bank interest rates

Global Central Bank Monetary Policy in Review for week ended 27th April 2013

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Monetary Policy Week in Review – Apr 27, 2013: One central bank cuts, pressure grows on Europe’s politicians – Central Bank News.

Last week nine central banks took policy decisions, with Hungary continuing its rate-cutting spree and the other eight banks (Namibia, New Zealand, Philippines, Fiji, Japan, Mexico, Colombia and Trinidad & Tobago) keeping rates unchanged as pressure mounted on euro zone policy makers to get serious about reforms and speed up growth.
    A quiet exasperation over the lack of action by Europe’s policy makers turned into more forceful criticism during the annual meeting of the International Monetary Fund in Washington D.C. with signs that the dogged belief in austerity as a growth strategy is starting to break down.
    The other theme dominating central banking last week was the continuing fallout from Japan’s aggressive policy easing, which has lead to a weaker yen and upward pressure on other currencies as some of the Bank of Japan’s money looks for higher yield outside the country.
    The Bank of Korea’s governor expressed his concern over the impact of the weaker yen on the competitiveness of his country’s industry; the Bank of Thailand is considering how to reduce the upward pressure on the bath; the Reserve Bank of New Zealand said upward pressure on the overvalued kiwi dollar was growing and the Bank of Israel said money was flowing into its bonds.
    Last year’s warning by Mervyn King, the outgoing governor of the Bank of England, that 2013 could feature “actively managed exchange rates as an alternative to the use of domestic monetary policy” was prescient and slightly ominous.

    Through the first 17 weeks of this year, the overwhelming majority of the world’s central banks have kept their rates on hold: 78 percent of the 156 policy decisions taken so far by the 90 central banks followed by Central Bank News have lead to unchanged rates, slightly up from 77 percent after 16 weeks.
    Globally, 19 percent of policy decisions this year have lead to rate cuts – largely by central banks in emerging economies – unchanged from last week.
    Rate rises are still rare – there have only been six so far this year – but this number is likely to rise in the second half of the year as global growth slowly strengthens and inflationary pressures rise, especially in Southeast Asia.

    The only real sinkhole in global growth remains Europe and policy makers from around the world appear to be losing their patience with the euro zone’s lack of progress in solving its problems. 
    Through the barrage of statements and communiqués from the IMF and G20 meetings, it is clear that global policy makers have decided that Europe’s experiment with harsh austerity has gone far enough. Recession, popular dissatisfaction and growing unemployment bear witness to the strategy’s failure.
    There was a remarkable confluence of criticism of austerity last week: The validity of the academic work used to underpin pro-austerity policies was questioned; the IMF stressed that fiscal tightening should only occur at a pace that economic recovery can handle – underlining the shift away from its traditional position as an advocate of austerity – while African finance ministers insisted euro zone politicians “work harder and faster” so growth in their own economies isn’t undermined.
    The bottom line is that the fragile global economic recovery may falter without growth in Europe and this year it’s economy is set to contract for the second year in a row.
    And the criticism, all too often shouted through the streets of Athens, Madrid, Rome and Lisbon, is finally being heard by a growing number of top policy makers.
    Christine Lagarde, IMF managing director, talked of  “adjustment fatigue” and growing tensions over the fairness of public policy, while European Commission President Jose Manuel Barroso said the combination of lower spending and higher taxes may have hit the limits of public acceptance and was now contributing to the recession.
    But so far the austerity camp seems unbowed and one its leading proponents, German Chancellor Angela Merkel, even had the audacity to up the ante, saying the European Central Bank would have to raise interest rates if its policy was based purely on German conditions.
    Although Germany is doing better than many of its euro zone brethren, it’s economy is hardly in need of cooling. The German economy shrank by 0.6 percent in the fourth quarter of 2012 from the third quarter and is forecast to grow a mere 0.5 percent in 2013, it’s inflation rate fell to 1.4 percent in March, below the ECB’s target, and the unemployment rate is 5.4 percent.

HUNGARY EM 4.75% 5.00% 7.00%
NAMIBIA 5.50% 5.50% 6.00%
NEW ZEALAND DM 2.50% 2.50% 2.50%
PHILIPPINES EM 3.50% 3.50% 4.00%
FIJI 0.50% 0.50% 0.50%
JAPAN DM 0.00% 0.00% 0.10%
TRINIDAD & TOBAGO 2.75% 2.75% 3.00%
MEXICO EM 4.00% 4.00% 4.50%
COLOMBIA EM 3.25% 3.25% 5.25%
Next week (week 18) features seven central bank policy decisions, including heavyweights the United States, the European Central Bank and India, plus Angola, the Czech Republic, Romania and Uganda.
COUNTRY MSCI              DATE               RATE        1 YEAR AGO
ANGOLA 29-Apr 10.00% 10.25%
UNITED STATES DM 1-May 0.25% 0.25%
EURO AREA DM 2-May 0.75% 1.00%
CZECH REPUBLIC EM 2-May 0.05% 0.75%
ROMANIA FM 2-May 5.25% 5.25%
UGANDA 3-May 12.00% 20.00%
INDIA EM 3-May 7.50% 8.00%


Global Central Bank Monetary Policy Week in Review – Apr 20, 2013

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Monetary Policy Week in Review – Apr 20, 2013: One central bank raises rate, 1 cuts as inflation remains sticky – Central Bank News.

Last week six central banks took policy decisions with two major banks in emerging markets (Turkey and Brazil) changing their rates in opposite direction while the other four central banks (Canada, Sweden, Mozambique and Sri Lanka) kept rates steady as inflation remains sticky despite weak global growth.
    Brazil’s 25 basis point rate hike – well-flagged and overdue – was significant because it illustrates that inflationary pressures are building in some emerging markets, specifically Asian countries, and central bankers will defend their inflation-fighting credentials.
    Brazil’s move was in contrast to decisions by Canada and Sweden to further push back the time frame for rate rises, showing how the euro area’s severe crises is hampering economic recovery throughout advanced economies while growth in many emerging markets is accelerating.
    While inflation remains an issue in many emerging countries, disinflation – or deflation in the case of Japan – haunts many advanced economies as long unemployment lines holds down wage pressure along with excess industrial capacity.
    Sweden’s Riksbank specifically cited the need to keep policy rates low for longer than forecast because inflation will take longer to return to target than expected. For 2013 inflation is forecast to average a mere 0.1 percent.
    Weaker-than-expected growth is also holding back inflation in Canada, with the Bank of Canada now first expecting inflation to return to target by mid-2015, at least six months later than it expected in January.
   Turkey, which bounced back swiftly from the global financial crises but then was hit by slow growth last year, cut its rate by a larger-than-expected 50 basis points despite inflation above the central bank’s target.
    The latest central bank decisions came as policy makers gathered in Washington D.C. for the annual meeting of the International Monetary Fund.
    While the IMF trimmed its 2013 global growth forecast, it also said the global economy was taking on the characteristics of a three-speed recovery. Growth in emerging and developing markets is still strong, the U.S. is getting back on its feet, but the euro area is continuing to contract with adverse feedback loops between weak banks, weak sovereigns and low economic activity reinforcing each other.
    Through the first 16 weeks of this year, 77 percent of the 147 policy decisions taken by the 90 central banks followed by Central Bank News have lead to unchanged rates, the same ratio as after 15 weeks.
    Globally, 19 percent of policy decisions this year have lead to rate cuts – largely by central banks in emerging economies – unchanged from last week and slightly down from 20 percent the week before then.
MOZAMBIQUE 9.50% 9.50% 13.50%
SRI LANKA FM 7.50% 7.50% 7.75%
TURKEY EM 5.00% 5.50% 5.75%
BRAZIL EM 7.50% 7.25% 9.00%
SWEDEN DM 1.00% 1.00% 1.50%
CANADA DM 1.00% 1.00% 1.00%
Next week (week 17) features nine central bank policy decisions, including Hungary, Namibia, New Zealand, Philippines, Fiji, Japan (including the economic outlook), Mexico, Colombia, and Trinidad and Tobago.
COUNTRY MSCI              DATE               RATE        1 YEAR AGO
HUNGARY EM 23-Apr 5.00% 7.00%
NAMIBIA 24-Apr 5.50% 6.00%
NEW ZEALAND DM 24-Apr 2.50% 2.50%
PHILIPPINES EM 25-Apr 3.50% 4.00%
FIJI 25-Apr 0.50% 0.50%
JAPAN DM 26-Apr 0.00% 0.10%
TRINIDAD & TOBAGO 26-Apr 2.75% 3.00%
MEXICO EM 26-Apr 4.00% 4.50%
COLOMBIA EM 26-Apr 3.25% 5.25%


Turkey Central Bank News update

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Turkey cuts key rates 50 bps, inflation seen contained – Central Bank News.

Turkey’s central bank cut its main short-term interest rates by 50 basis points, saying that weak global demand and the outlook for commodity prices should “contain the upward pressures on inflation.”
    The Central Bank of the Republic of Turkey (CBRT) cut its policy rate, the one-week repo rate, to 5.0 percent from 5.50 percent along with the top and bottom rates on its daily interest rate corridor.
   The overnight borrowing rate in the corridor was cut by 50 basis points to 4.0 percent and the overnight lending rate to 7.0 percent.
    The rate on borrowing facilities for primary dealers was also cut by 50 basis points to 6.5 percent.
    The CBRT has been steadily narrowing its interest rate corridor since last September, including a 100 basis point cut in the ceiling rate last month. However, it only cut its main policy rate in December, seeking to balance the need to stimulate declining economic activity without boosting credit growth too much and encouraging the inflow of capital that looks to take advantage of the high yield.
    The CBRT said capital inflows had re-accelerated and credit growth was above the bank’s reference rate so “in order to balance the risks to financial stability, the proper policy would be to keep interest rates low while increasing foreign currency reserves via macroprudential measures.”
    In addition to cutting short-term rates, the bank will further raise its reserve options coefficients, a tool that helps the central bank control banks’ foreign exchange reserves and thus liquidity.

     Turkey’s inflation rate rose to 7.29 percent in March, slightly up from 7.03 percent in February. The CBRT targets annual inflation of 5.0 percent this year, the same as in 2012 when inflation averaged 6.2 percent.
    The central bank said demand was developing in line with expectations, with domestic demand healthy, but exports were lower. The current account deficit had increased in light of a revival in domestic demand but it expects to contain a further widening of the deficit.
    Turkey’s Gross Domestic Product stagnated in the fourth quarter from the third quarter for annual growth of 1.4 percent, down from a 1.6 percent annual rate in the third quarter.

    The Turkish economy is estimated to have expanded by 2.5 percent in 2012, down from 8.5 percent in 2011. The CBRT forecasts 2013 growth of 4 percent or higher.
    In the first four months of this year, the CRBR has cut the overnight lending rate by 200 basis points and the overnight borrowing rate by 100 basis points. The short-term rates have been declining during the last decade from 2002 when the borrowing rate was 57 percent and the lending rate 62 percent.
    In 2012 the CBRT started cutting the overnight lending rate from 12.50 percent while keeping the borrowing rate steady at 5.0 percent.
    Earlier this month, the central bank’s governor, Erdem Basci, held out the hope for “a measured rate cut, ” and a few day’s later Prime Minister Recep Erdogan said interest rates around 6 percent were too high in light of a decline in inflation to around 6 percent from 63 percent in 2002.


South Korea Central Bank Monetary policy meet review

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Korea holds rate, keeps eye on impact of geopolitical risks – Central Bank News.

South Korea’s central bank held its base rate steady at 2.75 percent, saying the domestic economy is  continuing to expand on the back of a recovery in exports and investments but the pace is weak and consumption has declined further, keeping inflation low.
    But the Bank of Korea (BOK), which cut rates twice in 2012 by a total of 50 basis points, said it would “closely monitor external risk factors and Korea’s geopolitical risk and any consequent changes in financial and economic conditions.”
    Financial markets were split in their expectations to the BOK’s decision, with a growing number of economists expecting a cut to boost confidence in light of the recent threats from North Korea, the growing competition from Japan and its weaker yen, and the Korean government’s pressure for the central bank to stimulate the economy to avoid a slowdown in the second half of the year.
    The BOK’s assessment of the economic outlook is largely steady from last month, when it also said it expected the economy to operate below its potential “for a considerable time, due mostly to the slow recovery of the global economy.” This month, however, it added that the influence of the weak yen would also contribute to the negative output gap.
     Nevertheless, the BOK expects the global economy to sustain its modest recovery, based on continued growth in the U.S. and an improvement in China and emerging markets. 

    There are still downside risks to the global economy, the BOK said, referring to a delay in the economic recovery in the euro area, which remains sluggish, and the impact of fiscal consolidation in the United States.
    The BOK added that stock prices had fallen substantially and the Korean won had “depreciated significantly” against the U.S. dollar as foreigners had withdrawn some investment funds in connection with “the reemergence of euro area risk and with the increase in geopolitical risk in Korea.”
    South Korea’s headline inflation rate has been easing recently and dropped to 1.3 percent in March from 1.4 percent in February and January’s 1.5 percent, well below the BOK’s 2.5-3.5 percent range for the 2013-2015 period. Core inflation rose slightly to 1.5 percent in March from 1.3 percent.
    Although inflation remains low due to weak demand, the BOK said it expects inflation to rise as downward pressure from “institutional factors” disappear.
    South Korea’s economy expanded by 2.0 percent in 2012, down from 2011’s 3.6 percent, with Gross Domestic Product in the fourth quarter up by 0.3 percent from the third quarter for annual growth rate of 1.5 percent.

   The government recently cut its 2013 growth forecast to 2.3 percent, below the BOK’s forecast of 2.8 percent from January, and is now planning an additional budget, not only to make up for the expected revenue shortfall but also to add stimulus.


Global Central Bank Monetary Policy Review for week ended – Apr 6, 2013

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Global Central Bank Monetary Policy Review :

Last week 7 Countries Central Bank met #Australia #Russia #Thailand #Uganda #Japan #UnitedKingdom #Euro zone 

This week Central Banker from 8 Countries meet : #SriLanka #Poland #SouthKorea #Indonesia #Serbia #Peru #Chile #Singapore hold their Monetary Policy meet

Monetary Policy Week in Review – Apr 6, 2013: BOJ shows central bankers are still willing to take bold, creative steps – Central Bank News.

Monetary Policy Week in Review – Apr 6, 2013: BOJ shows central bankers are still willing to take bold, creative steps

    Three new chapters in the history of monetary policy were opened this week, showing that central bankers remain fearless, creative and willing to take bold steps to revive economic growth.
The main example was the Bank of Japan’s embrace of large-scale asset purchases as a way to banish deflation.
However, the Central Bank of Hungary’s effort to directly aid small businesses was also indicative of a willingness to think outside the box just as the Central Bank of Barbados showed a lack of dogmatic thinking by questioning its ability to control inflation through interest rates.
It also became clear this week that the European Central Bank (ECB) is likely to join the growing list of banks that are employing new and creative policies to solve the issue of how to channel funds to private businesses when the banking system is ailing.
At the core of these new policies is the lasting damage from the Global Financial Crises. The banking system, the traditional conduit between central banks and private businesses, is traumatized, saddled with debt and too little capital, reticent to lend to new business ventures.
ECB President Mario Draghi said this week he was considering various instruments and tools to stimulate growth, including those used by central banks abroad, and was ready to act.
Though the multinational structure of the ECB makes it less agile than other central banks, Draghi’s statement last July that the ECB was “ready to do whatever it takes to preserve the euro” showed the same boldness and fearlessness that the BOJ’s new governor displayed this week.

The BOJ surprised on two fronts: The massive size of its asset purchases and the radical shift in its policy framework.
Over the next two years, the BOJ aims to purchase some 130 trillion yen of assets (US$1.33 trillion) including government bonds, exchange-traded-funds (ETFs) and real estate investment trusts (REITs), expanding its balance sheet to 290 trillion yen ($2.97 trillion) from 158 trillion at the end of 2012.
On a monthly basis, the BOJ plans to buy some 7 trillion yen ($72 billion) of mainly longer-term Japanese government bonds, which means it will be buying some 70 percent of new debt issued.
To put that into perspective, the U.S. Federal Reserve has bought some $2.5 trillion in mortgage and Treasuries over the last five years and is currently purchasing assets worth $85 billion a month. The Fed’s balance sheet is currently $3.2 trillion.
However, the U.S. economy is three times the size of the Japanese economy.
The other novel aspect of the BOJ’s “new phase of monetary easing both in terms of quantity and quality” was the change in its operational target.
Instead of focusing on the overnight call rate, it will now focus on the monetary base, a measure that includes coins and notes in circulation and banks’ reserves at the BOJ.
The call rate has been largely symbolic since December 2008 when it was cut to 0.10 percent. In October 2010 it was then trimmed to between zero and 0.10 percent and now the BOJ is drawing the ultimate consequence of an impaired interest rate channel and scrapping it altogether.
It remains to be seen whether other central banks, notably the Bank of England, which has held rates at effectively zero for five years, will draw inspiration from the BOJ.
The BOE, which left rates and asset purchase targets unchanged this week, is currently considering introducing economic thresholds as part of its framework and may go even further once its new governor, Mark Carney, takes over in June.

 Last week seven central banks took policy decisions with six banks (AustraliaRussia,ThailandUganda, the United Kingdom and the euro area) keeping rates on hold.
Although Japan is no longer targeting the uncollateralized overnight call rate but rater the monetary base, it is being counted as having cut rates to zero from the previous 0-0.10 percent in order to capture its decision to ease its policy stance.
Through the first 14 weeks of the year, 77 percent of the 133 policy decisions taken by the 90 central banks followed by Central Bank News lead to unchanged rates, the same ratio as after the first 13 weeks.
Globally, 20 percent of policy decisions this year have lead to rate cuts – largely by central banks in emerging economies and now Japan as the first central bank in developed markets – up from 19.0 percent last week.
Of the 26 rate cuts worldwide so far this year, 38 percent have come from central banks in emerging markets, down from 42 percent last week.


AUSTRALIA DM 3.00% 3.00% 4.25%
RUSSIA EM 8.25% 8.25% 8.00%
THAILAND EM 2.75% 2.75% 3.00%
UGANDA 12.00% 12.00% 21.00%
JAPAN DM 0.00% 0.10% 0.10%
UNITED KINGDOM DM 0.50% 0.50% 0.50%
EURO AREA DM 0.75% 0.75% 1.00%

    NEXT WEEK (week 15) features six central bank policy decisions, including Sri Lanka’s tentatively scheduled meeting, Barbados’ first quarter review, and meetings by Poland, South Korea, Indonesia, Serbia, Peru, Chile and Singapore.

COUNTRY MSCI          MEETING              RATE        1 YEAR AGO
SRI LANKA FM 9-Apr 7.50% 7.75%
POLAND EM 10-Apr 3.25% 4.50%
SOUTH KOREA EM 11-Apr 2.75% 3.25%
INDONESIA EM 11-Apr 5.75% 5.75%
SERBIA FM 11-Apr 11.75% 9.50%
PERU EM 11-Apr 4.25% 4.25%
CHILE EM 11-Apr 5.00% 5.00%


Monetary Policy Week in Review for last week – Central Bank News

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Monetary Policy Week in Review – Mar 30, 2013: Chance of global crises eases as 3 banks cut rates, 8 hold, 1 raises – Central Bank News.

Last week 12 central banks took policy decisions with three banks cutting rates (Vietnam,Hungary and Georgia), eight keeping rates on hold (Israel, AngolaTurkeyMoroccoTaiwan,ZambiaCzech Republic and Romania) and Tunisia becoming the fifth central bank to raise rates this year.
    The main message gleaned from central banks last week was that the global economy continues to recover, but every time it seems to pick up a little steam, confidence is undermined by developments in Europe, the only major risk to a sustained recovery. 
    But like a resilient boxer, the global economy dusts itself off and gets back on its feet, adjusting to the fact that large bank depositors in Europe may have to share the costs of future bank bailouts with tax payers, the main lesson from Cyprus.
    After the shock from this major but ultimately positive policy shift, there was a sense of relief that Europe had muddled through, once again, and financial markets had taken the events in stride.
     “It appears that there has been a decline in the probability of a crises occurring, a development which has reduced the high level of uncertainty that prevailed in the last year,” the Bank of Israel said in its statement.
    But as both Israel and the Reserve Bank of Australia (RBA) acknowledged, the global economic picture remains mixed and “it is too early to say whether the improved market sentiment over the past six months is the beginning of a sustained recovery, or merely a temporary upswing.”
    The challenges facing Europe’s policy makers is considerable. Not only do they have to restore financial health to governments and banks, they must also find ways to strengthen economic growth at a time of growing challenges from emerging markets.
    “The renewed market tension associated with the handling of the sovereign and banking crisis in Cyprus in recent weeks has provided a reminder of the political, economic and social challenges of resolving the pervasive fiscal and banking sector problems,” the RBA said in its financial review.
     In the latest manifestation of the structural shift in the global economy – illustrated by a stagnating Europe and growing emerging markets – the leaders of Brazil, Russia, India, and South Africa and China agreed to establish a New Development Bank.
    The leaders of these five countries, known as the BRICS countries, acknowledged that their infrastructure has to be improved but currently there is insufficient long-term and foreign investment in capital stock.
    Acknowledging their role and responsibility for global governance, the BRICS leaders said a bank, which now will be established, would use global financial resources more productively and thus make a positive contribution in boosting global demand.
    They also agreed to establish a $100 billion financial reserve arrangement that would “help BRICS countries forestall short-term liquidity pressures, provide mutual support and further strengthen financial stability,” the leaders said in their March 27 Durban declaration.
     The Contingent Reserve Arrangement (CRA) would help strengthen the global financial safety net during times of market turmoil.
    Through the first 13 weeks of the year, 77 percent of the 125 policy decisions taken by the 90 central banks followed by Central Bank News lead to unchanged rates, marginally down from 78 percent after the first 11 weeks.
    Globally, 19 percent of policy decisions this year have lead to rate cuts, largely by central banks in emerging economies, a ratio that was steady from last week.
    Of the 24 rate cuts worldwide so far this year, 42 percent have come from central banks in emerging markets and the remainder from frontier markets and other countries.
    No central banks in developed markets have cut rates this year, but this is largely because many of those central banks slashed rates to effectively zero five years ago and then switched to various forms of so-called quantitative easing to stimulate demand.
ISRAEL DM 1.75% 1.75% 2.50%
VIETNAM FM 8.00% 9.00% 14.00%
ANGOLA 10.00% 10.00% 10.25%
TURKEY EM 5.50% 5.50% 5.75%
MOROCCO EM 3.00% 3.00% 3.00%
HUNGARY EM 5.00% 5.25% 7.00%
GEORGIA 4.50% 4.75% 6.50%
TAIWAN EM 1.88% 1.88% 1.88%
ZAMBIA 9.25% 9.25% 9.00%
CZECH REPUBLIC EM 0.05% 0.05% 0.75%
TUNISIA FM 4.00% 3.75% 3.50%
ROMANIA FM 5.25% 5.25% 5.25%
Next week (week 14) features six central bank policy decisions, including Australia, Thailand, Uganda, Japan, United Kingdom and the euro area.
COUNTRY MSCI          MEETING               RATE        1 YEAR AGO
AUSTRALIA DM 2-Apr 3.00% 4.25%
THAILAND EM 3-Apr 2.75% 3.00%
UGANDA 3-Apr 12.00% 21.00%
JAPAN DM 4-Apr 0.10% 0.10%
UNITED KINGDOM DM 4-Apr 0.50% 0.50%
EURO AREA DM 4-Apr 0.75% 1.00%


Nigeria Central Bank holds rate steady . . . .

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Nigeria holds rate steady, cut would send wrong signal – Central Bank News.

Nigeria’s central bank held its monetary policy rate (MPR) steady at 12.0 percent, as expected, with its policy committee rejecting a proposal to cut rates due to slower growth and core inflation because “it could send the wrong signals of a premature termination of an appropriate tight monetary stance” and “signal the preference for a higher inflation rate.
    The Central Bank of Nigeria (CBN), which started tightening policy in September 2010 and last raised rates by 275 basis points in October 2011, said rising inflationary pressures in February indicated “factors that could constitute a threat to inflation in the medium term.”
    The bank’s monetary policy committee voted by 9:3 to hold rates steady and rejected a proposal to raise rates as there were no major inflationary concerns at this time. 
    Nigeria’s inflation rate ticked up to 9.5 percent in inflation from 9.0 percent in January, largely reflecting the base effect of the first and second round impact of the removal of fuel subsidy in January 2012 and thus sending a clear signal that there was still a risk of inflation in the near-to-medium term.

    The central bank targets inflation of 10 percent but is working to get inflation toward 6 percent.
    Taking note of an approximate 5 percent rise in the 2013 federal government budget, which is based on an oil benchmark price of $79, “potentially slows down the pace of fiscal consolidation.”
    Nigeria’s Gross Domestic Product rose by an annual rate of 6.99 percent in the fourth quarter, up from 6.48 percent in the third quarter. 
   For 2012 Nigeria’s real GDP growth eased to 6.58 percent from 7.43 percent in 2011, mainly due to a 0.91 percent contraction in the oil sector. The main driver of growth was thus the non-oil sector, with agriculture contributing with 1.37 percent, wholesale and retail trade with 2.19 percent and services with 2.10 percent, the central bank said.
    Growth projections for this year are “relatively robust,” the bank said, noting there are risks of “increased levels of corruption and impunity in the country, insecurity particularly in the northern part of the country, as well as mixed signals from power and petroleum sector reforms.”
    The central bank said growth in the domestic capital market, where bond yields have been declining steadily and equity prices were trending upwards, was due to the impact of “huge capital inflows” and quantitative easing, especially in the U.S. and the EU “is already creating a potential new round of asset bubbles globally.”
    The principal risk to stability from these inflows can only be addressed through fiscal consolidation and structural reform and without these the economy will not be able to attract the long term capital inflow that can help insulate the economy from the risks of external shocks and capital flow reversals, the central bank said.

Russian Central Bank News

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Russia holds rate steady, says rise in inflation poses risks – Central Bank News.

Russia’s central bank held its benchmark refinancing rate steady at 8.25 percent, as expected, saying the rise in inflation was expected and poses risks while economic growth is continuing to slow down.
    The Bank of Russia, which raised its rate by 25 basis points in 2012 and is under pressure to cut rates to boost growth, warned that if inflation remains above target for a prolonged period it may affect expectations and thus poses risks, in particular in light of planned increases in the tariffs of monopolies.
    However, the central bank omitted last month’s phrase that the risk of a significant slowdown from tighter monetary conditions were considered minor, indicating a slightly less hawkish stance.
    Russia’s inflation continued to climb in February, hitting an 18-month high of 7.3 percent, up from January’s 7.1 percent.
    The central bank repeated that it expects inflation to exceed its 5-6 percent target in the first half of 2013 due to higher food prices and certain regulated prices.
     In 2012 prices rose 5.1 percent and the central bank targets 4-5 percent inflation in 2014.

     The Bank’s Chairman Sergey Ignatiev has lead a dogged campaign against inflation which started accelerating in mid-2012 after easing in the second half of 2011. Ignatiev is retiring in June and is being replaced by Elvira Nabiullina, economic aide to Russian President Vladimir Putin.
    “The dynamics of the key macroeconomic indicators in January 2013 point to a continuing slowdown in economic growth,” the central bank said, adding that investment in productive capacity was subdued, retail sales decelerated and industrial output decreased.
    At the same time, economic confidence remains positive and labor market conditions, along with credit expansion, is providing support to domestic demand, the bank added.
     Russia’s Gross Domestic Product rose by 0.6 percent in the third quarter from the second for annual growth of 2.9 percent, down from the second quarter’s 4.0 percent rate. In 2012 the economy expanded by 3.4 percent.
     It is the weakest growth rate since 2010 and economists expect the bank to start cutting rates after inflation begins to ease over the next few months.
    The appointment of a Putin ally as new bank president has further stoked these expectations with some economists expecting the bank to cut rates sooner rather than later.

Switzerland’s Central Bank News

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Swiss keep FX, interest rate targets, cut inflation forecast – Central Bank News.

 Switzerland’s central bank maintained its interest rate and exchange rate targets, as expected, and said the downside risks to the Swiss economy remain considerable while revising downwards its inflation forecast.
    The Swiss National Bank (SNB) kept its target range for three-month Libor at zero to 0.25 percent and repeated its pledge to “buy foreign currency in unlimited quantities” to keep the Swiss franc below 1.20 per euro.
    The cap on the Swiss franc was introduced in September 2011 as jittery investors from the euro zone sought refuge in Swiss assets, pushing up the value of the Swiss franc and negatively affecting the competitiveness of Swiss industry.
    Switzerland’s headline inflation rate in February was minus 0.3 percent, the 17th month in a row with deflation. In 2012 the average inflation rate was minus 0.7 percent
    The SNB now expects an inflation rate of minus 0.2 percent for 2013, plus 0.2 percent for 2014 and 0.7 percent for 2015. This compares with its previous forecast of 0.1 percent in 2013 and 0.4 percent in 2014.
    “Under this assumption, the Swiss franc weakens over the forecast period,” the SNB said, adding that “in the foreseeable future, therefore, there continues to be no threat of inflation in Switzerland.”

    Switzerland’s economic growth slowed as expected in the fourth quarter, but the SNB said it continues to expect growth of 1.0-1.5 percent in 2013.
    Gross Domestic Product expanded by 0.2 percent in the fourth quarter from the third, for annual growth of 1.4 percent, up from 1.2 percent.
    “Downside risks to the Swiss economy remain considerable,” the SNB said, adding that tensions in the euro area may rise again and uncertainty about the future of fiscal policies in many advanced countries is dampening consumer and investment confidence, posing risks to growth.
    “The global economic situation and sentiment on the financial markets therefore remain vulnerable,” the SNB said.

Global Monetary Policy Rates – February 2013 : Global Central Bank News

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Global Monetary Policy Rates – Feb. 2013: Rates decline further but pace slows as growth prospects improve – Central Bank News.

 Global interest rates declined further in February as six central banks cut rates by a total of 150 basis points, pushing the average global monetary policy rate down to 5.86 percent from January’s 5.88 percent and December’s 5.92 percent.
    The pace of rate cuts cooled from January when the 90 central banks followed by Central Bank News trimmed rates by a total of 342 basis points, as many central banks start to shift towards a more neutral stance to gauge the impact of last year’s rate cuts, U.S. budget cuts and Europe’s recession.
    Only one central bank raised rates in February: Serbia, which has now raised rates by 50 basis points this year, continuing its dogged fight against inflation.
    Apart from Denmark, which raised its rate in January for exchange rate reasons, Serbia is the only central bank worldwide to have tightened policy this year, illustrating how weak global demand is keeping inflation at bay and allowing central banks to cut interest rates to stimulate growth.
    Declining inflation rates and subdued upward pressure was specifically cited by five of this month’s rate cutters (Georgia, Azerbaijan, Poland, Hungary and Colombia) in their policy statements. 
    Nevertheless, some central banks are starting to voice concern over inflationary pressures, especially Brazil, Russia and Malaysia, while China has been draining funds from the banking system to temper the rise in inflation.
    While there are still major risks to the global economic recovery, the overall picture of the global economy is one of brightening prospects, with the U.S., China and emerging markets growing stronger while Europe is weakening.
    The Reserve Bank of Australia (RBA) and the Bank of Israel (BOI) typify those central banks that are in a holding pattern. After last year’s sizable rate cuts, their economies are adjusting with the RBA saying the full impact of “significant easing” is yet to come while the BOI notes it’s too early to tell whether the economy has reached a turning point.
    Asia remains the hub for global growth, with a pickup in China’s economic activity cited by both Indonesia and far-away Chile as helping their exports. South Korea, Thailand, Japan and Sweden also noted improving exports.
     New Zealand, whose strong currency is helping curtain inflation, is also more upbeat about its economic prospects and keeping a close eye on house prices for any signs of overheating.


KENYA FM 9.50% -150
MONGOLIA 12.50% -75
COLOMBIA EM 3.75% -50
GEORGIA 4.75% -50
HUNGARY EM 5.25% -50
JAMAICA 5.75% -50
POLAND EM 3.75% -50
AZERBAIJAN 4.75% -25
ALBANIA 3.75% -25
ANGOLA 10.00% -25
INDIA EM 7.75% -25
MACEDONIA 3.50% -25
BULGARIA FM 0.01% -2