In this article we examine the potential application of the Global Monetary Policy Rate Indexes in forecasting and understanding financial market trends. We look at the developed and emerging rate indexes and key stock indexes; the S&P 500, the Hang Seng, and the US 10 Year government bond yield, and a commodities index. We find some link in movements between the indexes, with a few notable conclusions. [more]
The past week in monetary policy saw two central banks changing their main interest rates; Colombia +25bps to 5.25%, and Belarus -500bps to 38.00%, while two held their rates unchanged; Namibia at 6.00%, and Turkey at 5.75%. Turkey did however cut some of its other interest rates (see the update for details). Also making headlines was the People's Bank ofChina announcing a 50 basis point cut to the Required Reserve Ratio, an important move towards more growth focused policy settings.
Full story: http://www.centralbanknews.info/2012/02/monetary-policy-week-in-review-25.html [more]
The People's Bank of China (PBOC) announced a 50 basis point reduction in the required reserve ratios (RRR) for deposit taking financial institutions, effective 24th February 2012. The new required reserve ratios will average 20.50% for large banks, and 18.50% for small banks. The move is expected to add as much as 400 billion yuan of liquidity to the financial system. The move marks a shift in the policy bias to loosening, with the PBOC previously being content to use open market operations to adjust liquidity, in contrast to the higher profile RRR. [more]
The past week in monetary policy saw 3 monetary policy interest rate changes; Kazakhstan -50bps to 7.00%, Sweden -25bps to 1.50%, and Ghana +100bps to 13.50%. Meanwhile the central banks of Pakistan 12.00%, Japan 0.10%, Chile 5.00%, and Georgia 6.50% all held interest rates unchanged. The other key headline was the Bank of Japan expanding its quantitative easing program by another 10 trillion Yen to 65 trillion. The Reserve Bank of India also made a technical adjustment to one of its old policy rates.
Full story : http://www.centralbanknews.info/2012/02/monetary-policy-week-in-review-18.html [more]
Following on from the initial launch of the GMPRI [Global Monetary Policy Index] this research note focuses on the Developed Markets sub-index. The first point to note is that we have developed history for the index back to January 1999 (data file is available at the bottom of this article). While the method of GDP weighting is also discussed, we have overlain a couple of key data series with the index to demonstrate the value of the index in strategy and forecasting.
Access the index data here: GMPRI-DM Data
Full Story: http://www.centralbanknews.info/2012/02/global-monetary-policy-rate-index.html [more]
The past week in monetary policy saw just one bank lift rates; Jordan +50bps to 5.00%, and two banks cut rates; Belarus -200bps to 43.00%, and Indonesia -25bps to 5.75%. Meanwhile the banks that held rates unchanged were: Australia 4.25%, UK 0.50%, EU 1.00%, South Korea 3.25%, Serbia 9.50%, Iceland 4.75%, Poland 4.50%, and Peru 4.25%. Also making news was the Bank of England adding another GBP 50 billion to its quantitative easing program.
Full story: http://www.centralbanknews.info/2012/02/monetary-policy-week-in-review-11.html [more]
Central Bank News has developed a set of interest rate indexes to track broad trends in monetary policy across the globe. The index is essentially a GDP weighted average interest rate, thus the index can also be used to estimate the cost of capital, assessing monetary policy tightness/looseness, and other economic and financial analysis for the broad groups. There are four indexes: All, Developed, Emerging, and Lesser Developed & Frontier markets. The full methodology and components are detailed below.
Full details: http://www.centralbanknews.info/2012/02/introducing-global-monetary-policy-rate.html [more]
The past week in monetary policy saw 5 central banks adjusting interest rates, with increases from: Colombia +25bps to 5.00%, and Sri Lanka +50bps to 7.50%; and decreases from: The Gambia -100bps to 13.00%, Uganda -100bps to 22.00%, and Romania -25bps to 5.50%. Meanwhile those that held rates unchanged were: Russia 8.00%, Malaysia 3.00%, Kenya 18.00%, the Czech Republic 0.75%, Egypt 9.25%, and Nigeria 12.00%.
Full story: http://www.centralbanknews.info/2012/02/monetary-policy-week-in-review-5.html [more]