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

Egypt Central Bank maintains Interest rates, sees limited inflation risks - Central Bank News

27th February 2014

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.

    "Investment levels remained low given the heightened uncertainty that faced market participants since early 2011 and weak credit growth to the private sector," the CBE said.
    The CBE said upside risks to inflation had continued to ease as international food prices were unlikely to rise due to recent global developments and it projects inflation will ease in coming months.
    Egypt's headline inflation rate declined to 11.4 percent in January from 11.7 percent in December and November's 12.97 percent, a high for 2013 and the highest since February 2009.
    Core inflation also eased to 11.7 percent in January from 11.9 percent in December.
    Economists had expected the central bank to maintain rates, following a surprise rate cut in December to boost growth.

Egypt maintains rates, sees limited inflation risks - Central Bank News

Israel Central Bank cuts interest rates by 25 bps on surprise fall in inflation

24th February 2014

Israel's central bank cut its benchmark interest rate by 25 basis points to 0.75 percent after a surprise fall in January inflation, pessimism among consumers and continued strength of the shekel.
    The Bank of Israel (BOI), which cut its rate by 75 basis points in 2013, said the decision to cut the rate was consistent with the bank's aim of entrenching inflation within a 1-3 percent range and it would use its tools to achieve this objective along with encouraging growth and employment while it would continue to keep a close watch on asset markets, including the housing market.
    Israeli consumer prices fell by 0.6 percent in January, higher than an expected 0.2 percent fall, pushing down the annual inflation rate to 1.4 percent from 1.8 percent in December. As a consequence,  private forecasters reduced their inflation projections to an average of 1.6 percent over the next 12 months while capital market's expectations were steady at 1.9 percent and inflation expectations derived from banks' own interest rates were unchanged at 1.4 percent.
    Private forecasters and market interest rates also indicated "some probability" of a cut in rates by the BOI over the next three months while expectations for a cut over the next year are lower and some forecasters even expect an interest rate increase, the central bank said.
    Since the beginning of the year, Israel's shekel has depreciated by almost 1 percent and immediately fell further after the rate cut, dropping to 3.517 to the U.S. dollar from 3.50 before the announcement.
    But since the start of 2013, the shekel has risen by 7.3 percent the bank said, despite the BOI's efforts to hold down the shekel's exchange rate by intervening in the foreign exchange market to help the country's exporters that account for some 40 percent of the economy.
    This year the BOI has targeted foreign exchange purchases of $3.5 billion, up from $2.1 billion in 2013, to help offset the impact of natural gas production on the exchange rate.
    Recent data show that Israel's economy is "growing at a moderate pace," with estimates showing that fourth quarter Gross Domestic Product expanded by an annual rate of 2.3 percent, down from 3.3 percent in the third quarter, with a turnaround in exports mainly to volatile pharmaceutical exports while exports from labour-intensive industries are at a virtual standstill, the BOI said.
    Various indicators of activity in January point to some recovery but consumer confidence indices continue to signal pessimism and there is a lack of growth in employment and wages in business.
    Israel's unemployment rate rose to 5.8 percent in December from 5.5 percent the previous month with real wages declining by 0.4 percent in the September-November period from June-August.
     Isreali home prices, which are not included in consumer prices, rose by an annual 8.1 percent in December, up from 7.9 percent in November, and the number of transactions hit its highest level since 1997 with the share of investors in transactions steady at around 22 percent, the central bank said.

Israel cuts rate by 25 bps on surprise fall in inflation - Central Bank News

Albania Central Banks cuts rate 25 bps to 3.5 percent last week

Albania's central bank cut its benchmark repurchase rate by 25 basis points to 3.50 percent, but it did not release any reason for the decision on July 31 by the bank's supervisory council.
    Last week the bank's governor, Ardian Fullani, said the country's economy was "in a fragile stage" with weak aggregate demand due to low consumer spending from household uncertainty about the future and slowing income. Public spending is also limited due to high public debt while exports suffer from sluggish international demand and a low degree of diversification.
    "In Bank of Albania's opinion, this situation requires pursuit of stimulating macroeconomic policies," Fullani said on July 25.
    Albania's economy expanded by an annual 1.7 percent in the first quarter, down from 1.8 percent in the fourth quarter, while inflation rose to 2.3 percent in June from 2.1 percent.
    In January the central bank cut the refi rate to 3.75 percent, saying the rate cut should help ensure that inflation meets the bank's target of 3.0 percent, plus/minus one percentage point

Albania cuts rate 25 bps to 3.5 percent - Central Bank News

for more details log on to Bank of Albania website : http://www.bankofalbania.org/web/Welcome_to_Bank_of_Albania_webpage_5186_2.php?kc=0,0,0,0,0 

Uganda Central Bank holds rate to boost growth ....

Uganda's central bank held its central bank rate (CBR) rate steady at 11.0 percent, saying it was maintaining a neutral policy stance to support private sector credit growth without jeopardizing its inflation objective.
    The Bank of Uganda (BOU), which cut its rate by 100 basis points last month, said the macroeconomic outlook was largely unchanged from last month "with the exception that we believe that the balance of risks to the inflation forecast have shifted slightly upward, mainly due to the threat posed to food prices by drought."
    Uganda's headline and core inflation rates eased to 3.4 percent and 5.5 percent, respectively, in May from 3.7 and 5.6 percent, and the BOU expects inflation to rise slightly over the next two to three months but then decline towards the bank's target of 5.0 percent by June 2014.
    "However, the adverse weather conditions currently being experiences in most parts of the country could push-up prices in the near term and this poses an upward risk to the inflation forecast," it said in a statement from July 2.

    Output from Uganda's economy is forecast to increase to 6 percent in the 2013/14 financial year, which began July 1, from a preliminary estimate of 5.1 percent in 2012/13. In May the BOU had forecast 2013/14 growth of 6-7 percent.
    But the BOU said the pick-up in real economic growth is unlikely to pose a risk to inflation as output is still below potential growth rate of about 7 percent.

Uganda holds rate to boost growth, higher inflation risks - Central Bank News

for more details log on to Bank of Uganda website : http://www.bou.or.ug/bou/home.html 

Botswana Central Bank cuts rate 50 bps

Botswana's central bank cut its Bank Rate by 50 basis points to 8.50 percent, saying the economy is growing below potential and unemployment is high and this "provides an opportunity for non-inflationary stimulus to the economy."
    The Bank of Botswana, which also cut its rate by 50 basis points in April, said the inflation outlook  suggests that a "more accommodative monetary policy stance is consistent with the achievement of the bank's 3-6 percent inflation objective in the medium term."
    Inflation eased to 6.1 percent in May from 7.2 percent in April with weak domestic demand contributing to the positive inflation outlook. In the short term, inflation is expected to be close to the upper end of the bank's target range, but it should converge to the range in the second half of 2013.
    "The lower global growth, subdued demand and stable commodity prices have contributed to moderate inflationary pressures," the bank said, adding persistent capacity underutilisation and high unemployment rates in major economies is restraining global inflation.
    Domestic output rose 3.7 percent in the year to December 2012 and expansion is expected to remain below potential in the medium term and thus not inflationary, the central bank said.

Botswana cuts rate 50 bps in non-inflationary stimulus - Central Bank News

For more details log on to Bank of Botswana website : http://www.bankofbotswana.bw/  

Angola Central Bank News

Angola holds rate steady at 10%, inflation drops further - Central Bank News

Angola's central bank held its main policy rate steady at 10.0 percent as inflation continued to drop and the exchange rate remained stable.
    The National Bank of Angola (BNA), which cut its rate by 25 basis points in January, said the monthly inflation rate in April was 0.6 percent, down from 0.66 percent in March, for an annual rate of 9.0 percent, down from 9.1 percent.
    The BNA has for many years strived for an inflation rate below 10 percent and since August 2012 inflation has remained below that level.
    The central bank also said credit to the economy rose by 0.18 percent in April and the average interest rate on credit of 181 days in local currency rose to 12.53 percent for retailers and declined to 13.7 percent for the corporate sector.
    The average exchange rate for the kwanza against the U.S. dollar was 96.045 at the end of April compared with 95.98 at the end of March. During April the central bank sold US $1,980 million to the market for a total of $6,232 million in the first four months.
    In 2012 Angola's economy grew by 7.4 percent and the International Monetary Fund projects growth of 6.2 percent this year.

    www.CentralBankNews.info

National Bank of Angola weblink : http://www.bna.ao/

Norway Central Bank holds rate

Norway holds rate, still sees rate at current level this year - Central Bank News

Norway's central bank held its policy rate steady at 1.5 percent and said it saw no reason to revise its view from March that the rate will remain around this level for the next year and then gradually rise toward a more normal level.
     Norges Bank, which cut its rate by 25 basis points in 2012, said Norway's economy had evolved largely in line with the central bank's expectations and "global growth remains robust" while growth prospects for the euro area had weakened somewhat.
    Deputy Governor, Jan Qvigstad, said in a statement that inflation had been slightly lower than expected and wages were expected to rise somewhat slower than forecast. On the other hand, the Norwegian krone had depreciated, unemployment was low and Norway's economy was growing at a solid pace while household debt continued to rise from a high level.
    "The key policy rate is low because inflation is low and because external interest rates are very low," Qvigstad said, repeating the bank's oft-used phrase.
    In March Norway's inflation rose to 1.4 percent from 1.0 percent in February, but still well below the central bank's 2.5 percent target. The last time inflation was above the bank's target was in December 2011 and since February 2012 it has been below 2.0 percent.
    The Norwegian central bank first started easing its upward rate bias last October and finally at its previous meeting in March the central bank delayed any rate change until next year.
    "In March, the key policy rate was projected to remain at around the current level for the next year before being raised gradually towards a more normal level. There is no basis for changing this assessment for now," Qvigstad said.
    Norway's Gross Domestic Product expanded by 3.5 percent 2012, up from 2.5 percent in 2011, but the government this week cut its 2013 growth forecast to only 1.4 percent from a previous forecast of 2.5 percent.

    www.CentralBankNews.info