Monetary Policy Week in Review – Jan 26-30, 2015: Central banks active, rate changes in 48% of decisions

By CentralBankNews.info
    Central banks remained hyperactive last week as four banks eased their policy stance while two raised rates as almost half of this year’s 44 policy deliberations have resulted in policy changes.
     The plunge in oil prices, the pending tightening of U.S. monetary policy against the backdrop of easier policy in Europe and Japan has boosted volatility in international financial markets, clearly worrying central bankers across the world.
    The Swiss National Bank’s decision to abandon its cap on the franc against the declining euro has awakened the animal instincts of foreign exchange traders who have set their sights on Denmark’s peg to the euro.
    Central banks are clearly acknowledging these growing risks to the global economy, with Mexico’s central bank for example last week describing the  balance of risks to growth as deteriorating.
    However, it is also just as clear to central banks that the over 50 percent fall in crude oil prices since June will help stimulate global economic growth as the year progresses. And in most cases, a decline in the currencies of oil exporters, such as Russia, will ultimately help boost exports.
     Last week 18 central banks issued policy statements, with Russia, Albania, Singapore and Denmark easing their policy stance, increasing the number of rate cuts this year to 15, or 34 percent, of this year’s 44 policy decisions.

     During the month of January, central banks changed their monetary stance 21 times, or 48 percent of the 44 policy decisions taken so far this year.
    In comparison, only 24 percent of last year’s 482 policy decisions resulted in rate changes.
    Six of the rate cuts during January came from central banks in advanced economies: Three by Denmark, one by Switzerland, one by Canada and one by Singapore.
    Another six rate cuts came from central banks in emerging economies: India, Russia, Turkey, Chile, Peru and Egypt.
    Two central banks in frontier markets cut rates in January: Romania and Pakistan, while another cut was carried out by Albania, a country that is neither an emerging market nor a frontier market.
    In contrast, there have only been six rate increases so far this year, none by central banks in advanced economies, one by an emerging market central bank (Brazil), none among frontier market central banks but five by central banks in other economies: Belarus, Mongolia, Armenia, Kyrguzstan and Trinidad & Tobago.

• Sri Lanka holds rate, sees robust economic performance
• Kyrgyzstan raises rate 50 bps in effort to lower inflation
• Singapore reduces slope of policy band
• Hungary maintains rate, no systemic risk from CHF rise
• Malaysia holds rate, assessing external developments
• Thailand maintains rate but 2 of 7 vote for 25 bps cut
• Fed: US economy expanding at “solid pace,” still patient
• New Zealand holds rate, data to determine rate cuts, rises
• Albania cuts rate 25 bps, to keep stance some quarters
• South Africa holds rate, wants sustained drop in inflation
• Denmark cuts deposit rate another 15 bps to -0.50%
• Mexico holds rate, eye on peso’s impact on inflation
• Fiji holds rate, low oil to dampen effect of strong demand
• Bangladesh holds rate, targets 6.5% inflation mid-2015
• Russia cuts rate 200 bps to avoid further hit to growth
• Colombia holds rate, temporary inflation rise from peso
• Trinidad & Tobago raises rate 25 bps, ready for challenge

• Denmark suspends bond issuance to limit FX inflow