June 25th, 2014
by Peter Nielsen, Central Bank News
Last week in global monetary policy Colombia, Namibia and the Philippines tightened their policy stance while minutes from the Bank of England were viewed as hawkish and the U.S. Federal Reserve continued to rein back on its asset purchases.
Nevertheless, central banks appear remain cautious and reluctant to raise benchmark interest rates out of fear of torpedoing a global economy that is still considered vulnerable to a setback.
The global economy is at a delicate balancing point after the first half of 2014, with the expansionary forces not fully recovered after a stronger than expected winter chill in the first quarter and considerable geopolitical risks ranging from Iraq through Ukraine. Through the first 25 weeks of this year, central banks have now cut their policy rates 26 times while rates have been raised 22 times, illustrating the lack of synchronicity in the global economy.
The 90 central banks followed by Central Bank News have taken 237 policy decisions so far this year, of which 10.9 percent have favored rate cuts while 9.3 percent have favored rate rises.
But this year's global trend toward tighter monetary policy is unmistakable despite the recent easing by the European Central Bank (ECB) and the Bank of Japan's (BOJ) injection of liquidity.
The global monetary policy rate (GMPR), the average rate of 90 central banks, rose to 5.54 percent at the end of last week, up from 5.53 percent at the end of the first quarter and 5.41 percent at the end of 2013.LIST OF LAST WEEK'S CENTRAL BANK DECISIONS:
- Russia holds rate, warns of rises, cuts growth forecast
- Botswana holds rate, sees inflation within target range
- Morocco holds rate, sees 0.9% inflation, 2.5-3.0% growth
- Sri Lanka holds rate, 2014 growth still seen 7.8%
- Thailand maintains rate, economy should pick up pace
- Namibia raises rate 25 bps, revises up inflation forecast
- Georgia holds rate, inflation moves close to forecast
- U.S. Fed trims QE to $35 bln, expects to reduce further
- Norway holds rate, warns it may cut if outlook weakens
- Philippines holds rate, raises SDA, ready to tighten more
- Switzerland keeps FX cap, trims inflation forecast
- Colombia raises rate 25 bps, doubles Q3 FX intervention
TABLE WITH LAST WEEK'S MONETARY POLICY DECISIONS:
|COUNTRY||MSCI||NEW RATE||OLD RATE||1 YEAR AGO|
This week (Week 26) eight central banks will decide on monetary policy, comprising the countries of Angola, Israel, Armenia, Turkey, Hungary, Albania, Fiji and the Czech Republic. The Bank for International Settlements (BIS), known as the central bankers' bank, will be releasing its annual report on Sunday, June 29.
TABLE WITH THIS WEEK'S MONETARY POLICY DECISIONS:
|COUNTRY||MSCI||DATE||CURRENT RATE||1 YEAR AGO|