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Brazil Central Bank Cuts Rate Another 50bps to 11.50%

October 20, 2011 by CentralBankNews   Comments (0)

Central Bank News - Brazil Monetary Policy RateThe Banco Central Do Brasil dropped the Selic interest rate by another 50 basis points to 11.50% from 12.00% previously.  In its statement, Brazil's Central Bank Monetary Policy Committee (Copom) said [translated]: "Continuing the process of adjusting monetary conditions, the Committee decided unanimously to reduce the Selic rate to 11.50% pa, without bias.  The Monetary Policy Committee believes that the timely mitigate the effects coming from a more restrictive global environment, a moderate adjustment in the level of the base rate is consistent with the scenario of convergence of inflation to the target in 2012."

Brazil's central bank previously also cut the rate by 50 basis points, after raising the Selic rate by 25 basis points to 12.50% at the June Copom meeting this year, which at the time amounted to total tightening for the year of 175 basis points (now net tightening of 75bps).  Brazil reported an annual inflation rate of 7.31% in September, compared to 7.23% in August, 6.87% in July, 6.71% in June, and 6.55% in May, and just outside the official inflation target of 4.50% +/-2% (2.5-6.5%).  

The Brazilian government is forecasting economic growth this year of 4.5-5%, compared to GDP growth of 7.5% during 2010.  The "BRIC" emerging market economy grew 0.8% q/q in the June quarter (1.3% in March), placing annual growth at 3.1% (4.2% in Q1).  The Brazilian Real (BRL) has weakened about 6% against the US dollar so far this year, while the USDBRL exchange rate last traded around 1.77

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Bank of Thailand Keeps Rate at 3.50%

October 20, 2011 by CentralBankNews   Comments (0)

The Bank of Thailand held its benchmark 1-day bond repurchase rate unchanged at 3.50%.  Bank of Thailand Assistant Governor, Mr. Paiboon Kittisrikangwan, said: "The MPC deemed that the current level of the policy rate is appropriate in addressing upcoming inflationary pressure  and supporting economic adjustments amidst heightened uncertainty in the global economy. Meanwhile, with the floods not yet over, their impact on the economy was not fully evident. The MPC therefore voted 6 to 1 to hold the policy interest rate at the current level of 3.50 per cent, with one vote in favour of a 0.25 per cent decrease. The MPC would remain vigilant in monitoring developments of risks and stand ready to take appropriate policy actions."

The Bank of Thailand raised the rate to 3.50% at its previous meeting, and increased the interest rate in July this year by 25 basis points to 3.25%, continuing a string of monetary policy tightening measures, with the repo rate now 150 basis points higher than the start of the year.  Thailand reported core inflation of 2.92% in September, compared to 2.6% in June, 2.48% in May, and 2.07% in April, according to the Commerce Ministry.  Headline inflation was 4.29% in August, 4.08% in July, 4.1% in June, compared to 4.19% in May, and 4.04% in April.  The Bank of Thailand has an inflation target range of 0.5% to 3.0%.  

The Thai economy contracted -0.2% in the second quarter, after growing 2% in the March quarter, placing annual GDP growth at 2.6% (3.2% in the previous quarter).  The Thai baht (THB) has weakened about 2% against the US dollar this year, the USDTHB exchange rate last traded around 31


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Norwegian Central Bank Holds Rate at 2.25%

October 20, 2011 by CentralBankNews   Comments (0)

Norway's central bank, Norges Bank, held its key monetary policy rate steady at 2.25%, and signaled no changes.  The Bank's Deputy Governor, Jan F. Qvigstad, said: "The Executive Board is of the view that the outlook and the balance of risks now suggest that the key policy rate should be kept at the current level for some time ahead. If the economic unrest abroad intensifies, money market premiums remain high and the outlook for growth and inflation weakens further, the key rate may be reduced. If financial market turbulence subsides and there are prospects of higher growth and inflation, the key rate may rise." 

At its previous meeting the Bank held the key policy rate unchanged, after increasing the interest rate by 25 basis points to 2.25% in May.  The Bank expects inflation to remain relatively low, but to progress towards the 2.5 percent inflation target (but with due upside inflation risks); Norway reported annual inflation of 1.6% in September, 1.3% in August, 1.6% in July, 1.3% in June, 1.6% in May, and 1.3% in April this year.  

Norway's economy grew by 0.4% in the June quarter (-0.6% in Q1 this year), placing GDP growth at -0.4% on an annual basis (+0.9% in Q1). The Norwegian krone has gained about 4% against the US dollar this year, while the USDNOK exchange rate last traded around 5.64

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Things worth reading: 20th October 2011

October 20, 2011 by skinnercm   Comments (0)

Things we're reading today include:


Clear and present danger [HFM Week]

October 20, 2011 by mikeohara   Comments (0)

Proposals for a tax on financial transactions have been on the periphery of the political agenda for a while. But with renewed support for the tax from the EU President, it may be time for the hedge fund industry to seriously consider the impact of such a measure 

Amid the flood of post-2008 industry regulation, proposals for a new Europe-wide tax on all financial transactions had gone by largely unnoticed until last month. EU president José Manuel Barroso’s speech in support brought the potential levy to wider attention, bringing what had previously been a distant threat considerably closer to becoming a reality. It seems the proposed Financial Transactions Tax (FTT), which will be next discussed when the G20 meets in November, has almost crept up on the industry.


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