, such as the U.S. Federal Reserve and the European Central Bank that may affect capital flows to emerging economies, such as Serbia.
      In August NBS forecast economic growth this year of around 3.0 percent and 3.5 percent for 2018 amid continuing appreciation pressures on the Serbian dinar, this year's fall in the country's risk premium, continued export growth and foreign direct investment.
      In the second quarter of this year Serbia's Gross Domestic Product grew by an annual rate of 1.3 percent, up from 1.0 percent in the first quarter, with a weak harvest and lower electricity output leading the International Monetary Fund to lower its 2017 growth estimate to 2.3 percent from a previous 3.0 percent.
      Serbia's dinar firmed steadily this year against the euro until early September, reaching levels not seen since 2014. Today it was trading at 119.42, up 3.0 percent this year. 
      The NBS has been reported by dealers to have purchased euros around 119 in recent months to stem the dinar's gains amid strong inflow of investments, remittances and appetite for its government bonds. 

    
     The National Bank of Serbia issued the following statement:

"At its meeting today, the NBS Executive decided to cut the key policy rate to 3.5%.
In making the decision, the NBS Executive Board was guided by the medium-term inflation projection and movements in key inflation factors.

Since early 2017, y-o-y inflation has been moving within the target tolerance band, falling to 2.5% in August. Core inflation declined further – to 1.5% y-o-y, as well as both one- and two-year ahead inflation expectations, which signals the persistently low inflationary pressures. In addition, the negative effects of the drought on food prices were weaker than expected.  Compared to the August projection, other factors working towards lower inflation are subdued dinar import prices and the fact that the country risk premium fell to its lowest level on record for Serbia. Furthermore, fiscal movements are more favourable than expected, as confirmed by the consolidated surplus of around 2% of GDP in the period of eight months. 

The NBS Executive Board expects inflation to remain within the target tolerance band of 3.0%±1.5 pp in the period ahead. In addition to the above factors, inflation will be slowed down by the high base from the prices of petroleum products and, as of early 2018, by the drop-out of this year’s one-off price hikes of certain products and services from the y-o-y calculation. A gradual increase in the global prices of primary agricultural commodities and aggregate demand in Serbia will work in the opposite direction over the medium run.  
The Executive Board stated that developments in the international commodity and financial markets are still fraught with uncertainty. Uncertainties also surround global primary commodity prices, as attested by the volatility of oil prices during September. Uncertainties in the international financial market continue to stem largely from the diverging monetary policies of leading central banks, the Fed and the ECB, which may affect capital flows to emerging economies. However, despite the global economic recovery, for the time being there are no signals of a rise in inflationary pressures on the demand side or that leading central banks might tighten their monetary policies faster than previously announced. In addition, the Executive Board emphasises that today, owing to a favourable macroeconomic outlook, Serbia is more resilient to potentially adverse effects from the international environment.

By further lowering the key policy rate amid low inflationary pressures, the NBS provides additional support to credit activity and economic growth.

The next rate-setting meeting of the Executive Board will be held on 9 November."

Iceland cuts rate 25 bps as economic growth cools

October 4, 2017 by CentralBankNews   Comments (0)

     Iceland's central bank cut its key policy rate for the third time this year as economic activity continues to slow from last year's boom due to lower growth in tourism, taking the steam off some of the pressures from demand.
      The Central Bank of Iceland (CBI) cut its benchmark 7-day deposit rate by another 25 basis points to 4.25 percent and has now cut it by 75 points this year following cuts in May and June.
     The central bank signaled it's not planning further monetary easing in the immediate term, saying demand pressures in the economy still necessitate a tight monetary stance to ensure price stability and the current real interest rate is sufficient at present to keep inflation broadly at target.
      However, as usual, the CBI added its monetary stance in the coming term will be determined by economic developments and actions taken in other policy spheres.
      Iceland's economy has been booming from tourism that has fired up consumption and only the strong exchange rate of the krona, and low global inflation, has kept a lid on inflation.
      "The outlook is for GDP growth to be weaker this year than in 2016, in part because growth in tourism has eased," the CBI said.
      In August the CBI lowered its growth forecast for this year to 5.2 percent from May's forecast of 6.3 percent on lower growth in exports and the economy is continuing to decelerate.
      In the second quarter of this year Iceland's Gross Domestic Product contracted for the second quarter in a row as quarterly GDP fell 1.1 percent after a 0.7 percent fall in the first.
     On an annual basis, second quarter GDP was still up by 3.4 percent but this was down from 5.2 percent in the first quarter, 10.8 percent in the fourth quarter of last year and 10.1 percent in the third quarter of 2016.
       In 2016 Iceland's economy grew by 7.2 percent, up from 4.1 percent in 2015.
       Iceland's headline inflation rate is also decelerating and fell to 1.4 percent in September from 1.7 percent in August and 1.8 percent in July but the CBI said it remains in line with its target. The CBI targets inflation of 2.50 percent.
       In its latest forecast, the central bank raised its inflation forecast for this year to 1.8 percent from 1.7 percent and the 2018 forecast to 2.6 percent from 2.3 percent.
       Iceland's krona has been depreciating since June following a steady rise since March 2015 and fell further to 105.8 in response to the rate cut. However, it still remains 6.8 percent higher than at the start of this year.
     "In the past few months, fluctuations in the exchange rate have had relatively little impact on inflation and only transitory effects on inflation expectations," the CBI said.

     The Central Bank of Iceland issued the following statement:
   

   

"The Monetary Policy Committee (MPC) of the Central Bank of Iceland has decided to lower the Bank’s interest rates by 0.25 percentage points. The Bank’s key interest rate – the rate on seven-day term deposits – will therefore be 4.25%.
The outlook is for GDP growth to be weaker this year than in 2016, in part because growth in tourism has eased. The rate of GDP growth will nevertheless be robust. There are signs that demand pressures in the economy have begun to subside.
Inflation has fallen somewhat in the past two months, measuring 1.4% in September. Measures of underlying inflation are even lower, and falling. The exchange rate of the króna is broadly unchanged since the MPC’s last meeting, after falling during the summer, and is 4.5% higher than it was a year ago. Measures of inflation expectations remain in line with the inflation target. In the past few months, fluctuations in the exchange rate have had relatively little impact on inflation and only transitory effects on inflation expectations.
Demand pressures in the economy call for a tight monetary stance so as to ensure medium-term price stability. Developments in inflation and inflation expectations and diminishing demand pressures indicate, however, that the Bank’s real rate is sufficient at present to keep inflation broadly at target. The monetary stance in the coming term will be determined by economic developments and actions taken in other policy spheres."

Uganda cuts rate 50 bps to boost credit and economy

October 3, 2017 by CentralBankNews   Comments (0)

     Uganda's central bank cut its Central Bank Rate (CBR) by 50 basis points to 9.5 percent, saying a "cautious easing of monetary policy is warranted to boost private sector credit growth and to strengthen the economic growth momentum" as inflation is forecast to remain around the medium term target while economic activity is slowly gaining momentum.
     The Bank of Uganda (BOU) has now cut its rate by 250 basis points this year following cuts in February, April and June. In 2016 the rate was cut by 500 points.
     The BOU's band around CBR was maintained at plus/minus 3 percentage points and the margin on the discount rate at 4 percentage points so the rediscount rate and the bank rate were lowered to 13.5 percent and 14.5 percent, respectively.
      Uganda's headline inflation rate rose slightly to 5.3 percent in September from 5.2 percent in August while core inflation dropped to 4.1 percent in August from 4.5 percent in July.
     "The consumer price index (CPI) data indicates that inflation remains subdued," the BOU said, adding the rise in inflation was largely due to higher costs of fuels while food crops inflation continued to fall due to to improved supply.
     The central bank's outlook for inflation was unchanged since the previous meeting of the Monetary Policy Committee in August, with core inflation seen remaining within the target range of 5 percent. The bank's target is within a range of plus/minus 2 percentage points.
      Upside risks remain muted, the BOU said, with the exception of possible higher food prices due to crop pests and severe rains in parts of the country. The inflation forecast is also based on the assumption that the exchange rate of the shilling would remain around the current level with "a stronger depreciation" raising the risk of higher inflation.
      After falling sharply in 2014 and 2015, Uganda's shilling depreciated further last year but at a slower pace. This year the shilling has remained more stable and was trading at 3,600 to the U.S. dollar today, practically unchanged form 3,602 at the start of this year.
      Uganda's economy recovered in the second half of the 2016/17 financial year, which ended June 30, after bad weather hit the agricultural sector in the first half of the year. Growth in 2016/17 was estimated to have slowed to 3.9 percent from 4.7 percent in 2015/16.
      However, the BOU said private sector credit remains sluggish but confirmed its forecast from August for economic growth in the current 2017/18 financial year of 5.0 to 5.5 percent, a bit lower than potential growth.
      Over the medium term growth is projected to accelerate to between 6.0 and 6.5 percent.
      In the second calendar quarter, Uganda's Gross Domestic Product grew by an annual rate of 5.5 percent, up form 4.6 percent in the first quarter.

    The Bank of Uganda issued the following statement:

"The consumer price index (CPI) data indicates that inflation remains subdued. Annual headline and core inflation increased marginally to 5.3 percent and 4.2 percent in September 2017 from the respective rates of 5.2 percent and 4.1 percent in August 2017. The rise in inflation was largely driven by an increase in the cost of fuels, which pushed up the Electricity, Fuels and Utilities (EFU) inflation to 10.6 percent in September 2017 from 7.8 percent in August 2017. Annual food crops inflation however continued to fall, declining to 9.6 percent in September 2017 from 11.7 percent in August 2017, largely on account of improved food supply.

The latest quarterly GDP data released at end September 2017 by UBOS indicates that growth recovered in the second half of 2016/17. Quarterly growth rates of only 0.6 percent and 1.1 percent were recorded in the first two quarters of 2016/17, mainly because of bad weather that affected the agricultural sector. But growth rates accelerated to 1.8 percent and 1.9 percent respectively in the third and fourth quarters of the financial year. The growth in private sector credit however remains sluggish. The economy is projected to grow at an annual rate of 5.0 to 5.5 percent in FY2017/18, which is a bit lower than estimates of potential GDP growth. Economic growth is however projected to accelerate to between 6 and 6.5 percent over the medium-term. The outlook continues to be supported by accommodative monetary policy, improvement in public investment management and an improvement in the global economy.

The Bank of Uganda’s (BoU) forecasts indicate that the inflation outlook remains unchanged since the last Monetary Policy Committee meeting in August 2017, with annual core inflation forecast to remain within the target range of 5 percent over the short to medium-term. The upside risks to inflation remain muted, with the exception of the possibility of higher food prices due to crop pests that are affecting agricultural sector and severe rains in some parts of the country. In addition, the forecasts are based on the assumption that the exchange rate will remain around its current level. A stronger exchange rate depreciation, however, would increase the risk of higher inflation.

Given that annual core inflation is forecast to remain around the medium- term target of 5 percent and economic activity is slowly gaining momentum, a cautious easing of monetary policy is warranted to boost private sector credit growth and to strengthen the economic growth momentum. 

The BoU has therefore decided to reduce the Central Bank Rate (CBR) by 0.5 percentage points to 9.5 percent. The band on the CBR will be maintained at +/-3 percentage points and the margin on the rediscount rate at 4 percentage points on the CBR. Consequently, the rediscount rate and the bank rate have been reduced to 13.5 percent and 14.5 percent, respectively. "

    www.CentralBankNews.info

Dominican Rep. holds rate, domestic demand revitalizing

October 3, 2017 by CentralBankNews   Comments (0)

     The Dominican Republic's central bank left its monetary policy rate at 5.25 percent, saying economic activity had reacted favorably to the easing of monetary policy in July with credit to the private sector up by 16 billion Dominican peso since then, resulting in a positive outlook for a revitalization of domestic demand for the rest of 2017.
     The Central Bank of the Dominican Republic (BCRD) cut its rate by 50 basis points on July 31 and lowered the legal reserve ratio by 2.2 percentage points to boost economic growth.
     "In this regard, growth is expected to approach its potential for the end of the year, even in a context of recovering from damages caused by recent climate events," BCRD.
      Hurricane Maria, which caused major damage to Puerto Rico and other parts of the Caribbean, also caused damage to parts of the Dominican Republic last month.
      The World Bank has approved a US$150 million loan to the Dominican Republic to help deal with natural disasters and this should support economic activity in the fourth quarter of this year.
      In addition, public spending is also receiving a boost although the government has said it would still meet the budget's deficit target of 2.3 percent of Gross Domestic Product.
      A dynamic external sector is currently helping boost the country's foreign exchange earnings and helping stabilize the foreign exchange market and thus supporting accumulation of foreign reserves, the BCDR said.
      Inflation in the Dominican Republic rose to 3.18 percent in August from 2.54 percent in July, within the central bank's target range of 4.0 percent, plus/minus 1 percentage points, and the central bank forecasts it will remain within the target range at the end of this year.
      GDP expanded by 5.2 percent year-on-year in the first quarter of this year, down from 5.9 percent in the previous quarter while the exchange rate of the peso has continued its steady depreciation.
       Last month the central bank said the economy grew by an annual 4.0 percent in the first half as domestic demand slowed during the second quarter.
      The Dominican peso was trading at 47.7 to the U.S. dollar today,  down 3.2 percent this year.

      The Central Bank of the Dominican Republic issued the following statement:

"At its monetary policy meeting of September 2017, the Central Bank of the Dominican Republic (BCDR) decided to keep its monetary policy interest rate at 5.25% per annum.
The decision on the benchmark rate was taken following a comprehensive review of the balance of risks around inflation projections, including the evolution of the main domestic and international macroeconomic indicators, the relevant international environment for the Dominican economy and expectations of the domestic market. The monthly inflation rate in August amounted to 0.57%, so the year-to-date inflation stood at 1.77%. Also, year-on-year inflation climbed to 3.18%, within the target range of 4.0% ± 1.0% of the Monetary Program. In addition, core inflation, reflecting monetary conditions, rose to 2.27% year-on-year. Projections indicate that inflation would remain within the target range at the end of the year.
In the external context, advanced economies have accelerated their growth for the sixth consecutive quarter. Prospects are favorable for the United States of America (USA), the Eurozone (EZ) and Japan. According to Consensus Forecast, the US would grow 2.2% in 2017, after upwardly revised the annualized quarter-on-quarter growth of April-June to 3.1. By 2018, the USA is projected to grow by 2.4%, in a context of normalization of its monetary policy. As for the EZ, output is expected to expand by 2.1% during 2017 and 1.8% by 2018. The dynamism of the advanced economies would have a positive impact on world economic activity, which would grow 3.0% in 2017 and 3.1% in 2018. It should be noted that inflationary pressures in developed economies remain relatively low, projecting 2.0% for the USA in 2017 and 1.9% in 2018, as well as inflation rates of 1.5% in 2017 and 1.3% in 2018 for the EZ.
On the other hand, Latin America (LA) continues to see a gradual economic recovery, with the exception of Venezuela. In the case of Brazil, the largest economy in the region, it would grow 0.7% in 2017 and 2.3% in 2018. Mexico would expand 2.2% in both years, while Chile would grow 1.4% in 2017 and 2.9% in 2018. The projections for Latin America have been revised upwards and reflect that the region's economy would expand by 1.7% in 2017 and 2.6% in 2018, driven by more favorable terms of trade.
Domestically, economic activity has reacted favorably following the expansionary measures taken at the end of July, such as the reduction of the monetary policy rate by 50 basis points and the decrease in the legal reserve requirement by 2.2 percentage points. It should be noted that credit to the private sector in local currency has increased by RD$16 billion since these measures were taken, so there is a positive outlook on the revitalization of domestic demand for the rest of 2017. In this regard, growth is expected to approach its potential for the end of the year, even in a context of recovering from damages caused by recent climate events. It is important to note that the World Bank approved a US$150 million loan for the Dominican Republic with the purpose of dealing with natural disasters, which would facilitate the recovery of economic activity during the last quarter of the year.
In the fiscal sector, a boost in public spending was recently announced, which implies a more active fiscal policy for the rest of the year. Notwithstanding this decision, the Government announced that it would meet the deficit target of 2.3% of GDP, set in the National Budget for 2017. On the other hand, the external sector maintains its dynamism, contributing to the increase in foreign exchange earnings and creating a favorable environment for the relative stability of the exchange market and for the accumulation of international reserves.
The Central Bank of the Dominican Republic reaffirms its commitment to conduct monetary policy to achieve its inflation target and maintain macroeconomic stability. In this regard, it will continue to monitor the evolution of the world economy and the domestic situation in order to take the necessary measures in view of possible risks to price stability and the proper functioning of the financial and payment systems."

     www.CentralBankNews.info

Angola maintains rate as inflation continues to decelerate

October 2, 2017 by CentralBankNews   Comments (0)

     Angola's central bank kept its benchmark BNA rate at 16.0 percent, once again saying its monetary policy committee (CPM) had taken note for the downward trajectory in inflation that began in January this year.
      The National Bank of Angola (BNA) has maintained its rate since June 2016 and in August the national headline inflation rate fell for the eight consecutive month to 25.18 percent from 41.12 percent in December 2016.
      Inflation as measured in the province of Luanda eased to 26.95 percent in August from 29.01 percent in July and 38.18 percent in August last year, the BNA said.
       Angola's inflation rate began accelerating in early 2015 as the fall in crude oil prices dented government revenue and foreign exchange earnings, weakening the kwanza's exchange rate and pushing up import prices and inflation.
      The BNA added the LUIBOR overnight rate was 22.23 percent while 3 month and 12 month rates were at 19.62 percent and 23.27 percent, respectively.
       Preliminary data for August also show that credit to the economy had fallen by 0.29 percent while gross credit to the central government had risen 2.36 percent and government deposits in the banking system had decreased 12.74 percent.
      The exchange rate of Angola's kwanza against the U.S. dollar was unchanged at 165.92.
      The BNA has devalued the kwanza several times in recent years and has been quoting the kwanza around 165 per U.S. dollar since mid-April 2016. In January last year the central bank let the kwanza ease to around 155 from around 135, the rate it had targeted since September 2015.
      The latest data for Angola's Gross Domestic Product show the economy contracted by an annual 4.3 percent in the third quarter of 2016 as the economy remains in recession that began in the second quarter of 2015.

     www.CentralBankNews.info