Monetary Policy Week in Review - 8 Jan 2011

The past week was another quiet, but not uneventful, week in monetary policy. The central banks of Indonesia, Romania, and Peru all met to review monetary policy rates. Indonesia and Romania held steady, while Peru unexpectedly increased its rate +25bps to 3.25%, as a preventative move on inflation. Also announcing monetary policy measures was the central bank of Bosnia, which reduced its required reserve ratio -400bps to 10%. The central bank of Chile also announced measures to intervene in the foreign exchange markets, in effort to weaken the Peso.

Some of the other themes that ran through the week were the threat of rising commodity prices, with supply constraints pushing up food prices, as well as a cyclical rebound in energy prices. The commodities trend is also putting pressure on the fast growing emerging markets such as India and China, and the People's Bank of China has repeatedly asserted that it will act to stem inflation this year; also suggesting it may begin to review the required reserve ratios for the large banks on a monthly basis. Next week the major central banks due to announce policy are the Bank of England, and the European Central Bank, with both expected to hold steady.

Source: www.CentralBankNews.info

Article source: http://www.centralbanknews.info/2011/01/monetary-policy-week-in-review-8-jan.html