Monetary Policy Week in Review - June 30, 2012

    The past week in monetary policy saw interest rate decisions by five central banks around the world, with two cutting rates due to a slowing economy and lower inflationary pressure. The other three central banks left rates unchanged.

    

    MONETARY POLICY DECISIONS:

    

    COUNTRY                NEW RATE            PREVIOUS RATE         RATE 1 YEAR AGO

    

    ISRAEL                        2.25%                        2.50%                               3.25%   

    HUNGARY                   7.00%                        7.00%                               6.00%

    ROMANIA                    5.25%                        5.25%                               6.25%

    CZECH REPUBL          0.50%                        0.75%                               0.75%

    COLOMBIA                  5.25%                        5.25%                              4.50%

    NEXT WEEK:

    Looking at the central bank calendar for next week, Australia kicks off the meeting schedule but the focus will remain largely in Europe with policy decisions by both the Bank of England and the European Central Bank.

    

    The Reserve Bank of Australia is expected to keep its benchmark cash rate unchanged at 3.5 percent following cuts in June and May.

    

    The National Bank of Poland: The fight to curtail inflation is the main factor governing monetary policy decisions in Poland with the bank raising rates by 25 basis points in May to the current 4.75 percent, the fifth rate rise since the beginning of 2011. The bank has said that inflation and growth forecasts will be a factor in determining the decision of the July 3-4 council meeting. In May inflation eased to 3.6 percent from 4.0 percent. The central bank's goal is inflation of 2.5 percent.

    

    Sweden's Riksbank: The Swedish central bank has room to cut rates with economic growth slowing and inflation below the bank's 2 percent target. However, in April the bank said interest rates were likely to remain unchanged for more than a year. It's last rate cut was in December 2011 to the current 1.5 percent.

    Central Bank of Malaysia: Expected to maintain benchmark overnight policy rate (OPR) at 3 percent. The committee said at its last meeting in May that it expected domestic demand to continue to grow despite the impact from global developments.

    Bank of England: Widespread expectation that the central bank will keep its interest rate unchanged but raise its target for purchasing bonds by at least 50 billion pounds following last month’s meeting when the nine-member Monetary Policy Committee voted 5-4 to keep the target at 325 billion pounds.

    The European Central Bank: Expectations for either a rate cut, which was already discussed at last month's meeting, or some form of additional quantitative easing given the recession in the euro area. The ECB’s main refinancing rate was cut to 1.0 percent in December, 2011.

     MEETINGS:

Jul-03 AUD Australia Reserve Bank of Australia Jul-03 PLN Poland National Bank of Poland Jul-03 SEK Sweden Bank of Sweden Jul-05 MNR Malaysia Central Bank of Malaysia Jul-05 GBP United Kingdom Bank of England Jul-05 EUR Eurozone European Central Bank

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