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Bank Of Russia Surprises With Unexpected Rate Cut, Brings YTD Total Of Nations Easing To 14
Bank Of Russia Surprises With Unexpected Rate Cut, Brings YTD Total Of Nations Easing To 14
Yesterday we reported that in less than 1 month in 2015, so far a whopping 13 countries have proceeded with “surprising” rate cuts: Singapore, Europe, Switzerland, Denmark, Canada, India, Turkey, Egypt, Romania, Peru, Albania, Uzbekistan and Pakistan. As of this morning, make that total 14, because in one of the more “surprising surprises” so far, it was none other than the Bank of Russia which cut its main interest rate from the 17% shocker it instituted at an emergency session on December 17 to halt the Ruble collapse (as a result of the crude price plunge) to 15% less than an hour ago. At the same time it cut the deposit rate to 14% and the repo rate to 16%.
More rate cuts may be coming:
- NABIULLINA SAYS 15% RUSSIA’S KEY RATE STILL FAIRLY HIGH
Not surprisingly, the ruble tumbled in response with the USDRB jumping to 72, while the RTS stock index was down 2% at last check.
The question why Russia decided to cut rates now is relevant, and likely has to do with both the recent stabilization of crude prices in the mid-$40s, coupled with pressure from the administration to lower rates which have led to the Russian economy and banking sector grinding to a near halt.
More from the WSJ:
This was the first rate-setting meeting with Dmitry Tulin, a former deputy chairman who replaced Ksenia Yudaeva as monetary-policy chief earlier this month.The statement issued after the central bank’s board meeting was the latest acknowledgment by Russia’s leadership that its economy will face protracted pain amid falling oil prices and a confrontation with the West over Ukraine.
And Bloomberg’s take:
…click on the above link to read the rest of the article…
Interest Rate Cut: Bank Of Canada Moves To Stave Off Threat From Sliding Oil Prices
Interest Rate Cut: Bank Of Canada Moves To Stave Off Threat From Sliding Oil Prices
OTTAWA — The looming economic threat of sliding oil prices is forcing the Bank of Canada to unexpectedly cut its trend-setting rate to three quarters of a percentage point from one per cent.
The central bank’s announcement follows the stunning nose dive in crude prices since the summer.
The bank says the price collapse poses considerable uncertainty for economic growth in the oil-producing nation.
It is the first time the bank has moved its overnight rate in either direction in nearly four and a half years.
Most economists had been predicting the bank to stand pat on the interest rate today and hike it late this year or in early 2016.
But the bank says falling oil prices threaten to overshadow signs of economic life spotted outside Canada’s weakening energy sector — such as rising foreign demand, a boost in exports and job growth.
…click on the above link to read the rest of the article…
Exclusive: China ready to cut rates again on fears of deflation – sources | Reuters
Exclusive: China ready to cut rates again on fears of deflation – sources | Reuters.
(Reuters) – China’s leadership and central bank are ready to cut interest rates again and also loosen lending restrictions, concerned that falling prices could trigger a surge in debt defaults, business failures and job losses, said sources involved in policy-making.
Friday’s surprise cut in rates, the first in more than two years, reflects a change of course by Beijing and the central bank, which had persisted with modest stimulus measures before finally deciding last week that a bold monetary policy step was required to stabilize the world’s second-largest economy.
Economic growth has slowed to 7.3 percent in the third quarter and policymakers feared it was on the verge of dipping below 7 percent – a rate not seen since the global financial crisis. Producer prices, charged at the factory gate, have been falling for almost three years, piling pressure on manufacturers, and consumer inflation is also weak. “Top leaders have changed their views,” said a senior economist at a government think-tank involved in internal policy discussions.
…click on the above link to read the rest of the article…
