Saturday, May 14, 2011

Emerging markets–Central Bank Rate Changes

These changes:

The past week saw monetary policy decisions announced by 12 different central banks around the world.

Those that increased interest rates were:

  • Azerbaijan +25bps to 5.25%
  • Poland +25bps to 4.25%
  • Norway +25bps to 2.25% Peru +25bps to 4.25% and
  • Chile +50bps to 5.00%.

Ghana was the only country that eased policy, cutting rates 50bps to 13.00%.

Those that held rates unchanged were:

  • Indonesia 6.75%
  • South Africa 5.50%
  • Latvia 3.50% and
  • South Korea 3.00%.

Other changes saw two economies lift reserve requirements:

  • Uruguay lifted its required reserve ratios 300bps to 15%,
  • China increased its RRR by 50 basis points to an average 21% for large banks.

Central Bank News Info reports….

The theme of emerging market monetary policy tightening continued, as did the theme of the gradual start of developed market monetary policy tightening; or more appropriately, monetary policy normalization. The rate hikes in Norway and Poland show that policy tightening or normalization is becoming a Euro region-wide phenomenon, as inflation pressures begin to rise due to rising inflation expectations and improving economic conditions. Meanwhile the outlier of Ghana shows that when commodity prices start to ease it will give central banks the luxury of being able to ease policy somewhat, which will be helpful for economic growth, but of course it depends on how much of an impact the short-medium term commodity price spike will have on broader inflation conditions.

Full list of current central bank rates on the Brent Wheeler Group website here.


No comments:

Post a Comment