Central Bank News: February 2014

Friday, February 28, 2014

Zambia raises rate 50 bps on upside risks to inflation

Zambia's central bank raised its policy rate by 50 basis points to 10.25 percent, saying the monetary policy committee's "overall assessment is that risks to inflation are generally on the upside."
The Bank of Zambia, which raised rates by 50 basis points in 2013, said the further tightening of its policy should help put inflation on the path toward its 2014 inflation target of 6.5 percent.
"The upward adjustment in the policy rate, including the recent increase in the statutory reserve ratio to 14.0% from 8.0%, will help address the high liquidity levels in the market and contribute to exchange rate stability," the central bank said.
Zambia's inflation rate rose to 7.6 percent in February from 7.3 percent in January but the central bank said it expects inflationary pressures to moderate to due improvements in the supply of selected food as the harvest season gets underway and the fish ban is lifted.
Last month the central bank held an emergency meeting with lenders to examine the decline in the Zambian kwacha against the dollar. Like many other currencies, the kwacha came under pressure last year and the pressure has continued this year.
The kwacha was trading at 5.83 to the U.S. dollar today, down 5.5 percent this year.

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Central Bank News Link List - Feb 28, 2014 - Fed officials downplay worries over U.S. growth

Here's today's Central Bank News' link list, click through if you missed the previous link list. The list comprises news about central banks that is not covered by Central Bank News. The list is updated during the day with the latest developments so readers don't miss any important news.

Fed officials downplay worries over U.S. growth (Reuters)
Ukraine central bank introduces limits on FX withdrawals (WSJ)
PBOC seen doubling yuan band next quarter amid global push (Bloomberg)
China’s central bank opens liquidity front in hot money war (Reuters)
Bank of Canada rates seen hold until third quarter 2015 (Reuters)
Economists warn of more market ‘tantrums’ as U.S. Fed tightens (Reuters)
Russian central bank to keep policy tight till Q4, rouble volatile (Reuters poll)
Japan says any bitcoin regulation should be international (Reuters)
Uganda cbank sells dollars after anti-gay law hits shilling (Reuters)
Draghi’s dialogue with EU lawmakers falls short, experts agree (MNI)
RBI may not increase rates on Apr. 1: BNP Paribas (Economic Times)
Bank of Korea urged by President’s adviser to keep rates on hold (Bloomberg)
Mauritius MPC needs to be more independent-governor (Reuters)

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Angola holds BNA rate, raises liquidity absorption rate

Angola's central bank maintained its policy rate, the BNA rate, at 9.25 percent, and the rate on its Standing Lending Facility Liquidity at 10.25 percent, but raised the Liquidity Absorption rate by 50 basis points to 1.25 percent from 0.75 percent.
The National Bank of Angola (BNA), which last month maintained its BNA rate but cut the reserve requirement on local currency deposits to 12.5 percent from 15.0 percent, did not provide any reason for the increased liquidity absorption rate apart from saying its monetary policy committee had based the decision on an analysis on the country's economy based on January data.
In January Angola's inflation rate rose to 7.84 percent from 7.69 percent in December, but it was still well below the 10 percent that the central bank has long targeted. The last time Angola's inflation rate topped 10 percent was in July 2012 at 10.02 percent and since then inflation has trended lower.
The central bank, which cut its rates by 100 basis points in 2013, said the LUIBOR overnight rate was at 4.15 percent while maturities of 3 and 12 months were 7.49 percent and 9.42 percent, respectively.

Egypt maintains rates, sees limited inflation risks

Egypt's central bank held its main policy rates steady, including the benchmark overnight deposit rate at 8.25 percent, saying "pronounced downside risks to domestic GDP combined with the persistently negative output gap since 2011 will limit upside risks to the inflation outlook going forward."
The Central Bank of Egypt (CBE), which has held rates steady this year after cutting by 100 basis points in 2013, said downside risks to the global economy from the challenges facing the euro area and softening growth in emerging markets could pose risks to the domestic economy.
Egypt's economy has remained weak since political uprisings in 2011 and in the third quarter of 2013 - the first quarter of the 2013/14 fiscal year - Gross Domestic Product expanded by only 1.04 percent from the same 2012 quarter. It was the seventh quarter in a row with declining growth. In the 2012/13 fiscal year, Egypt's economy grew by 2.1 percent.
The lack of economic growth is leading to high unemployment and in the fourth quarter of 2013 the unemployment rate was steady at 13.4 percent from the third quarter, highs not seen for decades.
The economy was characterized by modest growth in manufacturing and construction while tourism and petroleum sectors declined in the first fiscal quarter.

Central Bank News Link List - Feb 27, 2014 - Yellen repeats Fed likely to keep trimming asset purchases

Yellen repeats Fed likely to keep trimming asset purchases (Bloomberg)
Ukraine appointed fin min: Will seek bailout from IMF, Russia-report (Dow Jones)
Bank of Japan’s Sato sees flexibility on timing of QE exit (Reuters)
Fed's Lockhart sees low interest rates for 'quite a while' (Reuters)
BoE's Miles says rates unlikely to return to pre-crises average (Reuters)
Poland seen raising rates toward year-end, no guidance change seen in March (Reuters)
Carney ordered full examination of records in BOE currency probe (Bloomberg)
China PBOC official says liquidity levels appropriate – Xinhua (MNI)
Uganda central bank in market selling dollars to support shilling-traders (Reuters)
German, U.S. central bankers disagree on tools to pop bubbles (WSJ)
Bank Indonesia predicts banks will raise credit interest rate (Jakarta Post)
QE may have hampered UK growth: Andrew Sentence (The Telegraph)
IMF says aging societies mute effectiveness of monetary policy (Bloomberg)

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Fiji maintains rate with inflation and FX reserves stable

Fiji's central bank held its Overnight Policy Rate (OPR) steady at 0.5 percent, saying the bank's twin policy objectives of low inflation and adequate foreign reserves were currently stable so the accommodative policy stance remains appropriate.
The Reserve Bank of Fiji, which has maintained rates since December 2011, reiterated that it expects Fiji's economy to grow faster than the pre-budget estimate of 3.0 percent due to the government's expansionary stance this year. Fiji's economy is estimated to have expanded by 3.6 percent in 2013.
"Domestic economic conditions remain positive with improved performances envisaged for most key sectors of the economy this year," Robin Yarrow, the bank's acting chairman, said in a statement. He added that aggregate demand was continuing to strengthen due to a buoyant performance of consumption and investment activity, with surveys pointing to improving prospects in coming months.
Financial conditions also remain conducive for growth with ample liquidity leading to lower interest rates and annual commercial bank credit expanded by 17 percent in the year to January, a 7-year high.
Fiji's inflation rate eased to 2.3 percent in January while foreign reserves were at comfortable levels of around $1.763 billion as of Jan. 30, sufficient to cover 4.7 months of imports.

Moldova holds rate steady at 3.5% as inflation eases

Moldova's central bank maintained its base rate at 3.5 percent, along with its rates on overnight loans and deposits, saying monetary policy continues to be determined by the complex balance of risks from inflationary and disinflationary forces.
The National Bank of Moldova, which last cut its rate by 100 basis points in April 2013, said inflation eased to 5.1 percent in January from 5.2 percent in December due to lower regulated prices, a lack of aggregate demand and inflationary pressures despite the depreciation of the Moldavian leu against major trading partners.
The central bank targets inflation of 5.0 percent, plus/minus 1.5 percentage point. The leu depreciated by 10.6 percent against the euro in 2013 and has continued to drop this year, down 4 percent so far in 2014, trading at 18.62 to the euro today.
The central bank also said data for trade and industrial production showed significant growth in the fourth quarter of 2013, with exports and imports up by 11.0 percent and 5.4 percent, respectively, while industrial production was up by 6.8 percent. In terms of consumer demand, annual real wage growth in the fourth quarter was 3.6 percent while cash remittances rose by an annual 6.2 percent.

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Wednesday, February 26, 2014

Brazil raises rate by 25 bps, 8th increase since April 2013

Brazil's central bank raised its benchmark Selic rate by 25 basis points to 10.75 percent, saying it was "continuing the adjustment of the basic interest rate process, initiated in the April 2013 meeting."
The Central Bank of Brazil, which has now raised its rate by 350 basis points since last April, said the decision by its policy committee, known as Copom, was unanimous and without bias.
The central bank's statement was similar to the statements it issued in January and November 2013.
Brazil's central bank embarked on its current tightening cycle last April when it raised the Selic rate by 25 basis points to 7.50 percent. Starting in May the central bank has raised its rate in 50-basis-point increments six times but it was expected to reduce the size of the rate rises today in light of the slowdown in inflation and a stabilization in the real currency.
Brazil's inflation rate eased to 5.59 percent in January, continuing the gradual decline since hitting a high of 6.7 percent in June 2013. The central bank targets inflation in a range of 2.5 to 6.5 percent, with a midpoint of 4.5 percent. Inflation has exceeded the bank's midpoint in the last four years.
A decline in Brazil's real currency, which raises import prices, has complicated the central bank's fight to push down inflation. In 2013 the real depreciated by 13 percent against the U.S. dollar as it was caught up in the general outflow of capital from emerging markets toward advanced economies following the U.S. Federal Reserve's preparations for reducing asset purchases.

Central Bank News Link List - Feb 26, 2014 - ECB sources: No consensus now for March policy move

ECB sources: No consensus now for March policy move (MNI)
Fed’s Rosengren: Still weak job market calls for patience (Dow Jones)
Policy interest rate appropriately set: India’s Rajan (Reuters)
Brazil plays the fool in the shower with interest rates (Bloomberg)
ECB’s Nowotny not sold on negative rates (WSJ)
China’s central bank engineered yuan’s decline (WSJ)
Shanghai zone to lift foreign-exchange rate deposit cap (Bloomberg)
Korea’s economic activity improving so far this year: central bank (Yonhap)
Turkey’s gold holdings slide sharply in January – IMF (Reuters)
China crises-gauge rises to record high as swaps avoided (Bloomberg)
Beyond Mt. Gox, bitcoin believers keep the faith, see more robust system (Reuters
Gordhan calls on South African central bank to boost reserves (Bloomberg)
Central bank of Costa Rica acts to prevent rising dollar (Costa Rica News)
G20 growth commitment is market positive-Philippine central bank (WSJ)
Uganda central bank sells dollars to halt shilling slide-trader (Reuters)
Nigeria’s ‘Emefiele will stay out of politics’ (This Day Live)
BOE’s Broadbent says UK outlook depends on global economy (Bloomberg)
Irish central bank to crack down on small firms breaking rules (Independent)
Vietnam central bank considers halving bank system (VietnamNet Bridge)
Central bank of Samoa tightens controls on foreign payments (Islands Business)

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Albania cuts rate by a further 25 bps to 2.75%

Albania's central bank cut its benchmark repurchase rate and the reserve repurchase rate by a further 25 basis points to 2.75 percent, continuing the easing cycle begun in October 2011.
The Bank of Albania has now cut its main rates by 250 basis points from 5.25 percent since October 2011, including 100 points in 2013.
The central bank's supervisory council did not issue any further comment in connection with the latest rate cut.
Albania's inflation rate eased to 1.7 percent in January from 1.9 percent in December while its Gross Domestic Product contracted by an annual rate of 2.3 percent in the third quarter of 2013, down from an expansion of 1.1 percent in the second quarter.

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