Central Bank Watch
Central Bank of Brazil Tightens Credit Again
March 4, 2015
The monetary policy committee, known as Copom, raised the Selic interest rate by another 50 basis points, matching increases made on January 20 and December 3rd. There also was a 25-basis point hike last October and 375 basis points of tightening between April 2013 and April 2014. The new Selic rate level of 12.75% will […] More
Foreign Exchange Insights and Next Week
An Abbreviated Weekly Dollar Essay
March 4, 2015
Snow shoveling duty will limit the length of the dollar essay this week to a couple of developments worth watching. The first is explained in an earlier posting today on Currency Thoughts that documents a very sharp narrowing of the U.S. and eurozone purchasing managers indices between November 2014 and last month. This convergence in both […] More
Deeper Analysis
U.S. and Eurozone Activity Trends Converging Surprisingly Quickly Since November
March 4, 2015
A poll of forecasters conducted each month by The Economist found expectations as recently as February of U.S. GDP growth in 2015 (3.3%) to be almost three times higher than the view toward the euro area (1.2%). The average forecasts three months earlier were respectively 2.9% and 1.2%. However, in the table below, which shows […] More
Central Bank Watch
No Change Made in Bank of Canada’s 0.75% Overnight Interest Rate Target
March 4, 2015
The target had been cut at the prior Governing Council Meeting on January 21, which coincided with a quarterly review of economic conditions and prospects. The cut in January was the first rate change since a hike in September 2010 was was characterized as providing “insurance against risk of too low inflation and growth from […] More
Central Bank Watch
Narodowy Bank Eases Polish Monetary Policy
March 4, 2015
Reductions of 50 basis points in the National Bank of Poland’s reference rate to 1.5%, Lombard rate to 2.5%, and deposit rate to 0.5% were announced in a central bank statement today. Officials make a case for deepening deflation in Poland: “Moderate wage growth, the fall in global commodity prices and no demand pressure all […] More
Central Bank Watch
Monetary Policy Tightened Sharply in Ukraine
March 4, 2015
The plunging hryvnia has lifted Ukraine inflation into double digits. In response, officials at the National Bank of Ukraine had raised their discount rate a month ago from 14.0% to 19.5%, but that didn’t stem geopolitically-generated capital flight. So even more draconian measures were unveiled in a statement released today. The discount rate has been […] More
Central Bank Watch
Reserve Bank of India Cuts Rates between Scheduled Meetings
March 4, 2015
RBI Governor Rajan released a statement announcing a new monetary policy framework oriented around a single target of 4% CPI inflation give or take two percentage points. The statement also informed markets about a 25-basis point cut of the RBI repo rate to 7.5%. A similar cut on January 15 (also not coinciding with a […] More
New Overnight Developments Abroad - Daily Update
More PMI Surveys Reported and a Second Indian Central Bank Rate Cut
March 4, 2015
The Reserve Bank of India sliced its repo, reverse repo and standing facility rates by 25 basis points to 7.5%, 6.5%, and 8.5%. Like the prior change on January 15, this easing of monetary policy was taken between scheduled policy reviews, creating a big element of surprise. The latest action was taken in conjunction with […] More
