Serbia, Pakistan Cut Rates as Commodity Prices Drop

Monetary Policy Week in Review 10-15 November 2014

by Peter Nielsen, Central Bank News

The central banks of Serbia and Pakistan cut their rates last week as the fall in global commodity prices from waning demand is leading to disinflation.

The drop in commodity prices picked up speed in October with the International Monetary Fund’s (IMF) index down a sharp 6.42 percent, continuing the decline seen since June.

Nevertheless, the central banks of Ghana and Ukraine raised their rates last week in response to the continued decline in their currencies that is leading to accelerating inflation.

Through the first 46 weeks of this year, the 90 central banks followed by Central Bank News have cut their policy rates 57 times, or 13.9 percent of this year’s 417 policy decisions, up from 13.5 percent at the end of the third quarter and 12 percent at the end of the first half, and 12 percent at the end of the first quarter.

Meanwhile, rates have been raised 44 times, or 10.4 percent of all policy decisions, up from 10.2 percent at the end of September, 9.3 percent at the end of June and 8.7 percent at the end of March.

Boosted by Ghana’s and Ukraine’s large rate rises, the Global Monetary Policy Rate – the average rate of the 90 central banks followed by Central Bank News – rose to 5.60 percent, up from 5.54 percent at the end of the third quarter and 5.53 percent at the end of the second and first quarters.

LIST OF LAST WEEK’S CENTRAL BANK DECISIONS:

• Armenia holds rate, sees inflation in target range in 2015
• Ukraine central bank raises key rate to highest since 2001
• Ghana raises rate another 200 bps due to rising inflation
• Korea holds rate, demand fluctuates, sentiment sluggish
• Indonesia holds rate, notes rising inflation expectations
• Serbia cuts rate 50 bps, sees inflation below target range
• Peru maintains rate, repeats will ease further if necessary
• Pakistan cuts rate 50 bps on improved inflation outlook

TABLE WITH LAST WEEK’S MONETARY POLICY DECISIONS:

This week (Week 47) six central banks or monetary authorities are scheduled to decide on monetary policy: Chile, Japan, Georgia, South Africa, Turkey and Zambia.

TABLE WITH THIS WEEK’S MONETARY POLICY DECISIONS:

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