By Central Bank News
The past week in monetary policy saw interest rate decisions by 12 central banks around the world, with three banks (Hungary, the Czech Republic and Trinidad &Tobago) cutting rates, one bank (Uruguay) raising rates, and the remaining 8 (Israel, Georgia, Romania, Mauritius, Sierra Leone, Colombia, Albania and the Dominican Republic) keeping rates unchanged.
The interest rate cuts were in response to continued weakness in the global economy with Hungary holding out the prospect of further cuts if inflation, which is already above the bank’s target, remains moderate.
Although Israel and Mauritius kept rates unchanged, both banks cut growth forecasts.
As last week, the impact on emerging economies from very low interest rates in the United States – flagged to remain close to zero to mid-2015 – is causing concern.
While the Dominican Republic noted a growing flow of capital to emerging markets, Uruguay took action and raised rates to dampen inflationary expectations before they threaten growth prospects.
LAST WEEK’S MONETARY POLICY DECISIONS:
| COUNTRY | NEW RATE | PREVIOUS RATE | RATE 1 YEAR AGO |
| ISRAEL | 2.25% | 2.25% | 3.00% |
| HUNGARY | 6.50% | 6.75% | 6.00% |
| GEORGIA | 5.75% | 5.75% | 7.50% |
| ROMANIA | 5.25% | 5.25% | 6.35% |
| CZECH REPUBLIC | 0.25% | 0.50% | 0.75% |
| MAURITIUS | 4.90% | 4.90% | 5.50% |
| SIERRA LEONE | 20.00% | 20.00% | 23.00% |
| COLOMBIA | 4.75% | 4.75% | 4.50% |
| TRINIDAD & TOBAGO | 2.75% | 3.00% | 3.00% |
| ALBANIA | 4.00% | 4.00% | 5.25% |
| DOMINICAN REPUBLIC | 5.00% | 5.00% | 6.75% |
| URUGUAY | 9.00% | 8.75% | 8.00% |
NEXT WEEK: The central bank calendar next week calls for 7 central bank meetings: Australia, Poland, Iceland, the European Central Bank (ECB), the United Kingdom, Japan and Pakistan.
Australia and Poland may reduce rates while the ECB and the Bank of England are not expected to change policy. Iceland should raise rates, according to the IMF, while the Bank of Japan is under pressure to weaken the yen. Pakistan is expected to keep rates steady.
| COUNTRY | MEETING DATE | CURRENT RATE | RATE 1 YEAR AGO |
| AUSTRALIA | 2-Oct | 3.50% | 4.75% |
| POLAND | 3-Oct | 4.75% | 4.75% |
| ICELAND | 3-Oct | 5.75% | 4.50% |
| EURO AREA (ECB) | 4-Oct | 0.75% | 1.50% |
| UNITED KINGDOM | 4-Oct | 0.50% | 0.50% |
| JAPAN | 5-Oct | 0.10% | 0.10% |
| PAKISTAN | 5-Oct | 10.50% | 13.50% |
