Economy
Colombia central bank to keep rate stable, won’t cut until December: Reuters poll
© Reuters. The Colombia’s central bank logo is seen in Bogota, Colombia October 1, 2018. REUTERS/Luisa Gonzalez/File Photo
By Nelson Bocanegra
BOGOTA (Reuters) – Colombia’s central bank board will keep its interest rate stable at its meeting next week, a Reuters poll forecast on Monday, amid uncertainty over the impact of the El Nino weather phenomena on inflation and gasoline price pressures.
Eighteen of 25 analysts surveyed said the bank would keep the benchmark interest rate at 13.25%, which is its highest point in 24 years and where it has remained since May.
Two analysts predicted a 25 basis point and five others projected a 50-point cut at the Oct. 31 meeting.
A majority of analysts in last month’s survey had projected the first rate cut would take place in October.
Whatever the decision, it will be by majority, like the vote seen in September, analysts said.
High inflation will limit the possibility of action by the central bank, BBVA (BME:) said in a note, adding inflationary risks include “a larger-than-anticipated effect of the El Nino phenomena, a stronger shock in energy prices and an important increase in the minimum wage.”
A minority of those polled said economic deceleration coupled with the downward tendency of inflation would give the board enough space to begin its cutting cycle now.
“The downward trend of disinflation is now sufficiently solid to permit the central bank to cut back the interest rate,” said Andres Abadia, chief Latin America economist for Pantheon Macroeconomics, who is betting on a 25-point cut.
Colombia’s inflation rate eased to 10.99% in September from 11.3% in August, though it remains more than three times the target rate of 3%.
Finance Minister Ricardo Bonilla – who represents the government on the board – told Reuters this month he is eyeing two rate cuts, in October and December.
Seventeen of those surveyed said cuts will start in December, while the remainder said they will begin next year.
Borrowing costs will close this year at 12.75%, next year at 7.75% and 2025 at 5.50%, the survey forecast.
© Reuters. Russian Central Bank Governor Elvira Nabiullina attends a news conference in Moscow, Russia June 14, 2019. REUTERS/Shamil Zhumatov/File Photo
MOSCOW (Reuters) – Russia’s central bank will need two to three months to make sure that inflation is steadily declining before taking any decision on interest rate cuts, the bank’s governor Elvira Nabiullina told RBC media on Sunday.
The central bank raised its key interest rate by 100 basis points to 16% earlier in December, hiking for the fifth consecutive meeting in response to stubborn inflation, and suggested that its tightening cycle was nearly over.
Nabiullina said it was not yet clear when exactly the regulator would start cutting rates, however.
“We really need to make sure that inflation is steadily decreasing, that these are not one-off factors that can affect the rate of price growth in a particular month,” she said.
Nabiullina said the bank was taking into account a wide range of indicators but primarily those that “characterize the stability of inflation”.
“This will take two or three months or more – it depends on how much the wide range of indicators that characterize sustainable inflation declines,” she said.
The bank will next convene to set its benchmark rate on Feb. 16.
The governor also said the bank should have started monetary policy tightening earlier than in July, when it embarked on the rate-hiking cycle.
© Reuters. FILE PHOTO: Workers walk past an under-construction area with completed office towers in the background, in Shenzhen’s Qianhai new district, Guangdong province, China August 25, 2023. REUTERS/David Kirton/File Photo
SHANGHAI (Reuters) – China’s top planning body said on Saturday it had identified a second batch of public investment projects, including flood control and disaster relief programmes, under a bond issuance and investment plan announced in October to boost the economy.
With the latest tranche, China has now earmarked more than 800 billion yuan of its 1 trillion yuan ($140 billion) in additional government bond issuance in the fourth quarter, as it focuses on fiscal steps to shore up the flagging economy.
The National Development and Reform Commission (NDRC) said in a statement on Saturday it had identified 9,600 projects with planned investment of more than 560 billion yuan.
China’s economy, the world’s second largest, is struggling to regain its footing post-COVID-19 as policymakers grapple with tepid consumer demand, weak exports, falling foreign investment and a deepening real estate crisis.
The 1 trillion yuan in additional bond issuance will widen China’s 2023 budget deficit ratio to around 3.8 percent from 3 percent, the state-run Xinhua news agency has said.
“Construction of the projects will improve China’s flood control system, emergency response mechanism and disaster relief capabilities, and better protect people’s lives and property, so it is very significant,” the NDRC said.
The agency said it will coordinate with other government bodies to make sure that funds are allocated speedily for investment and that high standards of quality are maintained in project construction.
($1 = 7.1315 renminbi)
© Reuters. Russian Central Bank Governor Elvira Nabiullina attends a news conference in Moscow, Russia June 14, 2019. REUTERS/Shamil Zhumatov/File Photo
MOSCOW (Reuters) – Russia’s central bank will need two to three months to make sure that inflation is steadily declining before taking any decision on interest rate cuts, the bank’s governor Elvira Nabiullina told RBC media on Sunday.
The central bank raised its key interest rate by 100 basis points to 16% earlier in December, hiking for the fifth consecutive meeting in response to stubborn inflation, and suggested that its tightening cycle was nearly over.
Nabiullina said it was not yet clear when exactly the regulator would start cutting rates, however.
“We really need to make sure that inflation is steadily decreasing, that these are not one-off factors that can affect the rate of price growth in a particular month,” she said.
Nabiullina said the bank was taking into account a wide range of indicators but primarily those that “characterize the stability of inflation”.
“This will take two or three months or more – it depends on how much the wide range of indicators that characterize sustainable inflation declines,” she said.
The bank will next convene to set its benchmark rate on Feb. 16.
The governor also said the bank should have started monetary policy tightening earlier than in July, when it embarked on the rate-hiking cycle.
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