Taiwan Central Bank holds Monetary Policy rates on moderate growth

27th March 2014

 Taiwan's central bank left its benchmark rate steady at 1.875 percent, as expected, and said the government's budget office was forecasting higher 2014 growth despite a slowdown in China's growth and the U.S. Fed's scaling back on its asset purchases, which "might complicate the outlook for the global economy" due to cross-border spillovers and heightened financial market volatility.
    The Central Bank of the Republic of China (Taiwan), which has maintained its rate since June 2011,  said the rate was held steady due to its assessment of "moderate growth and mild inflation outlook in the domestic economy and lingering uncertainties in the global economy."
    Economic growth in the first quarter of 2014 is forecast at 3.02 percent and the full year forecast is 2.82 percent, up from in 2.11 percent in 2013. Fourth quarter Gross Domestic Product rose by 2.43 percent from the third quarter for annual growth of 2.95 percent.
    Employment is also continuing to rise, the bank said, particularly in the services sector with the unemployment rate down from 4.05 percent in February from January's 4.07 percent.
    Inflation is forecast to remain stable at an average 1.07 percent in 2014 amid mild global inflation expectations, muted domestic demand and a negative output gap.
    In February Taiwan's consumer prices fell by 0.05 percent from inflation of 0.76 percent in January. For the first two months of the year, consumer prices averaged 0.39 percent

Taiwan holds rate on moderate growth, mild CPI outlook - Central Bank News

Nigeria Central Bankers holds Policy Rates but raises CRR to 15%

25th March 2014

Nigeria's central bank held its Monetary Policy Rate (MPR steady at 12 percent, as mostly expected, but raised the Cash Reserve Requirement (CRR) on private sector deposits by 300 basis points to 15 percent, saying "safeguarding short run macroeconomic stability under the circumstances required firm and bold measures."

    The Central Bank of Nigeria (CBN), which has maintained its policy rate since October 2011 but in January again raised the CRR on public sector deposits, said the Monetary Policy Committee had taken note of the relative stability of the exchange rate of the naira "in the face of undue pressure" and taken its policy decision with a view to attaining price and exchange rate stability, the goal of transitioning to a low inflation environment and the need to retain portfolio flows.

    "The Committee unanimously voted for further tightening of monetary policy but were divided on the instruments,"with some members voting to raise the MPR to attract further capital inflows while other members felt that such an increase could impact access to credit and negatively affect growth.

   The CBN's committee voted by 5 to 4 to maintain the MPR and raise the CRR on private deposits.    Nigeria's naira was hit by last month's suspension of Lamido Sanusi, the outspoken governor of the central bank by Nigeria's president. Sanusi has often criticized the government of corruption and has called for an investigation into billions of dollars in missing oil revenue.

    The naira has depreciated by 3.2 percent against the U.S. dollar this year, trading at 165.2 today.

    Nigeria's gross reserves declined to US$ 37.83 billion this month from $42.85 billion end-December, with the central bank attributing the decrease to the need to fund the foreign exchange market "in the face of intense pressure on the naira and the need to maintain stability."

    Tight monetary policy is needed to consolidate recent gains in inflation, the central bank said, with the recent resurgence in core inflation reinforcing this view.

    "Thus, prudent monetary stance would also facilitate better reserve and exchange rate management in an environment where Fed tapering increases pressure on emerging economies financial markets," the bank said.

     Nigeria's headline inflation rate eased to 7.7 percent in February from 8.0 percent in January due to a moderation in food prices. But core inflation rose to 7.2 percent from January's 6.6 percent. The central bank targets inflation of 6.0 to 9.0 percent

    Nigeria's economy remains robust, the bank said, with Gross Domestic Product growing by an estimated 6.89 percent in 2013, up from 6.58 percent in 2012, with the non-oil sector the main driver of growth in the fourth quarter.

    The central bank projects 7.7 percent growth for fiscal 2014, with the relatively robust projection based on favorable conditions for increased agriculture, sustained outcome of banking sector reforms and government initiatives to stimulate the real economy

Nigeria holds rate, raises CRR to 15%, bold moves needed - Central Bank News

Mexico Central Bank holds Policy Rates in 3rd week of March

21st March 2014

Mexico's central bank held its policy rate steady at 3.50 percent, as expected, and said the recent inflation data show the rise at the start of the year was transient and hasn't affected prices in general.
    The Bank of Mexico, which cut its target for overnight rates by 100 basis points in 2013, said the rise in prices in January was anticipated and concentrated on a small number of goods with no second order effects from the changes in prices that took place in late 2013 and early 2014.
    Both headline and core inflation fell in February and short-term inflation expectations have also declined slightly, the bank said, adding that expectations for 2015 and beyond have remained stable.
    Mexico's headline inflation rate fell to 4.23 percent in February from a jump to 4.48 percent in January while core inflation eased to 2.98 percent from January's 3.2 percent.
    In January the central bank had said it was keeping a close eye for signs of inflationary pressures in light of the rise in inflation due to higher public transport prices and taxes, with inflation expected to remain above 4.0 percent in the first few months of the year before declining in the second quarter toward the bank's target range of 2.0 percent to 4.0 percent.
    Mexico's economy slowed in late 2013 and early this year and the bank said a clear recovery had not yet been seen in the components of demand.
    "In particular, even when public spending is more buoyant, exports and private consumption and investment have yet to show clear signs of acceleration," the central bank said, adding that overall slack conditions prevail and the risks to economic activity had not improved markedly.
    Mexico's Gross Domestic Product expanded by only 0.18 percent in the fourth quarter from the third quarter for annual growth of 0.7 percent, down from a rate of 1.4 percent in the third quarter. For the full year of 2013 growth fell to 1.1 percent from 3.9 percent in 2012.
    The global economy, however, has continued to recover modestly in early 2014 and the outlook has improved despite major downside risks.

Mexico holds rate, rise in January inflation was temporary - Central Bank News

Hungary Central Bank cuts rate 12th time ........

Hungary's central bank cut its base rate for the 12th time in a row to help boost economic activity and inflation but added that it may change the "pace or extent of policy easing over the coming months" due to "the significant reductions in interest rates so far and the volatile conditions in financial markets."
    The National Bank of Hungary, which has now cut rates by 175 basis points this year alone, said inflationary pressures are likely to remain moderate in the medium term due to the "significant degree of spare capacity in the Hungarian economy" and data confirm that weak demand has exerted a strong disinflationary impact as firms have limited ability to raise their prices.
    A 25 basis point cut in the bank's base rate to 4.0 percent should help ensure that inflation rises toward's the central bank's 3.0 percent target, but the increased volatility in financial markets and the uncertain outlook for global growth pose a risk and this "calls for maintaining a cautious approach to policy," the bank said, adding:
    "A sustained and marked shift in perceptions of the risks associated with the economy may influence the room for manoeuvre in monetary policy," the central bank said, signaling that it is getting closer to a more neutral policy stance and the aggressive pace of easing is drawing to a close.
    Since August last year, the bank has cut its base rate by 300 basis points but it is now becoming more cautious about the effect that further rate cuts may have on capital flows and the forint currency.
    In June the central bank also noted that its room for manoeuvre was affected by the shift in market's perception of risk but it added that it would cut rates as long as the outlook for inflation and the real economy justified such a move. The reference to further rate cuts was omitted in today's statement.
    Like most other emerging market currencies, Hungary's forint weakened in May as major investors started to withdraw funds from riskier markets, with the forint falling 4 percent against the euro during the month. But by early June the forint bounced back and is down only 1.6 percent against the euro since the start of this year, quoted at 295.8 to the euro today versus 291 in early January.
    The central bank said there had not been any significant sell-off in domestic assets during the past month and domestic indicators of risk had declined despite uncertain global financial markets.
    Hungary's inflation rate has been pushed down due to weak demand and the central bank expects underlying inflation to remain subdued in the medium term and the risks are moderate.
    Inflation in June was 1.9 percent, slightly up from 1.8 percent the previous month. The bank said the impact of regulatory price measures from 2002 to 2009 on consumer prices had halved after 2010, indicating a change in the approach of economic policy to inflation.
    "Consequently, inflation in 2013 is expected to fall back to around 3 percent even excluding the effect of the reduction in utilities prices," the bank said.
    Hungary's economy, which has been in a deep recession, is showing signs of improvement and the bank said growth is likely to resume this year though it will remain weak.
     In the first quarter of this year, Hungary's Gross Domestic Product expanded by 0.7 percent from the previous quarter - the strongest quarterly growth rate in eight quarters. However, on an annual basis, the economy contracted by 0.9 percent, the firth quarter with a negative growth rate.

Hungary cuts rate 12th time, pace of easing may change - Central Bank News

for more details log on to National Bank of Hungary website : http://english.mnb.hu/ 

Chile Central Bank holds rate, may soon cut on lower growth, inflation

Chile's central bank held its benchmark overnight rate steady at 5.0 percent but said it may cut its rate in coming months due to an expected fall in economic growth and inflation.
    The Central Bank of Chile, which has held rates steady since January 2012, said recent information shows that economic output and demand is continuing to slow down, especially investment, but the labor market is still tight.
   "Consumption has remained strong, but the evolution of credit conditions and confidence surveys suggest this variable will lose momentum," said central bank said. In its June Monetary Policy Report, released on July 1, the bank lowered its 2013 forecast for growth and inflation.
    "The consolidation of the trends outlined in the last Monetary Policy Report could call for adjustments to the monetary policy interest rate in the coming months," the bank said.
    In the policy report, the central bank cut its 2013 growth forecast to 4-5 percent from a previous estimate of 4.5-5.5 percent and its inflation forecast to 2.6 percent from 2.8 percent.
    Chile's economic growth has been slowing in recent months, with the annual rate of its Gross Domestic Product in the first quarter slowing to 4.1 percent from 5.7 percent in the previous quarter.
    Chile's inflation rate rose to 1.9 percent in June from 0.9 percent in May, getting closer to the central bank's tolerance range of 2-4 percent. The central bank said inflation expectations remain around its target.
    The central bank took note of the recent tightening in international financial conditions, especially in  emerging market economies, following signs of an earlier-than-expected withdrawal of monetary stimulus in the United States.

Chile holds rate, may soon cut on lower growth, inflation - Central Bank News

for more details log on to Central Bank of Chile website :  http://www.bcentral.cl/eng/index.asp

Poland Central Bank cuts rate by 25 bps for third time in a row

Poland's central bank cut its policy rate by 25 basis points to 2.50 percent, its third cut in a row, along with its other main interest rates. The National Bank of Poland's (NBP) monetary policy council will explain its decision at a press conference later today.
    The NBP's reference rate was cut to 2.50 percent, the lombard rate was cut  to 4.0 percent, the deposit rate to 1.0 percent, and  the rediscount rate to 2.75 percent.
    The central bank has now cut rates by 175 basis points this year in response to weaker-than-expected economic growth due to the drag from recession in the euro area.
    In June, the NBP said uncertainty over the scale and timing of the euro area's economic recovery could adversely affect the Polish economy but it did not issue a specific guidance for rates though the central bank's governor, Mark Belka at the news conference said the easing cycle may be ending.
    However, he also added that a clearer direction for policy would be issued after today's meeting after the council reviews the latest economic projections.
    Last month, a member of the monetary council said the central bank should avoid cutting rates further due to the risk of weakening the Polish zloty further and triggering capital outflows.

    Like other emerging markets, the zloty has weakened since early May and is down almost 6.0 percent this year, quoted today at 4.34 to the euro. The NBP intervened in early June to limit volatility.
    Poland's Gross Domestic Product rose by only 0.1 percent in the first quarter from the fourth quarter for annual growth of 0.5 percent, the weakest rate in four years. Last month the central bank said indicators showed that second quarter growth was also weak.
    Poland's economy recovered from the global financial crises with growth rising in 2010 but in 2012 growth slowed sharply due to lower exports to the euro area, with average economic growth slowing to 1.9 percent growth, down from 4.5 percent in 2011.
    The central bank started cutting rates in November 2012 but this was criticized as being too late to cushion the impact from the euro zone recession. In April this year the NBP froze rates to review the impact of its easing but then started cutting rates again in May.
    The NBP has forecast growth this year of 1.3 percent.
    Poland's inflation rate fell further to 0.5 percent in May from 0.8 percent in April, well below the central bank's target of 2.5 percent, plus/minus one percentage point.

Poland cuts rate by 25 bps for third time in a row - Central Bank News

for more details log on to National Bank of Poland website : http://www.nbp.pl/homen.aspx?f=/srodeken.htm 

Israel Central Bank News

Israel's central bank held its policy rate steady at 1.25 percent, saying inflation is expected to remain around the center of its target range in the coming year, that recent rate cuts were a response to slower economic growth, home prices have moderated and the upward pressure on the shekel should ease as the U.S. Federal Reserve plans to remove its policy accommodation in the future.
    The Bank of Israel (BOI), which cut rates twice in May to weaken the shekel currency, said it would keep a close eye on asset markets, including the housing market, and continue to monitor the impact of its recent steps, "particularly in light of the continuing uncertainty in the global economy," and would "act as necessary in the future."
    It was the final decision by the BOI under present Governor Stanley Fischer, who is stepping down at the end of this month and being replaced by Jacob Frenkel, BOI governor from 1991 to 2000.
    The Israeli shekel has come under upward pressure since mid-2012 as investors sought higher yields due to ultra-low interest rates in advanced economies, along with the start of natural gas production. 
     This year the shekel has risen by 2.4 percent against the U.S. dollar, trading around 3.64 per dollar today, but down from a high of 3.55 in early May following two BOI rate cuts the same month and a decision to intervene foreign exchange markets.

    The BOI said the appreciation of the shekel against the dollar was in contrast to the global trend, taking place against the background of sales of domestic companies to foreign investors, a current account surplus in the first quarter and "extensive foreign exchange sales by nonresidents."
     The Federal Reserve's announcement last week that it would start to taper its asset purchases later this year, assuming the economy continues to improve, has hit global financial markets hard with funds flowing out of many emerging markets, global stocks and bonds.
    Bond yields in the U.S. have jumped and the BOI said that if this "increase, should it continue, is likely to moderate the forces for appreciation of the shekel."
    Global growth forecast have recently been revised downward, the BOI noted, primarily due to weakening momentum in emerging markets, while optimism about the U.S. economy was "reflected recently in remarks by the Chairman of the Federal Reserve."
    The Israeli economy appears to be slowing in recent months, the BOI said, pointing to economic activity indicators, with slower growth seen in the business sector, a worsening of investment and imports and a virtual standstill in the exports.
    In the first quarter of this year, Israel's Gross Domestic Product grew by 0.66 percent from the previous quarter for annual growth of 2.7 percent, up from 2.6 percent.
    The BOI's staff, which released its latest forecast, expects 2013 economic growth of 3.8 percent, including the effect of natural gas production, but 2.8 percent excluding gas output, down from 3.2 percent in 2012. The 2013 forecast is unchanged.
    For 2014, the BOI staff revised downwards its forecast due to a fiscal program to tackle deficits, forecasting growth of 3.2 percent including gas output, down from a previous forecast of 4.0 percent, and growth of 2.5 percent excluding fast, down from 3.3 percent previously.
    Israel's inflation rate, which rose slightly to 0.9 percent in May from 0.8 percent, is forecast at 2.1 percent in the four quarters ending in the second quarter of 2014, around the midpoint of the BOI's target of 1-3 percent.
    The BOI's interest rate is forecast to remain at 1.25 percent a year from now.

Israel holds rate on steady inflation, less shekel pressure - Central Bank News

For more details log on to Bank of Israel website : http://www.bankisrael.gov.il/en/Pages/Default.aspx

Rwanda Central Bank cuts rate by 50 bps

Rwanda's central bank cut its repo rate by 50 basis points to 7.0 percent to stimulate lending and economic growth in light of inflation that is expected to remain moderate in the third quarter.
    The National Bank of Rwanda (BNR), which last raised its rate in May 2012, said the unfavourable international environment is expected to slow down economic activity in the first half of this year compared with 2012, while the exchange rate has remained stable.
    Rwanda's headline inflation eased to 2.98 percent in May from 4.4 percent in April and the BNR said it expected inflationary pressures to remain moderate in the third quarter.
    "However, BNR will continue to closely monitor developments in underlying factors of inflation and exchange rate volatility so as to take timely appropriate measures," the central bank said in a statement following a meeting of the bank's monetary policy and financial stability committees on June 18.
    Rwanda's financial sector continues to perform well, the bank said, with capital adequacy ratios of 24.6 percent as of March, exceeding the minimum requirements of 15 percent, and adequate liquidity.
    Last month the governor of the BNR said rates would probably be kept unchanged this year as long as inflation remained below 10 percent and better harvests support growth.

Rwanda cuts rate 50 bps, inflation seen moderate in Q3 - Central Bank News

For more details log on to National Bank of Rwanda website : http://www.bnr.rw/

Switzerland Central Bank News

Switzerland's central bank maintained its monetary policy and exchange rate targets, saying the economic risks remain high and the threat of another bout of upward pressure on the Swiss franc has not been averted because international investors are still seeking a safe haven.
    The Swiss National Bank (SNB), which imposed a ceiling on the Swiss franc against the euro in September 2011, said it still stands ready to "enforce the minimum exchange rate, if necessary, by buying foreign currency in unlimited quantities, and to take further measures, as required."
     The ceiling was imposed as investors sought refuge from political and economic turmoil in the euro area, driving up the value of the franc. The SNB set a maximum limit of 1.20 francs per euro after it had moved towards parity to the euro and has successfully fought off any rise of the franc above that level. Earlier today it was trading around 1.23 to the euro.
    But SNB President Thomas Jordan said the Swiss franc remained high and any rise in its exchange rate would "compromise price stability and would have serious consequences for the Swiss economy."
    "The threat that the Swiss franc could suddenly come under upward pressure again has not been averted. In the current low interest rate environment, therefore, the minimum exchange rate remains the focal instrument for ensuring appropriate monetary conditions," Jordan added.

    A high exchange rate makes Swiss exports less competitive and tends to put downward pressure on inflation, leading to tighter monetary conditions.
    "Recent developments suggest that safe-haven considerations continue to play an important role in the demand for Swiss francs. Overall, the value of the Swiss franc remains high and should fall further over the next few quarters," Jordan added.
    In addition to maintaining its target for the exchange rate, the SNB also maintained its target for three-month libor rates at zero to 0.25 percent, and expects that to remain for three years.
    Inflation in Switzerland has remained negative for 20 months in a row and consumer prices fell by 0.5 percent in May. Lower oil prices is putting further pressure on prices and the SNB said it was cutting its inflation forecast for this year to minus 0.3 percent. For 2014 the SNB expects an unchanged inflation rate of 0.2 percent and 0.7 percent in 2015.
    The Swiss economy bounced back in the first quarter of this year, driven by private consumption and residential investment, with Gross Domestic Product expanding by 0.6 percent from the previous quarter for an annual increase of 1.1 percent.
    But Jordan said the risks remain high, mainly stemming from international developments and a weakening of the global economic momentum could not be ruled out as developments in the euro area remain uncertain and tensions can reappear on global financial markets.
    The SNB expects growth to weaken in the second quarter but still expects growth of between 1.0 and 1.5 percent for 2013.
    Lending by Swiss banks has been growing faster than nominal growth for several years and prices for owner-occupied apartments and single family homes have risen strongly.
    Given the low interest rates, which poses the risk that real estate markets will rise further, the SNB proposed activating a countercyclical capital buffer and this will take effect at the end of September. The SNB expects the buffer to enable banks to better weather any sudden economic downturn and also help counter a further rise in mortgage and real estate markets.

Switzerland maintains CHF ceiling as threat remains - Central Bank News

For more details log on to Swiss National Bank website : http://www.snb.ch/en

Namibia Central Bank holds rate

Namibia's central bank held its repo rate steady at 5.50 percent with inflation "at tolerable levels despite the recent Namibia dollar depreciation" and growth expected to remain below the target.
    The Bank of Namibia, which has held rates steady this year after a 50 basis point cut in 2012, headline inflation was steady at 6.1 percent in May from April while inflation excluding food an energy remained at 3.4 percent "thus suggesting an absence of underlying inflationary pressures."
    "Going forward, Namibia dollar depreciation against major currencies may present an inflation risk," the central bank cautioned.
    Like most emerging markets, Namibia's currency has fallen since early May and is down some 10 percent this year, quoted at 10.05 to the U.S. dollar today from 8.46 at the start of the year.
    A widening trade deficit may affect Namibia's international currency reserves and "warrants monitoring" but for now the central bank said international reserves remain adequate to protect the fixed currency arrangement and other international obligations.
    In April the central bank's governor, Ipumbu Shiimi, said interest rates would be held steady as long as inflation remains low and South African monetary authorities maintain their rates. Any significant difference in rates could result in capital fleeing Namibia to South Africa.
    The central bank said economic growth this year is expected to be driven by increased output in the mining, manufacturing and construction industries.  In April the central bank forecast growth this year of 4.4 percent, down from an estimated 5.0 percent in 2012.

Namibia holds rate, inflation tolerable despite FX fall - Central Bank News

for more details log on to Bank of Namibia website : https://www.bon.com.na/