<![CDATA[Hedgehogs.net: Ken Yeadon's connections' blogs]]> http://www.hedgehogs.net/pg/blog/keny/friends/?view=rss http://www.hedgehogs.net/pg/blog/CentralBankNews/read/11405693/central-bank-news-link-list-oct-31-2014-kurodas-easing-in-japan-seen-adding-to-pressure-on-koreas-lee Fri, 31 Oct 2014 19:23:07 +0000 http://www.hedgehogs.net/pg/blog/CentralBankNews/read/11405693/central-bank-news-link-list-oct-31-2014-kurodas-easing-in-japan-seen-adding-to-pressure-on-koreas-lee <![CDATA[Central Bank News Link List - Oct 31, 2014 - Kuroda's easing in Japan seen adding to pressure on Korea's Lee]]>
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.

http://www.hedgehogs.net/pg/blog/CentralBankNews/read/11405686/mexico-holds-rate-on-unchanged-inflation-growth-outlook Fri, 31 Oct 2014 17:03:10 +0000 http://www.hedgehogs.net/pg/blog/CentralBankNews/read/11405686/mexico-holds-rate-on-unchanged-inflation-growth-outlook <![CDATA[Mexico holds rate on unchanged inflation, growth outlook]]>     Mexico's central bank maintained its benchmark target for its interbank overnight rate at 3.0 percent, as expected, saying the balance of risks for inflation and economic activity were unchanged from its previous monetary policy decision in September.
    The Bank of Mexico, which surprised markets by cutting its rate by 50 basis points in June, said it still expects annual headline inflation to end this year around 4 percent and converge toward its 3.0 percent target by the middle of 2015.
    Although the downside risks to global growth had intensified, the central bank said the balance of risks to Mexico's economy remained unchanged due to the prospects for the U.S. economy and the effects of the country's structural reforms that have recently been carried out.
    And while global financial markets have been volatile recently, the bank said changes in Mexican financial markets had been of lower magnitude than in other emerging market, with only marginal increases in Mexican interest rates and orderly price movements.
    However, the central bank said it would not rule out possible higher volatility in the future.
    Mexico's headline inflation rate rose to 4.22 percent in September form 4.15 percent in August but the central bank said this was mainly due to higher prices for livestock products and some processed foods that use this as inputs.
    Core inflation, however, has remained close to the 3 percent level, the bank said, and inflation expectations remain very close to 3 percent. Mexico's core inflation rate eased to 3.34 percent in September from 3.37 percent in August.

   The Bank of Mexico issued the following statement: (translation by Google)

"The Governing Board of the Bank of Mexico has decided to keep the 3.0 percent target for the interbank interest rate overnight.

Recent developments in the global economy has shown new signs of weakness. While economic activity in the US continues to consolidate the recovery process after recording strong growth in the second quarter, the slowdown in the global economy and the appreciation of the dollar, among other factors, could moderate growth in 2015. this, together with the recent decline in inflation and prospects has led since our last statement at a market expectation of a postponement of the starting date of the elevation of the benchmark interest rate from the Federal Reserve, though persists uncertainty about it. In the euro area has been a marked slowdown in economic activity along with further reductions in inflation, which puts this well below the ECB target. This has led to a new round of monetary easing by the central bank said, although no apparent results, which has affected the expectations. Meanwhile, growth in several emerging economies continued to slow, highlighting what happened in China and Brazil. The balance of risks for growth in the global economy has deteriorated. While still an expectation that the difference between the monetary stances in major advanced economies will be accentuated in the medium term, it is expected that at the prospect of slower global growth, falling prices of basic commodities and low levels inflation, the monetary policy stance in most of the advanced and emerging economies will remain accommodative in the following quarters.

The described economic environment, coupled with the persistent geopolitical risks and the alarm caused by the evolution of the epidemic of Ebola has been reflected in a significant increase in volatility in international financial markets, significant declines in the prices of some raw materials and, in particular depreciation of the currencies of emerging economies. In the case of Mexico a moderate depreciation of the local currency against the US dollar, downward adjustment in the rate of the Mexican Stock Exchange, with marginal increases in interest rates was observed. So far these movements have occurred in an orderly manner, with appropriate levels of operations and liquidity. However, even when adjustments on financial variables in Mexico have been far lower magnitude than in most emerging economies, can not rule out the possibility of higher volatility in the future.

Economic activity in Mexico during the third quarter seems to have shown a modest recovery. This has been mainly contributed buoyant external demand, although domestic has also improved on its evolution in the first two quarters. They continue to observe conditions of slack in the economy, although it is expected that these conditions will continue to fall. No pressure on inflation perceived by the side of aggregate demand, or expected to be presented in the following quarters. Despite intensifying downside risks to growth in the world economy, the prospects for the evolution of the US economy, together with structural reforms recently enacted, makes the balance of risks to economic activity in Mexico remains the same from the previous monetary policy decision.

While the annual headline inflation has remained above 4 percent, the level is mainly explained by increases in the prices of livestock products and in some processed foods that use these as inputs. However, core inflation has remained at levels close to 3 percent. For their part, have remained stable inflation expectations for a medium- and long-term surveys from analysts and derivative market information, the latter being located very close to 3 percent.

As stated in the previous announcement of monetary policy, it is estimated that the annual headline inflation close around 4 percent in 2014, which at the beginning of 2015 present a significant decrease and converge to about 3 percent from mid last year. For core inflation is expected at the end of 2014 is close to 3 percent in 2015 and will be below that level. This forecast is based, among other factors, on the fading effect of the tax changes that took effect at the beginning of this year, at a lower rate of annual change in the price of gasoline, the impact of dilution changes mentioned in the previous paragraph relative prices and, of course, in the posture of monetary policy, which will ensure that changes in relative prices have no second order effects. While there are upside risks to the inflation trajectory, including the possibility of further currency depreciation as a result of volatility in international financial markets and increases in inflation above the minimum wage and increased productivity expected, there are also lower, and further declines in the prices of telecommunications services and the possibility of a less dynamic evolution of economic activity than expected if recent social developments in the country affecting the expectations of economic agents . However, it is estimated that the balance of risks for inflation remains unchanged from the previous decision.

Given the above, the Board of Governors decided to keep 3 percent target rate for overnight interbank rate, under which estimates the monetary stance is consistent with the efficient convergence of inflation to the target 3 percent. Going forward, it will remain attentive to the performance of all the determinants of inflation and expectations for a medium- and long-term. In particular, monitor the evolution of the degree of slack in the economy before the expected recovery, including the potential impact of implementing structural reforms and monetary stance relative to Mexico against the United States. All this in order to be able to reach the designated target inflation."


http://www.hedgehogs.net/pg/blog/CentralBankNews/read/11405638/russia-raises-rate-150-bps-to-curb-inflation-expectations Fri, 31 Oct 2014 13:43:12 +0000 http://www.hedgehogs.net/pg/blog/CentralBankNews/read/11405638/russia-raises-rate-150-bps-to-curb-inflation-expectations <![CDATA[Russia raises rate 150 bps to curb inflation expectations]]>     Russia's central bank raised its key policy rate by a sharp 150 basis points to 9.50 percent, larger than expected by economists, to curb rising inflationary expectations after a fall in the value of the ruble and import restrictions due to international sanctions over Ukraine boosted inflation.
    The Bank of Russia, which has now raised rates by 400 basis points this year, also said the expected decline inflation would be slower than it had expected and it would "continue to take measures aimed at stabilizing inflation expectations and slowing down consumer prices growth" to its target of 4.0 percent.
    Russia's headline inflation rate was estimated to have risen by 8.4 percent as of Oct. 27, up from 8 percent in September and 7.6 percent in August due to an acceleration in food prices.
    The central bank said it expects inflation to remain above 8 percent until the end of 2014 and in the first quarter of 2015, up from its September forecast that inflation would remain above 7 percent.
    Russia's economy has been hit by growing external political uncertainty and lower oil prices with consumer demand cooling along with real wage growth and retail lending.
    Russia's Gross Domestic Product expanded by only 0.2 percent in the third quarter from the same 2013 quarter, down from a rate of 0.8 percent in the second quarter, and the central bank estimates growth of close to zero in the fourth quarter of this year and the first quarter of 2015.
    The Bank of Russia issued the following statement:

"On 31 October 2014 the Bank of Russia Board of Directors decided to raise the Bank of Russia key rate to 9.5 percent per annum. During September-October significant changes in external conditions have taken place: considerable fall in oil prices and stricter sanctions imposed by certain countries against several large Russian companies. As a result the ruble depreciated that together with restrictions on the import of certain food items imposed in August resulted in further acceleration in consumer prices growth. According to the Bank of Russia estimates, inflation will remain above 8% till the end of 2014 and in 2015 Q1. Continuing high growth of consumer price will result in persistent increase in inflation expectations creating additional inflation risks. The Bank of Russia will continue to take measures aimed at slowing down consumer prices growth to the target of 4% in the medium run. If the external conditions improve and inflation and inflation expectation show a stable downward trend, the Bank of Russia will be ready to start monetary policy easing. 
In September-October, inflation grew more rapidly than had been expected earlier. According to the estimates as of the 27 October, annual consumer price growth rate was 8.4%. Core inflation rose to 8.2% in September 2014. Acceleration of inflation was mainly provoked by accelerated price growth for food items from 10.3% in August to 11.4% in September. Price growth rates for non-food products remained stable at 5.5%. Inflation dynamics was mainly influenced by ruble depreciation and external trade restrictions imposed in August 2014. According to the Bank of Russia estimates, cumulative impact of these factors on the annual consumer prices growth to the end of the 2014 will be about 2.5 pp (of which 1.2 pp â€” impact of external trade restrictions imposed in August, 1.3 pp â€” impact of ruble depreciation). Amid accelerated consumer prices growth, inflation expectations of households and businesses continued to increase imposing additional pressure on prices. 
Tighter monetary conditions haven’t offset the influence of the aforementioned factors on inflation expectations yet though monetary aggregates dynamics sets the ground for inflation decline in the medium run. According to the estimates, annual money supply (M2) growth rate decreased from 16.1% on 1 October 2013 to 7.4% on 1 October 2014. Continuing growth of interest rates on household deposits contributes to maintain the propensity to save and increase attractiveness of deposits for cash holdings. Given interest rates hike and tighter borrower and collateral requirements, lending growth sees a slowdown (adjusted for currency revaluation). 
According to the Bank of Russia estimates, annual GDP growth rate in 2014 Q3 was 0.2%. Economic slack does not have considerable restraining effect on consumer prices increase as it is mostly caused by structural factors. Utilisation of productive factors â€” labour force and commercially viable productive capacities â€” is high though labour productivity grows slowly. Due to the long-term demographic trends labour supply decreases. Besides structural factors, increased external political uncertainty has an adverse impact on economic activity. Amid limited access to long-term financing and higher borrower requirements from Russian banks, fixed capital investments are contracting. At the same time consumer demand is cooling down as real wage growth and retail lending are slowing. External economic conditions have restraining effect on the Russian economy: oil prices see a significant decline while economic activity of most Russia’s trading partners remains weak. However, exchange rate dynamics and restrictions on the import of certain food items support some industries. According to the Bank of Russia estimates, economic growth rate in 2014 Q4 and 2015 Q1 will be close to zero. 
Consumer prices growth is very likely to persist at the current level till the end of Q1 2015 due to remaining sizeable impact of restrictions on the import of certain food items and ruble depreciation in August-October 2014 on prices. Later, as the economy gradually adjusts to external trade restrictions and the impact of exchange rate dynamics on prices reduction, inflation and inflation expectations are expected to see a renewed decrease. Slower consumer prices growth will also be facilitated by subdued aggregate demand with aggregate goods and services output remaining below the potential. However, inflation decline will be slower than previously expected. The Bank of Russia will continue to take measures aimed at stabilising inflation expectations and slowing down consumer prices growth to the target in the medium term. Should the external conditions improve, and inflation and inflation expectation show a stable downward trend, the Bank of Russia will be ready to start monetary policy easing."

http://www.hedgehogs.net/pg/blog/skinnercm/read/11405625/ryanair-bank-or-private-bank-your-choice Fri, 31 Oct 2014 10:53:23 +0000 http://www.hedgehogs.net/pg/blog/skinnercm/read/11405625/ryanair-bank-or-private-bank-your-choice <![CDATA[Ryanair Bank or Private Bank? Your choice!]]>

I’ve talked for some time about component based banking but what about component based pricing?


]]> 11405625 http://www.hedgehogs.net/pg/blog/skinnercm/read/11405605/things-worth-reading-31st-october-2014 Fri, 31 Oct 2014 08:18:18 +0000 http://www.hedgehogs.net/pg/blog/skinnercm/read/11405605/things-worth-reading-31st-october-2014 <![CDATA[Things worth reading: 31st October 2014]]>

Things we're reading today include ...


]]> 11405605 http://www.hedgehogs.net/pg/blog/CentralBankNews/read/11405598/boj-boosts-qe-to-80-trln-yen-to-avoid-deflation-mindset Fri, 31 Oct 2014 05:43:30 +0000 http://www.hedgehogs.net/pg/blog/CentralBankNews/read/11405598/boj-boosts-qe-to-80-trln-yen-to-avoid-deflation-mindset <![CDATA[BOJ boosts QE to 80 trln yen to avoid deflation mindset]]>     Japan's central bank raised its target for boosting the country's monetary base by 10-20 trillion yen to about 80 trillion yen to prevent growing deflationary expectations from taking root.
    The Bank of Japan (BOJ), which embarked on quantitative and qualitative easing (QQE) in April 2013 by pledging to double the monetary base by buying 60-70 trillion yen of assets a year, said it would now purchase an additional 30 trillion yen worth of government bonds (JGBs) compared with the past "with a view to encouraging a decline in interest rates across the entire yield curve."
    The BOJ will also triple its purchase of exchange-traded funds so the amount outstanding rises to an annual pace of about 3 trillion yen and triple the purchase of Japanese real estate trusts (J-REITs) so the amount outstanding rises by about 90 billion yen. In addition, the BOJ will make ETFs that track the Nikkei index eligible for purchase.
    The central bank's target for purchasing commercial paper and corporate bonds will remain  about 2.2 trillion yen and about 3.2 trillion yen, respectively.
    In its statement, the BOJ said the expansion of QEE was decided by a 5-4 majority vote.
     As in its previous statement from Oct.7, the BOJ said the country's economy was continuing to "recover moderately as a trend" but today it added that the economy was expected to continue growing at a pace that was above the economy's potential.
    "However, on the price front, somewhat weak developments in demand following the consumption tax hike and a substantial decline in crude oil prices have been exerting downward pressure recently," the BOJ said.

    The BOJ has targeted inflation of 2 percent but financial markets and economists have become increasingly skeptical that the bank would achieve this goal and were expecting the BOJ to expand its asset purchases before the end of the financial year in March.
    Japan's headline inflation rate slowed to 3.2 percent in September from 3.3 percent in August but excluding the impact of the sales tax hike in April, core inflation (CPI excluding fresh food) was only 1 percent.
    The BOJ's aggressive monetary easing campaign in April 2013 was launched with the aim of ending 15 years of deflation.
    The government's increase in sales tax in April to help reduce its budget deficit has hit consumer demand but the BOJ said it was starting to bounce back and the decline in global crude prices would have a positive impact on economic activity in the long run and help push up prices.
    "Nevertheless, if the current downward pressure on prices remains, albeit in the short term, there is a risk that conversion of deflationary mindset, which has so far been progressing steadily, might be delayed," the BOJ said, adding:
   "To pre-empt manifestation of such risk and to maintain the improving momentum of expectation formation, the Bank judged it appropriate to expand the quantitative and qualitative easing (QQE)."

http://www.hedgehogs.net/pg/blog/CentralBankNews/read/11405593/central-bank-news-link-list-oct-31-2014-russia-seen-raising-interest-rates-despite-weak-economy Fri, 31 Oct 2014 04:33:07 +0000 http://www.hedgehogs.net/pg/blog/CentralBankNews/read/11405593/central-bank-news-link-list-oct-31-2014-russia-seen-raising-interest-rates-despite-weak-economy <![CDATA[Central Bank News Link List - Oct 31, 2014 - Russia seen raising interest rates despite weak economy]]>
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.

http://www.hedgehogs.net/pg/blog/CentralBankNews/read/11405588/colombia-holds-rate-next-move-depends-on-data Fri, 31 Oct 2014 03:53:10 +0000 http://www.hedgehogs.net/pg/blog/CentralBankNews/read/11405588/colombia-holds-rate-next-move-depends-on-data <![CDATA[Colombia holds rate, next move depends on data]]>     Colombia's central bank maintained its benchmark intervention rate at 4.5 percent, as expected, and said its monetary policy stance would depend on new data while demand continues to show strong growth and inflation expectations remain around 3 percent.
    But the Central Bank of Colombia, which has raised its rate by 125 basis points from April through August, added that the terms of trade were declining and there was increased uncertainty about the global economy, including the cost of external financing, which could impact aggregate demand and the exchange rate.
    The central bank issued the following statement:

 "The Board of the Central Bank in its meeting today decided to keep interest rates at 4.5% intervention. For this decision, the Board took into consideration mainly the following aspects:

  • New projections for world economic activity for the remainder of 2014 and 2015 suggest that the average growth of our business partners will be less than estimated earlier. External demand would be driven mainly by the US economy, while the euro area for low dynamism expected. China would have a slowdown, and some countries partners in the region will grow at less than their average rates of recent years.
  • The risk premiums of several emerging countries have deteriorated and their currencies have depreciated against the dollar. This, in an environment of slowing economies and falling prices of basic goods they export.  
  • The international price of oil has fallen and is below the forecast that had the technical team. This has led to a deterioration in the terms of trade of the country, despite international coffee prices remain high and the prices of other commodities have fallen Colombia matters. If the fall in the terms of trade will adversely affect the growth of national income. 
  • In Colombia, the new indicators suggest GDP growth in the third quarter of 2014 similar to that predicted in previous months. The behavior of retail sales, consumer credit, the consumer confidence index and the labor market indicate that consumption remain strong dynamics. The increase in foreign purchases of machinery and transport equipment, and the trend for civil works, provide a good investment performance, although lower than those observed in the first semester fees. Foreign trade indicators suggest that net exports have a negative contribution to growth. By 2014 the crew estimated growth of between 4.5% and 5.5%, 5%, and more likely figure.
  • The annual inflation in September, 2.86%, was in line with expectations by the technical team. The average of the four indicators of core inflation declined and stood at 2.63%. Estimates suggest that at year-end inflation may be in the upper half of the target range. 
  • The average inflation expectations one year analysts and papers arising from government debt with longer maturities are stable and slightly above 3%.

In summary, aggregate demand continues to show strong growth in the near to full utilization of productive capacity context. At the time, inflation expectations remain around 3%. This occurs in an environment of declining terms of trade and increased uncertainty about the recovery in global economic activity and the cost of external financing, factors that can influence the aggregate demand and the exchange rate. Made assessing the balance of risks, the Board considered it appropriate to maintain unchanged the benchmark interest rate.

The Board will continue to carefully monitor the behavior and projections of economic activity and inflation in the country, asset markets and the international situation. Finally, he reiterated that monetary policy will depend on the information available."

http://www.hedgehogs.net/pg/blog/CentralBankNews/read/11405568/fiji-holds-rate-to-mull-change-after-2015-govt-budget Fri, 31 Oct 2014 03:23:13 +0000 http://www.hedgehogs.net/pg/blog/CentralBankNews/read/11405568/fiji-holds-rate-to-mull-change-after-2015-govt-budget <![CDATA[Fiji holds rate, to mull change after 2015 govt budget]]>     Fiji's central bank maintained its benchmark Overnight Policy Rate (OPR) at 0.5 percent and said its monetary policy stance would be "re-aligned if needed" after the government announces the 2015 fiscal budget.
    The guidance by the Reserve Bank of Fiji (RBF), which has held the OPR steady since November 2011, compares with its guidance from its board meeting in September when it said its policy stance could remain accommodative for now to support growth.
    The RBF also said that both its objectives of inflation and foreign reserves would remain within the bank's comfortable range over the medium term while the economy is poised for its fifth year of consecutive growth, driven largely by tourism, sugar, construction and financial services.
    Fiji's economy expanded by 4.6 percent in 2013, above expected growth of 3.6 percent, and the RBF said in its September report that the economy is on track to achieve the forecast 3.8 percent growth this year.
    The RBF issued the following statement:

"The Reserve Bank of Fiji (RBF) Board in its monthly meeting on 31 October decided to leave the Overnight Policy Rate (OPR) unchanged at 0.5 percent.

The Governor and Chairman of the Board, Mr Barry Whiteside, while announcing the decision stated that “the domestic economy is poised for its fifth year of consecutive growth this year, driven largely by robust performance in key sectors such as tourism, sugar, construction and financial services. On the demand side, consumption and investment spending remains firm, supported by strong private sector credit growth and improved confidence.”
Mr Whiteside however, cautioned that pressure on the balance of payments front from the above trend growth in aggregate demand and continued higher growth in imports relative to exports remain a concern. Nonetheless, the Governor advised that current assessment indicates that both objectives of monetary policy will remain within the comfortable range over the medium term.
Inflation slowed further to 0.3 percent in September and the year-end forecast is 1.5 percent. Foreign reserves were around $1,749 million on 31 October, sufficient to cover 4.6 months of retained imports of goods and non-factor services and are projected to also remain at sufficient levels over the medium term.
The Governor concluded that the outlook for both objectives will be re-assessed after the announcement of the 2015 National Budget and monetary policy stance will be re-aligned if needed."


http://www.hedgehogs.net/pg/blog/skinnercm/read/11404988/africa-shows-the-way-to-the-future Thu, 30 Oct 2014 08:48:11 +0000 http://www.hedgehogs.net/pg/blog/skinnercm/read/11404988/africa-shows-the-way-to-the-future <![CDATA[Africa shows the way to the future]]>

I spent some time reviewing the latest news on M-PESA yesterday.


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