Archive for June 2013

Central Bank Watch

Hungary Gets 11th Consecutive 25-Basis Point Central Bank Interest Rate Reduction

June 25, 2013

The Magyar Nemzeti Bank Council, which meets monthly, approved a a 25-basis point cut in the two-week deposit rate in each of the final five months of 2012 and in every month of the first half of 2013.  BUT, today’s action was accompanied by an amber light that cuts in the future may become less […] More

New Overnight Developments Abroad - Daily Update

Roller Coaster Ride in Asian Equities

June 25, 2013

The dollar has retreated 0.4% against the yen, 0.3% versus the loonie, and 0.1% against the Aussie dollar and sterling but has edged up 0.2% relative to the yuan and 0.1% vis-a-vis the Swiss franc and kiwi.  EUR/USD is steady at $1.3124. China led another steep decline in Asian share prices initially overnight, but losses […] More

Central Bank Watch

Bank of Israel Holds Policy Rate Steady after Making Two Cuts in May

June 24, 2013

A decision to not cut Israel’s central bank interest rate more further was anticipated by a majority but not all analysts.  The Bank of Israel had implemented two 25-basis point cuts in May and eight cuts since September 2011.  At 1.25%, the key rate is back to its end-2009 level. Rising U.S. bond yields may […] More

New Overnight Developments Abroad - Daily Update

Festering Concerns about a Chinese Credit Crunch, European Banks, and Fed Tapering

June 24, 2013

Another steep drop in Asian and European share prices opened the final week before mid-2013. Equities plunged 6.1% in China, 3.4% in the Philippines, 2.2% in Hong Kong, 1.9% in Indonesia, 1.6% in Singapore, 1.5% in Australia, 1.3% in Japan, South Korea and India, and 1.0% in Malaysia. Stocks are down so far by 1.1% […] More

Foreign Exchange Insights and Next Week

Next Week

June 21, 2013

Next week will not be very active from a central bank watching standpoint.  Policy meetings are scheduled in Israel, Hungary and the Czech Republic. EU leaders hold a semi-annual summit in Brussels on Thursday and Friday.  The rotating presidency of the EU transfers on July to Lithuania from Ireland, which held the post for the […] More

Central Bank Watch

A Brave New Way of Conducting Monetary Policy

June 21, 2013

As noted in earlier updates, I was surprised by the clumsily handled signal that quantitative easing might soon be throttled back.  It was out of character with Bernanke’s previous stewardship that had managed to limit the duration and depth of the U.S. 2008-9 recession and achieved a sturdier subsequent recovery than experienced either in Europe […] More

New Overnight Developments Abroad - Daily Update

Pausing at the Solstice

June 21, 2013

After Thursday’s shock and awe, markets are taking stock of the damage.  Equities fell in the Pacific Rim but have bounced in Europe. Overnight movement in the U.S. dollar has been inconsequential: drops of 0.4% against the Australian dollar, which hit a 33-month low yesterday, and 0.2% versus the kiwi, upticks of 0.2% against the […] More

Foreign Exchange Insights and Next Week

Fed’s Optimistic Outlook Unlikely to Happen

June 20, 2013

Biological metaphors help to understand what’s happening in U.S. and global financial markets. Financial markets are like an over-active auto-immune system.  Weakened economies get monetary medicine to nurse them back to health.  As the process evolves, the medicine is withdrawn gradually, not all at once.  Ideally, policymakers want the increments of policy change to be […] More

Central Bank Watch

Swiss National Bank’s Quarterly Monetary Policy Review

June 20, 2013

It’s been almost two years since the 3-month Libor target point and range were cut in August 2011 to zero and 0.0-0.25% and authorities imposed a cap on franc strength versus the euro of 1.2000 on September 6, 2011.  Today’s quarterly policy review reaffirmed those guidelines and made minuscule changes in its economic outlook.  Real […] More

Central Bank Watch

Norwegian Central Bank Rate Left at 1.5%

June 20, 2013

Rate History:  The key policy rate was slashed from 5.75% in October 2008 to 1.25% by mid-2009, then raised four times by 25 bps each between October 2009 and May 2011.  From the resulting 2.25% level, the Executive Board later implemented two reductions, first by 50 bps to 1.75% in December 2011 and by 25 […] More

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