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Easier or Tighter Global Monetary Policy Changes (GMPC)?

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Fahad Murad

A total of 29 central banks have tightened their monetary policy stance so far this year while 30 banks have eased as Ukraine’s central bank on Sept. 6 raised its rate for the fourth time this year.

Global Monetary Policy Changes (GMPC), a country-by-country overview of changes to monetary policy. GMPC aims to capture changes to a wide range of monetary policy instruments, such as reserve requirements, bond purchases or exchange rates, in addition to changes to key interest rates.

the Global Interest Rate Monitor (GIRM), which tracks official policy rates, and Global Monetary Policy Highlights (GMPH), which covers key events in monetary policy and includes a summary of rate changes each month.

2018


ALBANIA


Jun 6: policy rate cut 25 bps to 1.0% as appreciation of lek strengthens downside pressure on inflation. Purchase of foreign currency aimed at decelerating further appreciation of exchange rate.


ANGOLA


May 24: marginal lending facility cut by 200 bps to 18.0% and unified with basic interest rate,the BNA rate. Ratio on mandatory reserves in local currency cut 200 bs to 19.0%.

Jul 17: BNA rate cut 150 bps to 16.50% and mandatory reserve ratio cut 100 bps to 18.0% on continued decline in inflation.


ARGENTINA


Jan 9: monetary policy rate cut 75 bps to 28.00% to prevent a contractionary bias in monetary policy as disinflation process is continuing

Jan 23: monetary policy rate cut 75 bps to 27.25%, with current contractionary bias of monetary policy considered to be somewhat high but it will be cautious in changing its policy to suit the path of disinflation

Apr 27: monetary policy rate raised 300 bps to 30.25% to guarantee disinflation process and is ready to act again if necessary given the dynamics of the exchange market. Monetary Council met outside pre-established meeting schedule.

May 3: monetary policy rate raised 300 bps to 33.25% to guarantee disinflation process and is ready to act again if necessary given the dynamics of the exchange market. Monetary council met outside pre-established meeting schedule.

May 4: monetary policy rate raised 675 bps to 40.0% to avoid disruptive behaviour in the exchange market as well as to guarantee the disinflation process and is ready to act again if necessary.

June 18: reserve requirement for all peso deposits raised 3 percentage points to 23.0% to absorb liquidity

July 2: reserve requirement for all peso deposts raised 3 percentage points to 26.0% to absorb liquidty and help minimize recent volatility of the exchange market and reinforce anti-inflationary commitment

Aug 13: monetary policy rate raised 500 bps to 45.0% at extraordinary meeting in response to the current external situation and the risk of new impact on inflation. To guarantee that monetary conditions remain contractionary, COPOM will not lower the rate until at least October.

Aug 16: reserve requirement for all peso deposits raised 3 percentage points to 29.00%, helping to absorb $60 million of liquidity.

Aug 30: monetary policy rate raised 150 bps to 60.00% and reserve requirement for all peso deposits raised 5 percentage points to 34.0%. Copom says will not lower its policy rate until at least December.


CANADA


Jan 17: target for overnight rate raised 25 bps to 1.25% but some monetary policy accommodation will likely be needed to keep economy operating close to potential and inflation on target.

Jul 11: target for overnight rate raised 25 bps to 1.50% and governing council expects higher rates will be warranted to keep inflation near target.


KAZAKHSTAN


Jan 15: Base rate cut 50 bps to 9.75% based on lower than forecast inflation, expected further decline in inflation, weak domestic demand and favourable external markets

Mar 5: Base rate cut 25 bps to 9.50% as there is a risk inflation may undershoot lower boundary of target range, further easing to continue.

Apr 16: Base rate cut 25 bps to 9.25%, gradual reduction of base rate will continue to secure neutral monetary conditions

Jun 4: Base rate cut 25 bps to 9.0%, a neutral level, and further rate cuts this year restrained by the limited decline in inflation this year and 2019


KENYA


Mar 19: CBR rate cut 50 bps to 9.50% to support economic activity as inflation expectations are well anchored and economic output is below potential

Jul 30: CBR cut 50 bps to 9.00% as economic output is below potential and inflation expectations are well anchored within target range


KUWAIT


Mar 21: Discount rate raised 25 bps to 3.0% in first rate increase since March 2017.


KYRGYZ REPUBLIC


May 29: Discount rate cut 25 bps to 4.75% to stimulate economic activity against background of moderateinflation and growing aggregate demand.


MACAU


Mar 22: Discount rate raised 25 bps to 2.0%, tracking Hong Kong’s rate rise

Jun 13: Discount rate raised 25 bps to 2.25%


MACEDONIA


Mar 13: CB bill interest rate cut 25 bps to 3.0% as economic fundamentals are sound, without any imbalances, and there are lower risks to the economy

Aug 14: Policy rate cut 25 bps to 2.75% as the monetary policy environment, especially the foreign exchange market, is somewhat more favorable than before, suggesting there is room for further monetary policy easing


PERU


Jan 11: Policy rate cut 25 bps to 3.0% on a continued decline in inflation, which is expected to decline further in the first months of 2018

Mar 8: Policy rate cut 25 bps to 2.75% as inflation and inflation expectations continue declining.


PHILIPPINES


May 10: Overnight Reverse Repurchase rate raised 25 bps to 3.25% to arrest potential second-round effects by tempering the buildup in inflation expectations

May 24: Reserve requirement ratio lowered 100 bps to 18.0% as part of the phased reduction in reserve requirement ratios begun in March 2018 and the shift to a more market-based implentation of monetary policy. The move is not intended to signal any change in prevailing monetary policy stance

Jun 20: Overnight Reverse Repurchase rate raised 25 bps to 3.50% as inflation expectations for 2018 remain elevated, posing risk of further price increases. There is continued vigilance against developments that could affect inflation, including peso volatility

Aug 9: Overnight Reverse Repurchase rate raised 50 bps to 4.00% to rein in inflation expectations and prevent sustained supply-side pressures from driving further second-round effects


AZERBAIJAN


Feb 12: Refinancing rate cut 200 bps to 13.0% on declining inflation and improving external balance. Further rate cuts possible as it transitions to neutral policy

Apr 9: Refinancing rate cut 200 bps to 11.0% as inflation is now in single digits, the foreign exchange market is stable, the foreign sector is positive and economic activity is intensifying

Jun 14: Refinancing rate cut 100 bps to 10.0% as inflation is forecast to remain in single digits and economic growth is forecast to continue


BELARUS


Jan 31: Benchmark refinancing rate cut 50 bps to 10.50% as inflation is seen in range for 2018

Jun 20: Refinancing rate cut 50 bps to 10.00% as inflation seen as neutral monetary conditions willensure achievement of price stability with inflation at 5.50% by end-2018


CHINA


Mar 21: 7-day reverse repurchase rate raised 5 bps to 2.55% in reaction to U.S. Federal Reserve’s 25 bps rate hike and as expected. Rate increase will help guide relationship between open market rates and currency rates and help form interest rate expectations

Apr 16: 14-day reverse repo rate raised 5 bps to 2.70%

Jun 24: Reserve requirement for big banks cut 50 bps to 15.50%, releasing 700 billion yuan in liquidity


ROMANIA


Jan 8: policy rate raised 25 bps to 2.00% on rising inflation from fast economic growth, tax cuts and lower administered prices. Deposit rate raised for the third consecutive time by 25 bps to 1.0%

Feb 7: policy rate raised 25 bps to 2.25% as new inflation reports forcasts higher inflation in 2018 than previously forecast

May 7: policy rate raised 25 bps to 2.50% as May inflation forecast re-confirms a slight pick-up and then aleveling of inflation over several months above the ceiling of the inflation target band followed by its return to the vicinity of the upper band at the end of the year


TAJIKISTAN


Jan 23: refinancing rate cut by 125 bps to 14.75% due to lower inflation risks and the approach of inflation to the medium-term target

Mar 20: refinancing rate cut 75 bps to 14.0% as there is no need for tight monetary policy due to lower risk of inflation and a gradual stabilization of the external economy


TRINIDAD AND TOBAGO


Jun 29: repo rate raised 25% to 5.0% amid growth led by the energy sector, a pickup in private sector credit, still low inflation and the implications for higher U.S. rates for the external trade balance


UKRAINE


Jan 26: key policy rate raised 150 bps to 16.00% to help lower inflation and bring it back into the target range from mid-2019

Mar 1: key policy rate raised 100 bps to 17.0% but monetary conditions should now be sufficiently tight to bring inflation back to the target

Jul 12: key policy rate raised 50 bps to 17.50% to ensure inflation meets target in 2019 amid a series of threats, including investors’ reluctance to purchase sovereign debt, rising domestic demand and high inflation expectations.

Sep 6: key policy rate raised 50 bps to 18.0% on a significiant increase in external risks that could prevent inflation from returning to target.


RUSSIA


Feb 9: monetary policy rate cut 25 bps to 7.50% as inflation is sutainably low and inflation expectations are diminishing. Bank will cut rates further as it moves towards a neutral policy stance

Mar 23: monetary policy rate cut 25 bps to 7.25%, with rate cuts to continue as the transition to neutral monetary policy this year will be completed


TUNISIA


Mar 5: BCT rate raised 75 bps to 5.75% to face up to the real risk of ongoing inflation in 2018

Jun 13: BCT rate raised 100 bps to 6.75% as persistent inflationary pressures are a threat to the recent economic recovery and purchasing power

May 23: Late liquidity lending rate raised 300 bps to 16.50% as elevated levels of inflation and inflation expectations pose a risk to price stability

May 28: one-week repo rate set as monetary policy rate and raised 850 bps to 16.50%. Overnight borrowing and lending rates set 150 basis points below and above one-week repo rate

Jun 7: one-week repo rate raised 125 bps to 17.75% and monetary policy will be tightened further until there is a significant improvement in the outlook for inflation

Aug 13: reserve requirement on lira liabilities cut 250 bps to 8.0% and reserve requirement for non-core FX liabilities cut 400 bps for up to 3-year maturities to free up 10 billion lire, US$6 billion and $3 billion equivalent of gold liquidity to the financial system. Central bank also says it will provide banks with all liquidity needed, increase FX liquidity management, and “take all necessary measures to maintain financial stability, if deemed necessary.”


UGANDA


Feb 13: Central Bank Rate cut 50 bps to 9.0% to boost private sector credit growth and strengthen economic growth momentum given spare capacity in economy


ZAMBIA


Feb 21: policy rate cut 50 bps to 9.75% and reserve ratio cut 300 bps to 5.0% to support economic growth while inflation is forecast to remain in lower bound of target range in next 8 quarters


SAUDI ARABIA


Mar 15: repo and reverse repo rates raised 25 bps to 2.25% and 1.75%, respectively, so rates are consistent with monetary stability in domestic and international monetary conditions

Jun 13: repo and reverse repo rates raised 25 bps to 2.50% and 2.0%, respectively


SERBIA


Mar 14: key policy rate cut 25 bps to 3.25% to boost growth of credit and economy while inflation is expected to continue to fall in coming months and first approach midpoint of target range in 2019

Apr 12: key policy rate cut 25 bps to 3.0% as faster than expected decline in inflation in the last three months allows for further boost to credit and economic growth.


SIERRA LEONE


May 17: monetary policy rate raised 50 bps to 15.00% as inflationary pressures remain and there are downward risks to the macroeconomic outlook despite the downward trend in inflation. Key threat to inflation is expected increase in import prices, which is likely to negatively affect the trade balance, with potentially adverse implications for the exchange rate.

Jul 3: monetary policy rate raised 150 bps to 16.50% due to risks to inflation outlook from rising domestic food prices from seasonal supply shocks, the depreciating Leone and rising international prices of fuel and rice.


TURKEY


Apr 25: Late liquidity lending rate raised 75 bps to 13.50% to support price stability as upside movements in import prices have further increased the risk from elevated levels of inflation and inflation expectations.


SINGAPORE


Apr 12: appreciation slope of Singapore dollar increased “slightly” due to rising inflation from improving labour market and steady economic expansion


SOUTH AFRICA


Mar 28: repo rate cut 25 bps to 6.50% on improved outlook for inflation and economic growth.


SRI LANKA


Apr 4: lending rate (SLFR) cut 25 bps to 8.50% on lacklustre economic growth while inflation outlook is favourable.


SWAZILAND


Jan 19: Discount rate cut 25 bps to 7.00% as international economic conditions show sustained improvement and domestic inflationary pressures have subsided

Mar 29: Discount rate cut 25 bps to 6.75% as global economic activity continues to firm and inflationary pressures have moderated somewhat.

 

 

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