West African States Central Bank cuts rate by 25 bps in the 1st Week of September 2013

The Central Bank of West African States (BCEAO) cut its benchmark marginal lending rate by 25 basis points to 3.50 percent,  along with its other main rates, saying the main risk to economic growth next year stems from the "negative impact of the slowdown in growth in emerging countries on the world prices of commodities exported by the countries of the Union."

    The BCEAO, which comprises the central banks of Benin, Burkina Faso, Ivory Coast, Mali, Niger, Senegal, Togo and Guinea-Bissau, said the latest estimates call for growth of 6.4 percent this year and 7.3 percent in 2014 in the members of the West African Monetary Union (WAMU).

    The central bank also cut its rate by 25 basis points in March for a total cut this year of 50 points.
    Inflation in WAMU slowed more than expected in June, the central bank said, with prices up 1.7 percent from 2.3 percent at the end of March, reflecting lower prices of cereals and lower fuel prices in some countries due to lower world oil prices.
    On average, inflation is forecast at 1.9 percent in 2013 and 2.4 percent in 2014, the central bank said following a meeting of its monetary policy committee on Wednesday. The inflation forecasts are in line with the bank's price stability objective and indicate that inflationary risks are under control.

    Over a two-year horizon, annual inflation would be 2.4 percent.
    In addition to the cut in the marginal lending rate, the central bank cut the minimum bid rate for liquidity to 2.50 percent but left the reserve ratio at 5.0 percent. The new rate takes effect from Sept. 16.  

W. African cuts by 25 bps, risk from commodity prices - Central Bank News

for more details log on to Central Bank of West African States website : http://www.bceao.int/ 

Bank of Japan holds QE Quantitative Easing target . . . .Global Liquidity flows

Japan's central bank maintained its target for asset purchases, as expected, and said the country's economy was "recovering moderately" and is expected to continue to recover on the back of resilient domestic demand and a pick-up in overseas economies.

   The latest observation by The Bank of Japan (BOJ)  is slightly more confident than last month when the BOJ said the economy "is starting recover moderately," reflecting an increase in business fixed investment on the back of improving corporate profits.
    With regard to inflation, the BOJ repeated that the annual rise in the consumer price index is likely to increase gradually and inflation expectations appear to be rising on the whole.

    The BOJ embarked on its current aggressive monetary easing in April to rid Japan of 15 years of deflation and repeated that it would continue with its easing policy with the aim of hitting the price stability target of 2.0 percent.
     In July Japan's inflation rate rose to 0.7 percent after 0.3 percent in June, breaking 12 months of continuous deflation.

     Boosted by the BOJ's aggressive monetary easing, Japan's economy is starting to improve, with the Gross Domestic Product up by 0.6 percent in the second quarter from the first for annual growth of 0.9 percent, the sixth quarter in a row with growth.
     The BOJ maintained its guidelines for money market operations, saying it aims to increase the monetary base - cash and banks' deposits at the BOJ -  at an annual pace of about 60-7- trillion yen, purchase Japanese government bonds so the amount rises by an annual pace of about 50 trillion along with purchases of exchange-traded funds, Japanese real estate trusts, commercial paper and corporate bonds.

    Financial markets are already speculating that the BOJ will have to take additional easing measures next year to achieve its 2.0 percent inflation goal, especially if the government proceeds with its planned sales tax increase in April.


Japan holds QE target, upgrades economic view slightly - Central Bank News

for more details log on to Bank of Japan website : http://www.boj.or.jp/en/ 

Sierra Leone Central Bank cuts rate by 3 % , sees lower inflation

Sierra Leone's central bank slashed its monetary policy rate (MPR) by 300 basis points to 12.0 percent, saying it expects food prices to continue to decline due to a good harvest and non-food prices to remain stable, helping contain inflationary pressures and push inflation further down.
    The Bank of Sierra Leone, which has now cut rates three times this year by a total of 800 basis points, also cut its other rates to align its rates with lower government treasury rates and money market rates. The reverse repo rate was cut to 12.5 percent and the standing facility rate to 13.0 percent.
    Sierra Leone's inflation rate eased to 10.58 percent in in June from 10.86 percent in May, continuing the declining trend since the start of 2012. Last year the central bank cut rates by 500 basis points.
    In a statement released on Aug. 30 following a meeting of the central bank's monetary policy committee on Aug. 29, the bank said economic prospects for this year remain favourable, "underpinned by encouraging trajectory of mining and non-mining sectors," including 10.5 millions metric tonnes of iron ore produced and exported in the first half of the year.
    For 2013, the central bank projects real growth of Gross Domestic Product at 13.3 percent, up from 6.2 percent in 2012, a forecast that is consistent with the second quarter outlook. Business confidence surveys show enhanced confidence and optimism resulting from stable macroeconomic conditions.
    The risk to the outlook for the private sector stems from the energy sector, the bank added.
    Exports of diamonds rose 18.1 percent in the first seven months of the year from the same 2012 period to US$107.17 million. Along with foreign exchange inflows from foreign direct investment and foreign tax revenue, this has contributed to relative stability in the foreign exchange market in the first half of the year, the bank said.
    The government's fiscal operations also continue to be within this year's targets and the central bank encouraged the revenue authority to implement new revenue-enhancing measures to help revenue collection efforts

Sierra Leone cuts rate 300 bps, sees lower inflation - Central Bank News

for more details log on to Bank of Sierra Leone website : http://www.bsl.gov.sl/ 

US Federal Reserve maintains QE plan, says expansion modest

The U.S. Federal Reserve will continue to purchase $85 billion of assets a month to support stronger economic recovery and confirmed that a highly accommodative policy stance will remain in place after quantitative easing ends.
     While the Federal Reserve largely repeated last month's statement, it added that economic activity had  "expanded at a modest pace" in the first half of the year, a slightly weaker description than in June and earlier months when it used the word "moderate" to describe the economy.
    The Fed also added in this month's statement that inflation "persistently below its 2 percent objective could pose risks to economic performance, but it anticipates that inflation will move back toward its objective over the medium term."
     Taken together, these two minor changes to its statement may signal that a planned tapering of its asset purchase program later this year could be pushed back further, though the Federal Reserve's policy-making body, the Federal Open Market Committee, did not make any specific references to this.
    Overall, the Fed still saw diminished risks to its economic outlook, expecting economic growth to improve from its current pace due to its accommodative stance and that the unemployment rate will continue to decline.
    On June 19 Fed Chairman Ben Bernanke said the U.S. central bank would probably start reducing its asset purchases later this year and end the purchases mid-2014 if the economy continues to improve. Financial markets expect the process of trimming asset purchases will begin in September
    The Fed has held its policy rate, the federal funds rate, at 0-0.25 percent since December 2008 and repeated that it will maintain this policy stance for "a considerable time after the asset purchase program ends and the economic recovery strengthens."
    To give financial markets a better guidance of how long rates will remain at essentially zero, the Fed also repeated that the federal funds rate would remain at this level at least as long as the unemployment rate is above 6.5 percent and inflation does not exceed the bank's goal of 2.0 percent.
    U.S. Gross Domestic Product expanded by 1.8 percent in the first quarter from the fourth's quarter's 0.4 percent for annual growth of 1.8 percent, slightly up from the fourth quarter's 1.7 percent pace but down from the third quarter's 2.6 percent.
    The unemployment rate was stable at 7.6 percent in June and May, but up from April's 7.5 percent while the headline inflation rate in June was 1.8 percent, up from 1.4 percent the previous month and April's 1.1 percent

US Fed maintains QE plan, says expansion modest - Central Bank News

for more details log on to US federal Reserve FOMC website : http://www.federalreserve.gov/monetarypolicy/default.htm