Slew of Second-Tier Central Bank Policy Decisions

September 12, 2013

The Reserve Bank of New Zealand left the Official Cash Rate at 2.5%, its level since March 2011, but gave a stronger indication that such will be raised in 2014.

Bangko Sentral ng Pilipinas retained a 3.5% reverse repo rate and a 5.5% repo rate as expected.  Officials expect in-target inflation over the forecast horizon.

Bank Indonesia hiked its benchmark interest rate by 25 basis points to 7.5% in a further step to support the ailing rupiah and to counter inflation, which is at a 7-year peak.

By unanimous vote, officials at the Bank of Korea did not change its 2.5% key interest rate.  Inflation is still below target.

Disappointing Australian labor statistics depressed the Aussie dollar by 0.9% against its U.S. counterpart.  The U.S. currency, in contrast, fell 0.8% against the kiwi and 0.5% versus the yen but otherwise is narrowly changed, with upticks of 0.1% against the loonie, euro, and Swiss franc and no net movement versus the yuan or sterling.

Share prices fell 1.1% in India but rose 1.0% in China.  Japan’s Nikkei lost 0.3%, but stocks edged up 0.4% in Singapore, 0.2% in Indonesia and Australia and 0.1% in New Zealand and Hong Kong.  The trend in Europe is more decisively downward following disappointing Ezone industrial production.  Share prices have fallen 0.8% in Italy, 0.5% in France, 0.3% in Britain and 0.2% in Germany.

The price of WTI crude oil rose 0.8% to $108.41 per barrel, while the price of gold dropped 1.5% and under $1350 to $1343 per ounce.

Ten-year German bund and British gilt yields each dropped by four basis points.  The 10-year Japanese JGB yield is steady, however.

Australian jobs contracted 10.8K last month following a 11.4K slide in July.  The jobless rate edged a tenth percentage point higher to 5.8%, and the labor participation rate of 65.0% constituted a 79-month low.

Industrial production in the euro area sank 1.5% in July and was 1.3% lower than the 2Q average.  Output fell on month by 2.3% in Germany, 1.1% in Italy, 3.2% in Portugal and 1.0% in Belgium.  Overall production in the common currency area was 2.1% weaker than in July 2012.

German wholesale prices slumped 0.6% on month and recorded their largest 12-month decline (1.7%) since late 2009.  Irish CPI inflation slowed to a mere 0.2% last month from 0.7% in the year to July.  Italian CPI inflation held steady at 1.2% in August, while French CPI inflation was confirmed to have been at 1.0% in August.  Spanish CPI inflation slowed 0.3 percentage points to 1.5.  Swedish CPI inflation stayed at just 0.1% but with a 1.2% core rate of increase.

Dutch retail sales fell 1.6% in volume during the year to July.  Finnish retail sales volume was revised downward to a 0.2% 12-month dip in July.  Greek unemployment is still grinding upward, reaching a depressionesque 27.9% in June after 27.6% in May.

Japanese core domestic machinery orders rose 3.4% in July, failing to reverse all of June’s 6.0% drop, but such exceeded the July 2012 level by 6.5% anyway.  Machinery orders from the public sector and foreigners respectively advanced by 12.9% and 1.4% in the latest month.

Japanese stock and bond transactions in the first week of September generated a tiny JPY 16 billion net capital inflow versus an outflow of JPY 491 billion in the final week of August.

Expected inflation in Australia slowed to 1.5% in September from 2.3% in August according to the latest MI-TD survey.

In Hong Kong, industrial output and producer prices respectively rose 0.3% and fell by 2.4% between 2Q12 and 2Q13.

Scheduled U.S. data to be released today are import prices, weekly jobless claims, and the monthly federal budget.  Canadian new home prices will also be reported.  The latest Chilean central bank interest rate policy decision will be unveiled.  The ECB monthly Bulletin arrived.

Copyright 2013, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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