The past week in monetary policy saw 8 central banks reviewing interest rates and monetary policy settings. Just one bank adjusted its main interest rate, with Thailand adding +25bps to 3.50%. Meanwhile the other central banks held interest rates unchanged: Turkey 5.75%, Hungary 6.00%, Namibia 6.00%, Egypt 8.25%, Sierra Leone 23.00%, Denmark 1.55%, and Mexico 4.50%. Aside from interest rates, the much watched annual Jackson Hole Economic Policy Symposium kicked off, with Ben Bernanke presenting the keynote speech where he stopped short of signalling QE3 but noted that the FOMC is actively considering options, and also talked at length about the role of fiscal policy in maximizing sustainable long term economic growth.
Full story: http://www.centralbanknews.info/2011/08/monetary-policy-week-in-review-27.html [more]
The past week in monetary policy saw just 5 central banks meeting to review monetary policy settings. Those that changed interest rates were: Iceland +25bps to 4.50% and Georgia -25bps to 7.50%. Meanwhile those that held interest rates unchanged were: Colombia 4.50%, Sri Lanka 7.00%, and Chile 5.25%. Elsewhere the Monetary Authority of Singapore released a statement affirming is monetary policy stance, following significant financial market movements. Similarly the Swiss National Bank announced even further measures to counter the strong Swiss franc. Also on the radar was the ECB releasing data showing in the week ending the 12th of August it had spent 22 billion euros on bond purchases as part of its SMP.
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The European Central Bank (ECB) spent 22 billion euros on bond purchases last week, as part of the expanded SMP (Securities Market Program), according to Reuters reports. The purchases exceed the previous record of 16.5 billion euros that the ECB undertook when it began buying Greek government debt in May 2010. [more]
The past week in monetary policy was rocked by the turmoil in global sentiment in the wake of the US sovereign credit rating downgrade, and heightened concerns about contagion in the European sovereign debt crisis. In all, 11 central banks reviewed monetary policy rates, with the following banks adjusting rates: Qatar -50bps to 4.50%, Mozambique -50bps to 16.00%, and Belarus +200bps to 22.00%. Meanwhile the following central banks held interest rates unchanged: Rwanda 6.00%, Indonesia 6.75%, US 0.25%, Hong Kong 0.50%, Norway 2.25%, Serbia 11.75%, South Korea 3.25%, and Peru 4.25%.
Aside from interest rate adjustments the week saw further moves from the Swiss National Bank to attempt to cap gains in the Swiss franc, which saw heavy safe-haven buying earlier in the week as panic gripped the market. Similarly the Central Bank of Turkey also announced a set of moves to support the Turkish Lira. Elsewhere, the US Federal Reserve issued a statement following the Standard & Poor's credit rating downgrade, and the European Central Bank issued a statement following disruptive activity in the European bond markets, essentially saying that it would expand its SMP to include Spanish and Italian bonds.
Full story: http://www.centralbanknews.info/2011/08/monetary-policy-week-in-review-13.html [more]
The Swiss National Bank (SNB) announced a further set of measures to halt a surging Swiss franc (CHF) as safe haven buying has driven a substantial rise. The SNB said it would "significantly increase the supply of liquidity to the Swiss franc money market" and aims to "rapidly expand banks' sight deposits at the SNB from CHF 80 billion to CHF 120 billion. The SNB will also conduct foreign exchange swap transactions, a measure that was last used in 2008. The Bank kept the line that it is closely monitoring the market and will take further measures if necessary.
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Standard & Poor's downgraded the long-term rating of the US government and federal agencies from AAA to AA+. In response the US Federal Reserve has said: "For risk-based capital purposes, the risk weights for Treasury securities and other securities issued or guaranteed by the U.S. government, government agencies, and government-sponsored entities will not change. The treatment of Treasury securities and other securities issued or guaranteed by the U.S. government, government agencies, and government-sponsored entities under other federal banking agency regulations, including, for example, the Federal Reserve Board's Regulation W, will also be unaffected."
The US Federal Reserve's FOMC meets next week on the 9th of August to review monetary policy settings. The FOMC last held the fed funds rate unchanged at 0 to 0.25 percent, and announced that it would finish the $600 billion asset purchase program or "Quantitative Easing II" when it met in June. Standard & Poor's noted in its release: "The downgrade reflects our opinion that the fiscal consolidation plan that Congress and the Administration recently agreed to falls short of what, in our view, would be necessary to stabilize the government's medium-term debt dynamics". [more]
The past week in monetary policy saw 12 central banks reviewing monetary policy settings, with 2 expanding asset buying programs, and just 3 adjusting interest rate levels. Those that adjusted interest rates were: Pakistan -50bps to 13.50%, Uganda +100bps to 14.00%, and Turkey -50bps to 5.75%; Switzerland also adjusted its interest rate target range downward to halt gains in the Swiss franc. Meanwhile those that held rates unchanged were: Botswana 9.50%, Uzbekistan 12.00%, Australia 4.75%, Japan 0.10%, Romania 6.25%, Russia 8.25%, EU 1.50%, UK 0.50%, and the Czech Republic 0.75%.
Other than interest rates, the Bank of Japan announced a 10 trillion yen expansion of its asset purchase (quantitative easing) program, Japan was also reported as intervening in the foreign exchange market to weaken the Yen. Similarly the European Central Bank recommenced its bond buying program in efforts to stabilize financial markets. Such moves spurred speculation that the US Federal Reserve may also adjust its quantitative easing program when it meets next week. Elsewhere the People's Bank of China announced a ban on foreign Yuan loans for purposes other than import/export.
Full story: http://www.centralbanknews.info/2011/08/monetary-policy-week-in-review-6-august.html [more]
The Swiss National Bank (SNB) announced a set of measures designed to stem a sharp acceleration in the Swiss franc (CHF). The Bank announced: "Effective immediately, the SNB is aiming for a three-month Libor as close to zero as possible, narrowing the target range for the three-month Libor from 0.00–0.75% to 0.00–0.25%". The Bank will also "significantly increase the supply of liquidity to the Swiss franc money market over the next few days" and will no longer renew repos and SNB Bills that fall due. The SNB will be watching the foreign exchange market closely and "will take further measures against the stength of the Swiss franc if necessary". [more]