monetary policy

Russian central bank governor Sergey Ignatyev on Monday completed his last rate-setting meeting with his hawkish reputation intact.

In line with expectations, the bank left key policy rates on hold, though it eased medium-term borrowing costs in a move which was seen a a signal of a coming relaxation in monetary policy. Read more

By Shang-Jin Wei of Columbia Business School

The Chinese central bank has recently dropped hints that it will quicken the pace of interest rate liberalisation. This has raised hopes for everything from improving efficiency to reducing China’s “excessive” savings and current account surplus.

However, to improve efficiency, this reform alone is insufficient, and complementary reforms outside the central bank’s controls must be undertaken in concert. The hopes for a much reduced current account surplus from this reform are misplaced and will be dashed. Read more

Serbia took another bold step in monetary easing on Thursday, cutting interest rates against expectations – and contrary the advice of the IMF, which is watching Belgrade closely and may need to support the vulnerable economy.

The National Bank of Serbia (NBS) cut its repo rate by 25 basis points to 11.00 per cent, citing the expectation that consumer price inflation would fall into its target range of 4 per cent plus/minus 1.5 per cent by October. Investors reacted sceptically, with the dinar falling to 114.4 to the euro, down 1.4 per cent on the day, despite the central bank intervening. Read more

Brazil’s cutting its IOF financial transaction tax to zero for foreign investments in local bonds makes perfect sense. The logic of its introduction, after all, was that Brazil faced a tsunami of hot money inflows as a result of the developed world’s aggressively loose monetary policies following the crisis of 2008-09. Those inflows made the currency stronger and eroded Brazil’s competitiveness. It needed a flood barrier. Now that the tide of those flows has turned, the obvious response is to take the barrier away.

If only things were that simple. Read more

With Poland’s economy slowing rapidly the central bank on Wednesday cut interest rates by a quarter point to a record low of 2.75 per cent in line with market expectations.

It was the latest in a series of reductions that has seen the bank’s benchmark rate come down from 4.75 per cent towards the end of last year. Read more

As African central bank governors go, few have a higher profile than Lamido Sanusi – and few have courted more controversy. Appointed in the midst of a debt crisis in 2009, his bold moves to fix Nigeria’s crisis-stricken banks toppled the chief executives of eight local lenders, and he’s not one to tiptoe around the political elite either.

 Read more

Serbian customer takes money from an ATM in BelgradeSerbia’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. Read more

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. Read more

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 yearRead more

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. Read more

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. Read more

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”.

 Read more

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.

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. Read more

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. Read more

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? Read more

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. Read more

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. Read more

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’. Read more

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. Read more