(NOTE TO READERS: Central Bank News is introducing a new feature
under the title of Global Monetary Policy Rates (GMPR). GMPR replaces and
expands the previous feature titled Global Interest Rate Movements. GMPR will
be issued monthly and reviews the monthly changes in official interest rates
worldwide.)
Global monetary policy interest rates were
cut by 470 basis points during November to an average 5.91 percent from
October’s 5.96 percent, strengthening this year’s trend of falling interest
rates.
Benchmark interest
rates at the 88 central banks followed by Central Bank News have been declining
steadily all year, from an average of 6.42 percent in the first quarter to 6.31
percent in the second and 6.11 percent in the third quarter of 2012.
In the month of November, eight central banks
cut policy rates compared with three banks (Iceland, Serbia and Bulgaria) that raised
rates, boosting the number of rate cuts in the first 11 months of this year to
114 compared with 28 rate increases.
November’s notable
rate cuts were by the Czech Republic, Colombia, Poland and Mozambique.
The
Czech Republic joined the exclusive club of central banks that have cut rates
to essentially zero; Colombia and Poland have now reversed earlier rate rises to bring rates below their level at the start of the year; Hungary cut further despite high inflation, and Mozambique cut for
the sixth time this year but looks like it may have won its battle against inflation.
More than half of
the world’s central banks have cut rates this year, with 45 of the 88 banks
followed by Central Bank News cutting in the January-November period compared
with 11 central banks that have raised rates. Thirty-two central banks have left rates unchanged in the same period.
Emerging market
central banks were again the most active in loosening their policy in November, with four banks cutting rates while all developed market
central banks kept rates on hold.
The average policy rate in developed market central banks was 1.1 percent in November compared with the 4.8 percent average rate among emerging market central banks, illustrating the limited scope for further rate cuts by central banks in advanced economies.
In the first 11
months of the year, emerging market central banks have cut rates by a total of 1,026
basis points compared with cuts of 325 basis points by developed market banks.
Two-thirds of all
emerging markets central banks have cut rates this year while just under
half of central banks in developed markets have cut.
But the true
extent of policy easing by developed markets central banks is not fully
reflected in these figures as they do not capture the quantitative easing that
major central banks have undertaken. Policy rates at the Federal Reserve, the
Bank of Japan, and the Bank of England have been at effectively zero since
2009.
Central banks in
frontier markets have been the most aggressive in cutting rates this year, with
policy rates cut by a total of 1,523 basis points in the first 11 months, lead
by Kenya which cut by 200 basis points in November for a reduction of 700 basis
points year-to-date.
Countering the
global policy easing are total rate rises of 1,570 basis
points by all central banks in the first 11 months of this year. More than half of this increase is accounted
for by Malawi’s total rate hike of 800 basis points – 400 basis points in
November alone - as the country struggles with falling foreign exchange
reserves and roaring inflation.
In 2011 the
average global monetary policy rate of the 88 central banks followed by Central
Bank News was 6.0 percent. This compares with the 2010 average policy rate of
4.3 percent, 5.2 percent in 2009, 7.4 percent in 2008, 6.9 percent in 2007 and
6.2 percent in 2006.
| COUNTRY | YTD | COUNTRY | YTD | COUNTRY | YTD | ||
| BELARUS | -1500 | HUNGARY | -100 | SOUTH AFRICA | -50 | ||
| UGANDA | -1050 | LATVIA | -100 | SOUTH KOREA | -50 | ||
| KENYA | -700 | MONGOLIA | -100 | SWEDEN | -50 | ||
| MOZAMBIQUE | -550 | PHILIPPINES | -100 | THAILAND | -50 | ||
| VIETNAM | -500 | ALBANIA | -75 | ANGOLA | -25 | ||
| MOLDOVA | -400 | ISRAEL | -75 | CHILE | -25 | ||
| BRAZIL | -375 | ROMANIA | -75 | COLOMBIA | -25 | ||
| TAJIKISTAN | -330 | CZECH REPUBLIC | -70 | EURO AREA | -25 | ||
| GAMBIA | -200 | CHINA | -56 | INDONESIA | -25 | ||
| KAZAKHSTAN | -200 | DENMARK | -50 | MACEDONIA | -25 | ||
| PAKISTAN | -200 | INDIA | -50 | MOROCCO | -25 | ||
| DOMINICAN REPUBLIC | -175 | KUWAIT | -50 | NORWAY | -25 | ||
| CAPE VERDE | -150 | MAURITIUS | -50 | T&T | -25 | ||
| GEORGIA | -125 | NAMIBIA | -50 | W. AFRICAN STS. | -25 | ||
| AUSTRALIA | -100 | POLAND | -50 | BULGARIA | -18 |
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