Serbia: more rate cuts possible after 50 basis-point reduction
Serbia’s first interest rate cut in 17 months is more dramatic than expected as the central bank looks to encourage a sluggish economy and bets that a recent inflation spike is temporary. But consumer price growth may still come in at double digits for 2013.
The National Bank of Serbia (NBS) this week cut its repo rate by 50 basis points to 11.25 per cent, more than the 25-point reduction forecast by a Bloomberg survey and other analysts. Continue reading »
S Korea: it’s the yen, stupid
In announcing a surprise rate cut on Thursday, South Korea’s central bank mentioned the yen only once in a statement of 523 words.
Governor Kim Choong-soo and his colleagues were probably just being polite in not pointing the finger at Tokyo. But it’s likely that the Japanese currency’s plunge on the forex markets looms much larger in their minds that the word-count suggests. Just look at the chart: perhaps Seoul might have held fire if the yen-won rate had stabilised in April. The latest drop in the Japanese currency may have pushed the central bank into action. Continue reading »
Poland’s rate cut: start of a new cycle?
Poland’s slowing economy prompted the central bank’s Monetary Policy Council to cut rates by a quarter point to a record low of 3 per cent on Wednesday, surprising a majority of analysts who had expected the council to stay put after a recent easing cycle that had seen the bank’s benchmark rate come down from 4.75 per cent near the end of last year. Continue reading »
[snap] Poland cuts rates to record low
Poland’s central bank on Wednesday surprised the markets with a 25 basis-point cut in its benchmark interest rate to a record low of 3 per cent.
The bank had said that it was all but finished with rate cuts after reductions totalling 150 basis points. But clearly the latest evidence of economic slow down has disturbed and worried policymakers. Continue reading »
Russia: rate cut hopes fall as consumer inflation rises
Russia’s consumer inflation rate picked up in April, with the headline figure rising to 7.2 per cent from 7.0 per cent. That’s hardly hardly shocking.
But it’s still enough to make it harder for the central bank to cut interest rates to boost flagging economic growth. Its next rate-setting meeting is next week. Continue reading »
[snap] India cuts rates
The Reserve Bank of India has cut its repo lending rate by 25 basis points to 7.25 per cent, in line with expectation.
But in a surprisingly hawkish move, it warned that room for further reductions was “very limited”.
[video] Matolcsy’s mortgage problem
Foreign currency debt – that’s the problem facing György Matolcsy, Hungary’s central banker, known for his unorthodox policies. More than half the household and company debt in Hungary is not in forints. Peter Attard Montalto, emerging markets economist at Nomura, discusses with deputy emerging markets editor Jonathan Wheatley how Hungary is tackling this and the resilience of foreign investors despite such risks.
Turkish interest rates: lower or higher?
Turkey’s central bank cut interest rates by more than expected on Tuesday – a move that highlighted pressures from both far afield and closer to home.
In some ways, the further-flung-factor was the more straightfoward one: the inflationary stance of Japan’s new prime minister is having a significant impact on Turkish monetary policy. What is more controversial is the role of Turkey’s own premier. Continue reading »
S Korea: central bank resists calls for rate cuts – for now
By Song Jung-a and Stefan Wagstyl
War threats or no war threats, the Bank of Korea is keeping a cool head.
Despite the crisis with the North and political pressure for rate cuts to boost flagging growth and push down the won in response to the yen shock, the central bank on Thursday left its policy rate unchanged at 2.75 per cent. But for how long it can resist the calls for cuts is moot. Continue reading »
Brazil inflation: bad news
Figures for March inflation, published on Wednesday, will have made painful reading in Brasília: for the first time since late 2011, consumer price inflation was above the government’s upper limit of 6.5 per cent a year, at 6.59 per cent.
But it could have been worse. Indeed, the benchmark IPCA index rose 0.47 per cent during March, less than the 0.5 per cent consensus in a Bloomberg survey of 38 economists. And inflation in the month was rather less than February’s 0.6 per cent. So, sighs of relief, rather than gnashing of teeth? Continue reading »
Putin’s central banker: how dovish?
It’s official. The Duma has confirmed Vladimir Putin’s pick, Elvira Nabiullina, as Russia’s next central banker with a vote of 360 in support, 20 against and one abstaining.
Nabiullina will be the first female central banker for a G8 country. But for investors the more important question is how dovish she will be when it comes to interest rates and economic growth. Continue reading »
Russia: shift in tone as rates held again
Russia held its interest rates steady – again. But the central bank has further shifted its tone in its statements, becoming increasingly negative.
Last month the bank moved away from talk of the economy running close to potential, to talk of “inflation risks”. This time, it pointed to “deceleration of economic growth”. But no cuts as yet. Continue reading »
Turkey: interest rate cut is another dose of ‘flexible’ policy
Turkey’s central bank cut its overnight lending rate by 1 percentage point on Tuesday to 7.5 per cent but kept its overnight borrowing rate and its repurchasing rate – its main policy rate – on hold at 4.5 per cent and 5.5 per cent, respectively.
It is a typical example of what the bank calls its ‘flexible’ monetary policy, designed to adapt to uncertainties in the global economy. Analysts mostly call it ‘confusing’. Continue reading »
[snap] Hungary cuts rates
Hungary’s central bank on Tuesday cut its benchmark rate by 25 basis points to a record low of 5 per cent, in the first decision overseen by György Matolcsy, the dovish new governor who took charge earlier this month.
The move was in line with expectations, though the forint strengthened slightly in relief that Matolcsy had not gone for a bigger reduction. Just after the announcement the HUF was 0.4 per cent up against the euro at 304.7. Continue reading »
S. Africa holds interest rates, fretting over growth and inflation
South Africa’s Reserve Bank left its benchmark interest rate unchanged at 5 per cent, out of concern that the recent decline in the rand is stoking inflation despite sluggish domestic economic growth.
The central bank surprised nobody, as analysts had expected no changes. And few envied the central bank governor Gill Marcus as she struggles to manage the risks to growth and the risks to inflation. Continue reading »
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