Mozambique Central Bank news

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Mozambique holds rate steady, signs of slower activity – Central Bank News.

Mozambique’s central bank held its benchmark standing facility rate steady at 9.50 percent, saying it would intervene in money markets to ensure that the monetary base does not exceed 39.70 billion meticais by the end of May compared with 38.81 billion at the end of April.
    The Bank of Mozambique (CPMO), which has held its rate steady this year after cutting by 550 basis points in 2012, said indicators of the economic climate pointed to lower economic activity, interrupting the upward trend that had been seen since July last year, while expectations regarding demand also showed a decline though employment prospects remained positive.
    Mozambique’s inflation rate rose to 4.79 percent in April, up from 4.27 percent, though well below a peak of 16.6 percent at the end of 2010.
    “The behavior of inflation in the first four months of the year reflects a scenario of a difficult early year, marked by floods that affected the food supply in some markets, especially fruits and vegetables, as well as the increase in average prices of some commodities in the international market, which weighed on domestic inflation, without neglecting the strengthening of the U.S. dollar in the domestic foreign exchange market,” the CPMO said.

    Following its recent visit to Mozambique, the International Monetary Fund (IMF) forecast that inflation would remain around 5-6 percent in the medium term despite the declining trend that was interrupted by the floods.
    The IMF said Mozambique’s economy remains robust, “reflecting the rapid expansion in coal production as well as in financial services, transport and communications, and agriculture.” 
      Last month the central bank cut its 2013 growth forecast to 7 percent from a previous 8 percent due to extensive flooding in the southern and central areas of the country in the first few months of the year, which affected mining output and agriculture. In 2012 the economy grew by 7.4 percent.
    Mozambique’s Gross Domestic Product expanded by 2.3 percent in fourth quarter of 2012 for annual growth of 8.3 percent, up from a rate of 6.9 percent in the third quarter.
    The IMF also forecast that Mozambique’s economy would expand by around 7 percent this year as mining expands and agricultural production recovers from the floods.
     The central bank said the metical was quoted at 30.02 against the U.S. dollar on the last day of April, equivalent to a monthly appreciation of 0.20 percent compared with a depreciation of 0.30 percent in the previous month, taking the cumulative and annual depreciation to 1.73 percent and 9.4 percent, respectively.


ECB European Central Bank cuts rate by 25 bps to 0.50%

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ECB cuts rate by 25 bps to 0.50% – Central Bank News.

The European Central Bank (ECB) cut the rate on its benchmark refinancing facility by 25 basis points to 0.50 percent, as widely expected, along with a 50 basis point cut on the rate on its marginal lending facility to 1.0 percent. The rate on its deposit facility will remain steady at 0.0 percent, the ECB said in a brief statement.
   ECB President Mario Draghi will comment on the decision by the ECB council at a press conference later today.
    Speculation had intensified in recent days that the ECB would cut rates following news that the inflation rate for the 17 nations sharing the single currency fell to 1.2 percent in April, the lowest since February 2010, and well below the ECB’s target of inflation that is below but close to 2 percent.
    Economic recession, growing unemployment and recent comments by ECB council members also fueled speculation of a rate cut. Last month Germany’s Jens Weidmann, head of the Bundesbank, said the ECB would only cut rates if the economic situation worsened and then both Draghi and Klaas Knot of the Netherlands central bank said the economic situation was not improving.
    Last month at the ECB’s press conference, Draghi said the bank was keeping a close eye on economic data for its impact on monetary policy and was ready to act. He also said the ECB was looking at various instruments and tools to stimulate economic activity.

    The unemployment rate in the euro zone rose to 12.1 percent in Mach from 12.0 percent, the highest level since Eurostat, the European Union’s statistics office, started collecting the data in 1995.
    The euro zone’s Gross Domestic Product shrank by 0.6 percent in the fourth quarter of 2012, its fifth quarterly contraction in a row, for an annual decline of 0.9 percent, up from 0.6 percent in the third quarter. Economist forecast a further contraction in the first quarter of this year.
    Global policy makers have also put pressure on the ECB to stimulate the economy with the International Monetary Fund’s managing director, Christine Lagarde, last month saying the ECB still has room to manoeuvre and could cut rates.

Mexico Central Bankers hold rate steady

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Mexico holds rate steady, says higher inflation temporary – Central Bank News.

Mexico’s central bank held its benchmark target for its overnight rate steady at 4.0 percent, saying the recent rise in inflation was temporary and there are no widespread pressures so inflation should resume its downward trend in June and then gradually move toward’s the bank’s 3.0 percent target.
    The Bank of Mexico, which last month cut its rate for the first time since July 2009 but stressed it was not embarking on a new cycle of easing, said inflation was expected to remain high in April and May and then settle around 3-4 percent during the second half of the year before declining to around 3 percent in 2014.
    A rise in Mexico’s inflation rate to 4.72 percent  in the first half of April from 4.25 percent in March and 3.55 percent in February strengthened expectations that the bank would not cut rates further in an attempt to dampen the rise in the peso and temper the inflow of capital.
    Mexico’s core inflation rate is expected to remain close, and even below, the bank’s 3.0 percent target for most of 2013 and 2014, the central bank said, adding that it would keep a close eye on prices to ensure that there are no second-round effects of the rise in inflation.
    Mexico’s economy continues to show signs of weakness, further reducing inflationary pressure, and downside risks to economic activity prevail from the possibility that recent slowdown in the U.S. economy could intensify, the bank said.
    “On balance, significant downside risks to global economic growth prevail,” the central bank said, adding that Japan’s growth prospects had improved from its “unprecedented monetary and fiscal stimulus” but there are doubts of the effectiveness of its strategy in the medium term given the uncertain transmission channel through which the Bank of Japan is operating.
    With weak global activity and declining international raw materials prices, the inflationary outlook remains favourable in most countries and monetary policy is expected to remain accommodative in advanced and emerging economies and “in some cases additional relaxations could occur,” it said.
    Mexico’s peso has risen by more than six percent against the U.S. dollar this year and its exports declined by 2.9 percent in February when the economy only expanded by 0.2 percent from January for annual growth of 0.4 percent, according to the national statistics office’s IGAE index, which captures most of the components of Gross Domestic Product.
    The low growth in February was caused by a 1.2 percent drop in industrial output while agriculture and services registered higher growth.
    In the fourth quarter of 2012, Mexico’s GDP rose by 0.8 percent from the third quarter for annual growth of 3.2 percent, the same rate as in the third quarter.
    Mexico’s economy is forecast to grow by around 3.5 percent this year, down from 2012’s estimated 3.9 percent.
    Last month the central bank said inflation was expected to rise to around 4 percent in coming months before settling down to a rate of about 3.0 percent in the second half and in 2014.


Norway Central Bank holds rate . . . .

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Norway holds rate, delays rate rise to first half 2014 – Central Bank News.

Norway’s central bank kept its policy rate steady at 1.5 percent, saying economic growth and inflation had been slightly lower than projected so it first expects to raise rates in the Spring of 2014.
    Norges Bank started easing its upward rate bias last October when it delayed a planned rate increase until this year from end-2012. At its previous meeting in January, the bank maintained a slight upward bias but it has now delayed any rate change until next year.
    “The analysis suggests that the key policy rate be kept lower longer than previously anticipated,” the bank quoted its governor Oeystein Olsen as saying.
    “The first increase in the key policy rate is now projected to take place in spring 2014,” he added. Norway’s central bank cut rates twice in 2012 for a total cut of 49 basis points.
    While growth and inflation remain low, the central bank said household debt and house prices were still rising faster than income.
     The central bank said it would introduce a countercyclical capital buffer to give banks more capital to draw on in an economic downturn. The size would be determined later this year.

    Norway’s inflation rate fell to 1.0 percent in February from 1.3 percent in January and the central bank said its policy rate was low because inflation is low and because interest rates abroad are low.
    The central bank targets inflation of 2.5 percent.
    The bank added that growth prospects for trading partners had weakened though global growth remains robust. Capacity utilization in the Norwegian economy is above normal and unemployment is low.
    “At the same time, there are now prospects that it will take longer for inflation to move up to the inflation target,” the central bank said.
    Norway’s Gross Domestic Product rose 0.4 percent in the fourth quarter from the third quarter for an annual rate of 2.1 percent.

Serbia’s Central Bank News

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Serbia holds rate, pauses after 8 hikes, sees lower inflation – Central Bank News.

Serbia’s central bank held its benchmark interest rate steady at 11.75 percent, pausing after eight rate hikes since last June, saying its current policy stance should return inflation to the bank’s target.
    The National Bank of Serbia, which has raised rates in the last eight of nine committee meetings since June 2012, said a low monthly inflation rate in the last four months confirms the impact of recent policy measures even if the annual inflation rate remains above target.
    Serbia’s inflation rate rose rose to 12.8 percent in January from December’s 12.2 percent, sharply above the central bank’s target of 4.0 percent, plus/minus 1.5 percentage points.
    Economists had expected the central bank to hold rates unchanged following last month when it said that inflation should start to decline due to its recent rate rises – 2.25 percentage points since June – a new agricultural season and the disappearance of the base effect of higher administered prices.
    The National Bank said the expected decline in inflation should help the government implement its fiscal consolidation program, reach a preliminary agreement with the International Monetary Fund, and stabilize agricultural administered prices.

    “So far, the monetary policy measures have taken into account the strength and character of inflationary pressures and demonstrate the bank’s firm commitment to returning inflation to the target range,” the central bank said.
     Serbia’s Gross Domestic Product contracted by 0.8 percent in the third quarter from the second quarter for an annual contraction of 1.5 percent, below the second’s quarter’s rate of minus 2.5 percent but above the first quarter’s 0.8 percent.
    Serbia’s inflation rate started accelerating in April last year when it hit a 30-year low of 2.7 percent and peaked at 12.9 percent in October due to higher agricultural prices and administered prices.
    Last month the central bank said in its quarterly inflation report that it would consider relaxing its policy stance as inflationary pressures from higher food and administered prices disappear.
    The central bank estimated that the country’s economy contracted by 1.7 in 2012 and forecast an expansion of 2.5 percent in 2013.