<![CDATA[Hedgehogs.net: Ken Yeadon's connections' blogs]]> http://www.hedgehogs.net/pg/blog/keny/friends/?view=rss http://www.hedgehogs.net/pg/blog/asiablues/read/11663790/this-video-is-for-upandcoming-traders-video Mon, 23 Jan 2017 20:23:46 +0000 http://www.hedgehogs.net/pg/blog/asiablues/read/11663790/this-video-is-for-upandcoming-traders-video <![CDATA[This Video Is For Up-and-Coming Traders (Video)]]> By EconMatters

We discuss two videos in one here, the first is some mentoring advice to struggling traders, and the last half is some specific market education that will help struggling traders develop some of the fundamentals needed to properly analyze daily price action in financial markets related to tracking the fund flows. Most people at Investment Banks are just faking it, because they will never make it on their own with a profitable Fund independent of Investment Bank Resource advantages.

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http://www.hedgehogs.net/pg/blog/asiablues/read/11663775/the-oil-production-cuts-are-purely-symbolic-marketing-trickery-video Sun, 22 Jan 2017 21:23:45 +0000 http://www.hedgehogs.net/pg/blog/asiablues/read/11663775/the-oil-production-cuts-are-purely-symbolic-marketing-trickery-video <![CDATA[The Oil Production Cuts Are Purely Symbolic Marketing Trickery (Video)]]> By EconMatters

The OPEC and Non-OPEC Oil Production cuts are actually a joke in the bigger scheme of things, the oil markets have been over supplied for a decade. The Market`s self serving definition of a balanced oil market is complete nonsense on a larger macro view of the market.

There is a reason the 5-year averages for oil stocks have been rising every year I have been trading the oil market. It isn`t a coincidental indicator that more oil storage facilities are being built or expanded every year for the last 15 years of the modern electronic oil markets.

There is so much oil and derivative oil products in storage on a global calculus, that it is a joke if OPEC thinks they have cut enough to actually long term balance the oil markets.

In addition they are delusional if they think a little six month seasonal pullback in production is going to do anything other than artificially set the oil market up for the next leg back down in the second half of 2017.

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http://www.hedgehogs.net/pg/blog/asiablues/read/11663769/netflix-can-add-subscribers-but-at-what-cost-video Sun, 22 Jan 2017 20:03:46 +0000 http://www.hedgehogs.net/pg/blog/asiablues/read/11663769/netflix-can-add-subscribers-but-at-what-cost-video <![CDATA[Netflix Can Add Subscribers - But At What Cost? (Video)]]> By EconMatters

We discuss the real problem facing Netflix in this video, and why this stock is a long term sell, and ultimately going to crash like Blackberry`s stock. These High Tech Flyers all Crash and Burn the same way - you sell 400 P/E Stocks with huge Cash Burn problems!

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http://www.hedgehogs.net/pg/blog/asiablues/read/11663760/volatility-and-market-risk-have-never-been-more-mispriced-video Sun, 22 Jan 2017 17:53:46 +0000 http://www.hedgehogs.net/pg/blog/asiablues/read/11663760/volatility-and-market-risk-have-never-been-more-mispriced-video <![CDATA[Volatility and Market Risk Have Never Been More MisPriced (Video)]]> By EconMatters

We discuss the real reasons Financial Markets have so mispriced the potential failure and market risks associated with a Trump Presidency in this video. Hint: Follow the Central Bank Asset Purchases Programs!

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http://www.hedgehogs.net/pg/blog/CentralBankNews/read/11663755/this-week-in-monetary-policy-israel-ghana-turkey-hungary-south-africa-nigeria-argentina-paraguay-georgia-ukraine-moldova-fiji-colombia-and-trinidad-tobago Sun, 22 Jan 2017 15:13:52 +0000 http://www.hedgehogs.net/pg/blog/CentralBankNews/read/11663755/this-week-in-monetary-policy-israel-ghana-turkey-hungary-south-africa-nigeria-argentina-paraguay-georgia-ukraine-moldova-fiji-colombia-and-trinidad-tobago <![CDATA[This week in monetary policy: Israel, Ghana, Turkey, Hungary, South Africa, Nigeria, Argentina, Paraguay, Georgia, Ukraine, Moldova, Fiji, Colombia and Trinidad & Tobago]]>
    This week (January 22 through January 28) central banks from 14 countries or jurisdictions are scheduled to decide on monetary policy: Israel, Ghana, Turkey, Hungary, South Africa, Nigeria, Argentina, Paraguay, Georgia, Ukraine, Moldova, Fiji, Colombia and Trinidad & Tobago.
    Following table includes the name of the country, the date of the next policy decision, the current policy rate, the result of the last policy decision, the change in the policy rate year to date, the rate one year ago, and the country’s MSCI classification.
    The table is updated when the latest decisions are announced and can always accessed by clicking on This Week.

JAN 22 - JAN 28, 2017:
COUNTRY                 DATE                RATE           LATEST                 YTD          1 YR AGO       MSCI
ISRAEL 23-Jan 0.10% 0 0 0.10%          DM
GHANA 23-Jan 25.50% -50 0 26.00%
TURKEY 24-Jan 8.00% 50 0 7.50%          EM 
HUNGARY 24-Jan 0.90% 0 0 1.35%          EM 
SOUTH AFRICA 24-Jan 7.00% 0 0 6.75%          EM 
NIGERIA 24-Jan 14.00% 0 0 11.00%          FM
ARGENTINA 24-Jan 24.75% 0 0 36.75%          FM
PARAGUAY 24-Jan 5.50% 0 0 6.00%
GEORGIA 25-Jan 6.50% 0 0 8.00%
UKRAINE 26-Jan 14.00% 0 0 22.00%          FM
MOLDOVA 26-Jan 9.00% 0 0 19.50%
FIJI 26-Jan 0.50% 0 0 0.50%
COLOMBIA 27-Jan 7.50% -25 0 6.00%          EM 
TRINIDAD & TOBAGO 27-Jan 4.75% 0 0 4.75%          EM 

http://www.hedgehogs.net/pg/blog/CentralBankNews/read/11663750/central-bank-news-link-list-jan-21-venezuelas-maduro-said-to-seek-ouster-of-central-bank-chief Sun, 22 Jan 2017 15:12:43 +0000 http://www.hedgehogs.net/pg/blog/CentralBankNews/read/11663750/central-bank-news-link-list-jan-21-venezuelas-maduro-said-to-seek-ouster-of-central-bank-chief <![CDATA[Central Bank News Link List - Jan 21: Venezuelaâs Maduro said to seek ouster of central bank chief]]>     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/11663745/chile-cuts-rate-25-bps-in-first-easing-since-oct-2014 Sun, 22 Jan 2017 15:11:35 +0000 http://www.hedgehogs.net/pg/blog/CentralBankNews/read/11663745/chile-cuts-rate-25-bps-in-first-easing-since-oct-2014 <![CDATA[Chile cuts rate 25 bps in first easing since Oct. 2014]]>     Chile's central bank lowered its policy rate by 25 basis points to 3.25 percent, referring to its monetary policy report from last month where it said it would be necessary to "boost the monetary impulse" if recent economic trends persist and impact the inflation outlook.
     It is the first rate cut by the Central Bank of Chile since October 2014 and follows the shift to an easing bias by the central bank board's in December.
   The central bank noted that Chile's inflation rate fell to an unexpectedly low rate of 2.7 percent in December, the lowest since November 2013, from 2.9 percent in November, adding that inflation projections for the coming months remain in the lower part of the bank's tolerance range.
    The central bank targets inflation of 3.0 percent, plus/minus 2 percentage points.
    In its December monetary policy report the central bank trimmed its end-2017 inflation forecast to 2.9 percent from 3.1 percent, with inflation expected to remain at the lower end of the target range for most of this year before returning to 3 percent by the end of the year.
    Economic activity in Chile is weak, the central bank said, affecting other sectors than just natural resources while demand-side indicators continue to grow at a similar pace as in recent quarters.
    In December the central bank lowered its forecast for 2017 economic growth to 1.5 - 2.5 percent from a previous 1.75 - 2.75 percent. For 2016 it estimated growth of 1.5 percent, the slowest annual rate since 2009.
    In the third quarter Chile's Gross Domestic Product expanded by an annual rate of 1.6 percent, the same as in the second quarter.

    The Central Bank of Chile issued the following statement:

"In its monthly monetary policy meeting, the Board of the Central Bank of Chile decided to lower the monetary policy interest rate by 25 basis points, to 3.25%.

Internationally, global financial conditions have improved and emerging economies’ asset prices have risen. The prices of copper and oil, beyond ups and downs, have remained above those of mid-2016. Activity indicators confirm improvements in the developed world and a weakening in Latin America.

At home, the CPI posted an unexpectedly low monthly variation, resulting in a 2.7% increase for the year. Inflation expectations at the end of the projection horizon are near target, although for the coming months they remain in the lower part of the tolerance range. Again, activity showed weak figures, this time concentrating in sectors other than natural resources. All in all, demand-side indicators continue to grow at a similar pace of previous quarters. The labor market continues along previous trends. Long-term interest rates returned to their pre-US-election levels.

As was said in the last Monetary Policy Report, the Board estimates that, if the recent trends of the economic scenario persist, and so do their implications on the mediumterm inflation outlook, it will be necessary to boost the monetary impulse. At the same time, it reiterates its commitment to conduct monetary policy with flexibility, so that projected inflation stands at 3% over the policy horizon."


http://www.hedgehogs.net/pg/blog/CentralBankNews/read/11663740/ecb-holds-rates-easy-policy-needed-to-boost-inflation Sun, 22 Jan 2017 15:10:25 +0000 http://www.hedgehogs.net/pg/blog/CentralBankNews/read/11663740/ecb-holds-rates-easy-policy-needed-to-boost-inflation <![CDATA[ECB holds rates, easy policy needed to boost inflation]]>     The European Central Bank (ECB) left its key policy rates and asset purchase program unchanged, as expected, and said "a very substantial degree of monetary accommodation is needed for euro area inflation pressures to build up," a likely move to dampen any speculation that it is considering scaling back its ultra-easy policy in light of rising inflation.
     The ECB, which in December trimmed its monthly asset purchases to 60 billion euros from a current 80 billion but extended the program until the end of 2017 from March, added that it remains ready to increase the size and duration of quantitative easing "if the outlook becomes less favorable" or the progress toward higher inflation stalls.
    In his press conference, ECB President Mario Draghi also repeated the ECB expects its key rates to "remain at present or lower levels for an extended period of time, and well past the horizon of our net asset purchases."
    The ECB's benchmark refinancing rate has been at zero percent since March 2016 and the deposit rate at minus 0.40 percent.
    A jump in euro area inflation to 1.1 percent in December from 0.6 percent in November to the highest level since September 2013 triggered calls by some German economists for the ECB to start to tighten its policy and even raise rates.
    But Draghi said the rise in inflation was mainly due to higher energy prices and "there are no signs yet of a convincing upward trend in underlying inflation."
    Draghi expects headline inflation to rise further in the near term due to higher energy prices while  underlying inflation only will rise more gradually.
    Core inflation in the 19 countries that share the euro rose to 0.9 percent in December from 0.8 percent in the preceding four months. 
    The ECB, which targets inflation of just below but close to 2 percent, in December forecast 2016 inflation of 0.2 percent, rising to 1.3 percent in 2017, 1.5 percent in 2018 and 1.7 percent in 2019.
    The economy in the euro area grew by an unchanged annual rate of 1.7 percent in the third quarter of last year but Draghi said data pointed to a somewhat stronger growth in the fourth quarter.
    But he also said growth would still be dampened by "a sluggish pace of implementation of structural reforms and remaining balance sheet adjustments," reiterating that the risks remain tilted to the downside, mainly due to global factors.
     The ECB has forecast 2016 growth of 1.7 percent and the same rate in 2017. For 2018 the ECB expects unchanged growth of 1.6 percent and the same rate for 2019.
    The euro fell sharply against the U.S. dollar in the second half of 2014 and has remained weak since then with some economists forecasting that it could fall to parity with the dollar this year as the U.S. Federal Reserve continues to normalize policy and raise rates while the ECB continues with low rates and asset purchases.
    But helped by an improved outlook for the global economy, higher inflation and speculation the ECB could alter its planned asset purchases, the euro has firmed in recent weeks.
    But the euro fell back following today's policy decision to 1.060 to the dollar from 1.067 though it  remains up from 1.052 at the start of the year.

    The European Central Bank released the following introductory statement by its president, Mario Draghi:

"Ladies and gentlemen, first of all let me wish you a Happy New Year. The Vice-President and I are very pleased to welcome you to our press conference. We will now report on the outcome of today’s meeting of the Governing Council.
Based on our regular economic and monetary analyses, we decided to keep the key ECB interest rates unchanged. We continue to expect them to remain at present or lower levels for an extended period of time, and well past the horizon of our net asset purchases. Regarding non-standard monetary policy measures, we confirm that we will continue to make purchases under the asset purchase programme (APP) at the current monthly pace of €80 billion until the end of March 2017 and that, from April 2017, our net asset purchases are intended to continue at a monthly pace of €60 billion until the end of December 2017, or beyond, if necessary, and in any case until the Governing Council sees a sustained adjustment in the path of inflation consistent with its inflation aim. The net purchases will be made alongside reinvestments of the principal payments from maturing securities purchased under the APP.
The Governing Council today also decided on further details of how the Eurosystem will buy assets with yields below the interest rate on the deposit facility under its public sector purchase programme. These decisions will be published in a separate press release at 15.30 CET.
The monetary policy decisions taken in December 2016 have succeeded in preserving the very favourable financing conditions that are necessary to secure a sustained convergence of inflation rates towards levels below, but close to, 2% over the medium term. Borrowing conditions for firms and households continue to benefit from the pass-through of our measures. As expected, headline inflation has increased lately, largely owing to base effects in energy prices, but underlying inflation pressures remain subdued. The Governing Council will continue to look through changes in HICP inflation if judged to be transient and to have no implication for the medium-term outlook for price stability. 
A very substantial degree of monetary accommodation is needed for euro area inflation pressures to build up and support headline inflation in the medium term. If warranted to achieve its objective, the Governing Council will act by using all the instruments available within its mandate. In particular, if the outlook becomes less favourable, or if financial conditions become inconsistent with further progress towards a sustained adjustment in the path of inflation, we stand ready to increase our asset purchase programme in terms of size and/or duration. 
Let me now explain our assessment in greater detail, starting with the economic analysis. Euro area real GDP increased by 0.3%, quarter on quarter, in the third quarter of 2016, after recording a similar pace of growth in the second quarter. Incoming data, notably survey results, point to somewhat stronger growth in the last quarter of 2016. Looking ahead, we expect the economic expansion to firm further. The pass-through of our monetary policy measures is supporting domestic demand and facilitating the ongoing deleveraging process. The very favourable financing conditions and improvements in corporate profitability continue to promote the recovery in investment. Moreover, sustained employment gains, which are also benefiting from past structural reforms, provide support for private consumption via increases in households’ real disposable income. At the same time, there are signs of a somewhat stronger global recovery. However, economic growth in the euro area is expected to be dampened by a sluggish pace of implementation of structural reforms and remaining balance sheet adjustments in a number of sectors. The risks surrounding the euro area growth outlook remain tilted to the downside and relate predominantly to global factors.
According to Eurostat, euro area annual HICP inflation increased markedly from 0.6% in November 2016 to 1.1% in December. This reflected mainly a strong increase in annual energy inflation, while there are no signs yet of a convincing upward trend in underlying inflation. Looking ahead, on the basis of current oil futures prices, headline inflation is likely to pick up further in the near term, largely reflecting movements in the annual rate of change of energy prices. However, measures of underlying inflation are expected to rise more gradually over the medium term, supported by our monetary policy measures, the expected economic recovery and the corresponding gradual absorption of slack. 
Turning to the monetary analysis, broad money (M3) continues to expand at a robust pace, with its annual rate of growth increasing to 4.8% in November 2016, up from 4.4% in October. As in previous months, annual growth in M3 was mainly supported by its most liquid components, with the narrow monetary aggregate M1 expanding at an annual rate of 8.7% in November, up from 8.0% in October.
Loan dynamics followed the path of gradual recovery observed since the beginning of 2014. The annual growth rate of loans to non-financial corporations was 2.2% in November 2016, after 2.1% in the previous month. The annual growth rate of loans to households was 1.9% in November, after 1.8% in October. Although developments in bank credit continue to reflect the lagged relationship with the business cycle, credit risk and the ongoing adjustment of financial and non-financial sector balance sheets, the monetary policy measures put in place since June 2014 are significantly supporting borrowing conditions for firms and households and thereby credit flows across the euro area. The euro area bank lending survey for the fourth quarter of 2016 indicates that credit standards for loans to enterprises are broadly stabilising, while loan demand has continued to expand at a robust pace across all loan categories.
To sum up, a cross-check of the outcome of the economic analysis with the signals coming from the monetary analysis confirmed the need for a continued very substantial degree of monetary accommodation to secure a sustained return of inflation rates towards levels that are below, but close to, 2% without undue delay.
Monetary policy is focused on maintaining price stability over the medium term and its accommodative stance supports economic activity. In order to reap the full benefits from our monetary policy measures, other policy areas must contribute much more decisively, both at the national and at the European level. The implementation of structural reforms needs to be substantially stepped up to increase resilience, reduce structural unemployment and boost investment, productivity and potential output growth in the euro area. Structural reforms are necessary in all euro area countries. In particular, reforms are needed to improve the business environment, including the provision of an adequate public infrastructure. In addition, the enhancement of current investment initiatives, progress on the capital markets union and reforms that will improve the resolution of non-performing loans, are a priority. Fiscal policies should also support the economic recovery, while remaining in compliance with the fiscal rules of the European Union. Full and consistent implementation of the Stability and Growth Pact over time and across countries remains crucial to ensure confidence in the fiscal framework. At the same time, it is essential that all countries intensify efforts towards achieving a more growth-friendly composition of fiscal policies."

http://www.hedgehogs.net/pg/blog/CentralBankNews/read/11663735/indonesia-holds-rate-improvement-in-outlook-to-continue Sun, 22 Jan 2017 15:09:17 +0000 http://www.hedgehogs.net/pg/blog/CentralBankNews/read/11663735/indonesia-holds-rate-improvement-in-outlook-to-continue <![CDATA[Indonesia holds rate, improvement in outlook to continue]]>     Indonesia's central bank maintained its benchmark BI 7-day RR rate at 4.75 percent and struck an optimistic tone by saying the "improvement in the national economic outlook is expected to continue, with stronger growth combined with maintained macroeconomic and financial system stability."
    Bank Indonesia (BI) cut its new benchmark rate twice last year by a total of 50 basis points following four cuts in its previous benchmark rate by a total of 100 points from January through June.
    Despite the risks from U.S., China, higher oil prices and inflation from higher fuel and electricity prices, BI said it expects gains in exports to continue, not only in commodities but also in manufactured products.
    Although government spending was lower than expected in the fourth quarter of last year, BI said consumption and investment was "solid" and exports "surged" while commodity prices rebounded.
    Growth for 2016 was seen around 5.0 percent, the same forecast as in December and up from 4.8 percent in 2015, and this year the central bank expects the economic recovery to continue, driven by exports and investments with stable household consumption.
    In the third quarter of last year Indonesia's Gross Domestic Product grew by an annual rate of 5.02 percent, down from 5.19 percent in the second quarter.
    For 2017 BI has forecast growth of 5.0 to 5.4 percent.
    Like many other emerging market currencies, Indonesia's rupiah fell in response to the election of Donald Trump as U.S. president in November last year. Although it rebounded in December, the rupiah remains below the level seen before Trump's election.
   The rupiah was trading around 13,386 to the U.S. dollar today, down 2.2 percent since the U.S. election but up 0.8 percent since the start of this year.
    BI said the appreciation of the rupiah in December was due to a "deluge" of capital inflows to the government bond market while the outflow from its stock market decreased after the U.S. Federal Reserve's rate hike, with a reversal seen at the end of December.
    In 2016 the rupiah appreciated by 2.32 percent, the BI said, on positive investor perception of the domestic economy but it added that it would remain vigilant of the risks from global financial uncertainty and stabilize the exchange rate in line with its fundamental value.
    Indonesia's inflation rate eased to 3.02 percent in December from 3.58 percent in November, close to the central bank's lower target range of 3.0 to 5.0 percent, with BI saying this was due to low core inflation and minimal administered prices while inflation pressures on food remained.

    Bank Indonesia issued the following statement:

"The BI Board of Governors agreed on 18-19th January 2017 to hold the BI 7-day (Reverse) Repo Rate (BI-7 day RR Rate) at 4.75%, while maintaining the Deposit Facility (DF) and Lending Facility (LF) rates at 4.00% and 5.50% respectively, effective 20th January 2017. The decision was consistent with Bank Indonesia’s effort to maintain macroeconomic and financial system stability, while keep optimizing domestic economic recovery amid uncertainties in the global financial market. After performing relatively well throughout 2016, improvement in the national economic outlook is expected to continue, with stronger growth combined with maintained macroeconomic and financial system stability. Bank Indonesia will continue to monitor risks in 2017. Globally, the risks include the policy directions taken in the US and China and global oil price hike, while the domestic risks are linked to the impact of administered prices (AP) on inflation. Consequently, Bank Indonesia will continue to optimise its monetary, macroprudential and payment system policy mix in order to maintain macroeconomic and financial system stability, while considering the impact on the optimilization of economic recovery. Furthermore, Bank Indonesia will strengthen policy coordination with the Government, focusing on inflation control to keep within the target range, as well as structural reforms to support sustainable economic growth. 
Bank Indonesia predicts the global economy to improve, supported by gains in the US and China, albeit several risks that need to be observed. The US economy has been buoyed by increased consumption and non-residential investment. In addition, US unemployment is low and inflation is on track to meet its long-term target. Growth in China has also accelerated, reflected by increased retail sales and private investment. On the commodity markets, the global oil price is expected to follow an upward trend, while export prices from Indonesia improved on the back of coal and various metals, including copper and lead. Looking forward, several global risks shall continue to demand vigilance, including the impact of US fiscal and international trade policy, Federal Funds Rate (FFR) hikes that could raise the cost of borrowing, economic and financial rebalancing in China, as well as geopolitical risks. 
The domestic economy remained within expectation in the fourth quarter of 2016. Actual government spending was lower than expected but consumption and investment remained solid. Externally, exports surged as trading partner economies improved and international commodity prices rebounded. Bank Indonesia expects the export gains to persist, not only supported by exports of commodities but also manufactured products, the outlook for which continue to improve. Consequently, economic growth in 2016 is predicted at around 5% (yoy). In 2017, however, the economic recovery should continue, driven by exports and investment as financing increases from bank loans and nonbank financing. On the other hand, stable household consumption is also predicted.
Indonesia’s balance of payments during the fourth quarter of 2016 was expected to record a relatively large surplus and lower than expected current account deficit. The BOP surplus was bolstered by a large capital and financial account surplus along with sound export performance. Meanwhile, the low current account deficit was supported by a large non-oil and gas trade surplus thanks to robust export performance. This brings the position of official reserve assets in Indonesia at the end of December 2016 stood at USD116.4 billion, up from USD111.5 billion the month earlier, equivalent to 8.8 months of imports or 8.4 months of imports and servicing government external debt, which is well above the international standard of three months. 
After pressures following the result of the US election, the rupiah appreciated in December as capital flowed back onto domestic financial markets. Point-to-point, the rupiah appreciated 0.59% (mtm) to close at a level of Rp13,473 per USD in line with a deluge of capital inflow, primarily to government debt securities (SUN). In contrast, outflow from the domestic stock market decreased after the FFR hike, with a reversal noted at the end of December 2016 to record an inflow. Point-to-point, in 2016, the rupiah appreciated 2.32% (ytd) on the positive investor perception of the domestic economic outlook, which attracted non-resident capital. Bank Indonesia will remain vigilant of risks from the global financial uncertainty, however, while continuing to stabilise the rupiah in line with the currency’s fundamental value and maintaining market mechanisms. 
Bank Indonesia maintained low inflation throughout 2016, towards the floor of the inflation target, namely 4±1%. CPI inflation in December 2016 was recorded at 0.42% (mtm), down from 0.47% (mtm) the month earlier. Therefore, inflation of 3.02% (yoy) was recorded for the year. Low inflation was supported by low core inflation and minimal administered prices, while inflationary pressures on volatile foods remained. Such achievements were supported by Bank Indonesia policy and increasingly solid coordination with the central and local governments to control inflation. Moving forward, efforts to control inflation will confront risks that demand vigilance, primarily in the form of administered prices adjustments along with government’s structural reform policies in energy subsidies, as well as risks of volatile food inflation. To that end, policy coordination between Bank Indonesia and the Government will constantly be strengthened.
Financial system remained stable, supported by resilience of the banking industry. In November 2016, the Capital Adequacy Ratio (CAR) was recorded at 22.8% and the liquidity ratio at 20.5%. Meanwhile, non-performing loans (NPL) were recorded at 3.2% (gross) or 1.4% (net). The looser monetary and macroprudential policy stance was able to lower deposit rate by 131 bps, working capital loan rate by 94 bps, investment loan rate by 79 bps, consumption loan rate by 23 bps during January-November 2016. Credit growth in November 2016 was recorded at 8.5% (yoy), down from 9.8% (yoy) one year earlier. On the other hand, economic financing increased through the capital market in the form of stocks (IPO and right issue), corporate bonds and medium-term notes (MTN). Deposit growth accelerated in November 2016 from 7.7% (yoy) the year earlier to 8.4% (yoy). Consequently, Bank Indonesia predicts credit growth in the 10-12% range and deposit growth at around 9-11% in 2017 in line with increased economic activity and the looser monetary and macroprudential policy stance adopted."

http://www.hedgehogs.net/pg/blog/CentralBankNews/read/11663730/malaysia-holds-rate-warns-of-bouts-of-volatility Sun, 22 Jan 2017 15:08:07 +0000 http://www.hedgehogs.net/pg/blog/CentralBankNews/read/11663730/malaysia-holds-rate-warns-of-bouts-of-volatility <![CDATA[Malaysia holds rate, warns of "bouts of volatility"]]>     Malaysia's central bank maintained its benchmark Overnight Policy Rate (OPR) at 3.0 percent and said it would continue to provide liquidity to ensure orderly financial markets as "uncertainties in the global economy, the policy environment and geopolitical developments may, however, result in bouts of volatility in the regional financial and foreign exchange markets."
    Bank Negara Malaysia (BNM), which in July 2016 cut its rate for the first time since March 2009, said volatile trading in the ringgit, and other emerging market currencies, had eased since "sharp adjustments towards the end of 2016" due to measures taken to stabilize the foreign exchange market.
     Liquidity in the banking system remains ample and financial institutions continued to operate with strong capital and liquidity buffers, the central bank said, adding that growth of financing to the private sector was consistent with the pace of economic activity.
     The exchange rate of the ringgit tumbled in the wake of the U.S. presidential election in November last year to hit lows not seen since the Asian financial crises in 1998. The ringgit breached a psychological level of 4.45 to the U.S. dollar in late November despite measures by the central bank to curb offshore ringgit trade and boost onshore trading.
    The measures brought back fears that BNM would introduce capital controls that were put in place in the late 1990s but Governor Muhammad Ibrahim said last week the central bank only wanted to reduce speculation in the currency to stabilize it and there were no plans for capital controls.
     After falling to 4.49 to the dollar in early January - down 6.7 percent since the election of Donald Trump as U.S. president - the ringgit has stabilized and was trading at 4.449 today, up 0.83 percent since the start of this year.
    Malaysia's economy bounced back in the third quarter of last year following five quarters of slowing growth and the BNM said latest data "point to continued expansion in the fourth quarter."
    Gross Domestic Product grew by an annual rate of 4.3 percent in the third quarter, up from 4.0 percent in the second quarter and the central bank said private sector activity will remain a key driver of growth, with private consumption sustained by continued growth in wages and employment.
    "On the external front, the expected improvement in exports will provide some support to growth," the bank said, adding that the economy is on track to expand as projected.
    Malaysia's government has forecast growth of 4.0 to 5.0 percent in 2017, up from a range of 4.0-4.5 percent for 2016.

    Bank Negara Malaysia issued the following statement:

"At the Monetary Policy Committee (MPC) meeting today, Bank Negara Malaysia decided to maintain the Overnight Policy Rate (OPR) at 3.00 percent.
The global economy continued to grow at a moderate pace. Economic activity in the major advanced economies has improved. In Asia, growth is supported by domestic demand amid some recovery in external demand. For 2017, the global economy is projected to expand at a slightly faster pace. The prospect of a shift towards progressive use of fiscal policy in the developed economies could lead to a more balanced policy environment that would support growth. Nevertheless, heightened uncertainty and downside risks to global growth remain, arising from risks of protectionism, geopolitical developments and commodity price volatility. These risks could also lead to episodes of increased financial market volatility.
For Malaysia, latest indicators point to continued expansion in the fourth quarter of 2016. Going forward, private sector activity will remain the key driver of growth. Private consumption is expected to be sustained by continued wage and employment growth, with support from various policy measures to raise disposable income. Investment activity, although moderating, will be supported by on-going infrastructure development projects and capital spending in the manufacturing and services sectors. On the external front, the expected improvement in exports will provide some support to growth. Overall, the economy remains on track to expand as projected.
Headline inflation averaged 2.1% in 2016 and is expected to average higher in 2017, amid the prospect of higher global oil prices. These cost factors are not expected to cause significant spillovers to the broader price trends, given the stable domestic demand conditions. Underlying inflation, as measured by the core inflation index, is therefore expected to remain stable.
The ringgit, along with other emerging market currencies, has seen a reduction in volatility since the sharp adjustments experienced towards the end of 2016. The implementation of financial market development measures has provided stability to the domestic foreign exchange market. Uncertainties in the global economy, the policy environment and geopolitical developments may, however, result in bouts of volatility in the regional financial and foreign exchange markets. In this regard, Bank Negara Malaysia will continue to provide liquidity to ensure the orderly functioning of the financial markets. Banking system liquidity remains ample. Financial institutions continue to operate with strong capital and liquidity buffers and the growth of financing to the private sector is consistent with the pace of economic activity.
At the current level of the OPR, the degree of monetary accommodativeness is consistent with the policy stance to ensure that the domestic economy continues on a steady growth path amid a stable core inflation, supported by sustained financial intermediation in the economy. While the risks of destabilising financial imbalances are contained, the MPC will monitor these risks to ensure the sustainability of the overall growth prospects. The MPC will continue to assess the balance of risks surrounding the outlook for domestic growth and inflation."