Uganda’s central bank kept its Central Bank Rate (CBR) steady at 12.0 percent for the fourth month in a row, saying upside inflationary risks had risen slightly but economic growth was below potential, credit growth was weak and the exchange rate stronger, factors that mitigate inflationary pressures.
The Bank of Uganda (BOU), which cut its CBR rate by 1100 basis points last year as inflation eased, said its forecast for “annual core inflation over the next 12-18 months remains largely unchanged at around 5 percent, though the upside risks have increased somewhat.”
Uganda’s headline inflation rate eased to 3.4 percent in February from January’s 4.9 percent due to lower food prices and annual core inflation was largely flat at 5.5 percent from January’s 5.6 percent.
“The monthly core inflation, however, accelerated, pointing to a buildup of core inflationary pressures that may need to be checked, if sustained,” the BOU said in a statement.
The central bank targets annual inflation of around 5 percent.
The BOU said growth in monetary aggregates continued to recover at a modest rate but shilling-denomined loans to the private sector remained stagnant due to high lending rates and the difficulties facing companies.
“Although real output is still below potential, real GDP growth is projected to gradually recover in 2013 and 2014; a projection which is supported by recent trends in the Composite Index of Economic Activity, that point to signs of increased buoyancy in the economy,” the bank added.
Uganda’s Gross Domestic Product expanded by 1.8 percent in the third quarter of 2012 from the second quarter for annual growth of 2.8 percent, down from 3.2 percent in the second quarter.
|COUNTRY||MSCI||NEW RATE||OLD RATE||1 YEAR AGO|
|TRINIDAD & TOBAGO||2.75%||2.75%||3.00%|
|COUNTRY||MSCI||MEETING||RATE||1 YEAR AGO|
The Central Bank of the Dominican Republic (CBDR) kept its Monetary Policy Reference (MPR) rate steady at 5.0 percent as inflation is forecast to be within the bank’s target this year and next and economic growth is also in line with expectations.
The CBDR, which cut its rate by 175 basis points in 2012 but also left the rate unchanged last month, said the domestic economy expanded by 3.9 percent last year, higher than the average in Latin America and liquidity in international financial markets was good, which could help the flow of capital to emerging economies. In 2011 the Dominican Republic’s economy grew by 4.5 percent.
“Credit to the private sector in the national currency continues to show a recovery and projections suggest that by the end of the year the funding would grow faster than nominal GDP,” the central bank said, adding that higher credit would allow faster recovery in consumption and private investment.
Inflation in the Dominican Republic rose to by a monthly 1.26 percent in January to an annual rate of 4.76 percent, up from December’s 3.9 percent, due to the impact of tax reform, the bank said.
The CBDR targets inflation of 5.0 percent, plus/minus one percentage point in 2013 and 4.5 percent, plus/minus one percentage point, in 2014.
The central bank of Trinidad and Tobago held its benchmark repo rate steady at 2.75 percent, saying its current accommodative policy stance was appropriate in light of contained inflationary pressures and the expectation that economic activity will improve in 2013.
The Central Bank of Trinidad & Tobago, which cut its rate by 25 basis points in 2012, said headline inflation rose by 7.3 percent in January, slightly above December’s 7.2 percent with food inflation up an annual 13.8 percent from 12.7 percent due to faster price increases for most food and vegetables.
The core inflation rate eased to a 2.2 percent rate in January from December’s 3.1 percent.
Private sector credit slowed down unexpectedly towards the end of 2012 after a slow but steady rise earlier in the year with the growth rate down to 2.1 percent in December from 3.8 percent in November and a 0.8 percent fall in business lending following a 2.6 percent rise in November.
“With underlying inflationary pressures still well contained and continuing expectation for a turnaround in economic activity in 2013, the Bank views its present accommodative monetary stance as appropriate,” the central bank said.
Last month the governor of the central bank said he was cautiously optimistic for 2013 and forecast economic growth of 2.5 percent.
Trinidad & Tobago’s Gross Domestic Product contracted by an annual 1.79 percent in the second quarter of 2012, wider than the 0.49 percent contraction in the first quarter.
Zambia’s central bank held its policy rate steady at 9.25 percent, saying in a brief statement that it had noted the moderation in inflationary risks to inflation in March “mainly due to continued improvement in the supply of maize to millers by the Food Reserve Agency coupled with the expected increase in fish supply follow the lifting of annual fishing ban.”
The Bank of Zambia, which raised its policy rate by 25 basis points in 2012, also said a stable supply of vegetables was expected to moderate inflationary pressures.
“This is in spite of some inflationary risks associated with the cost push pressures arising from lagged pass-through effects of the deprecation of the Kwacha,” the bank said in a statement.
The kwacha was rebased on January 1 and the central bank has been selling dollars in recent months to support the local currency.
Zambia’s inflation rate eased to 7.0 percent in January from 7.3 percent in December
Jamaica’s central bank cut its policy rate by 50 basis points to 5.75 percent, effective Feb. 25, saying the move was in light of the “generally weak economic conditions” and the government’s recent approval of debt reduction measures.
“These factors will have a dampening effect on inflationary impulses,” the Bank of Jamaica said in a statement from Feb. 22.
The cut in the policy rate – the rate payable on the Bank of Jamaica’s 30-day Certificates of Deposit – is in line with the reduction in the rate on government securities on the National Debt Exchange.
“These actions have occurred against the background of a staff level agreement between the Government and the International Monetary Fund on a medium- term economic programme,” the central bank said.
Earlier this month the IMF and Jamaica reached a staff-level agreement on a $175 million economic reform program aimed at cutting Jamaica’s “unsustainable debt burden, which has undermined confidence and elevated risks to economic stability,” the IMF said on Feb. 15.
The IMF’s executive board will take a final decision on the agreement by the end of March, subject to the Jamaican government carrying out some of the agreed measures, including a debt exchange that involves private investors, fiscal tightening and structural reform.
“Over the last three decades, the Jamaican economy has experienced very low economic growth, declining productivity, and reduced international competitiveness,” the IMF said, adding the high cost of servicing debt has limited the government’s ability to provide services that are needed to achieve sustained rates of growth.
Jamaica’s Gross Domestic Product rose by 0.2 percent in the third quarter from the second quarter for annual contraction of 0.2 percent, the same rate as in the second quarter.
In its latest quarterly monetary policy report, the Bank of Jamaica estimated that the economy contracted by up to 1.0 percent in the fourth quarter due to the impact of Hurricane Sandy, the postponement of some projects and weak global and domestic demand.
For the first quarter of 2013, the central bank forecasts an expansion of the economy by 0.0-1.0 percent following four consecutive quarters of decline. For the 2012/13 fiscal year, which ends March 30, the central bank forecasts Jamaica’s GDP at minus 0.5 to plus 0.5 percent.
Jamaica’s inflation rate rose to 8.4 percent in January from 8.02 percent in December and the bank forecast inflation in the first quarter of 2013 of 2-3 percent. For the 2012/13 fiscal year, inflation is forecast in a range of 7.5-9.5 percent, a level the bank described as in its “desired range.”
Last month Fitch Ratings lowered Jamaica’s credit outlook to negative, saying the sustained erosion of its international liquidity position had reduced the government’s capacity to manage external and fiscal pressures.
Jamaica’s net international reserves fell by $131.7 million to $125.6 million with gross reserves at $980.8 million at the end of December, representing 13.2 weeks of imports, according to the central bank.