10 rate hikes in 2022 as China continues to ease policy
During the third week of 2022, the central banks of Sri Lanka, Ukraine and Paraguay raised their interest rates again, boosting the number of rate hikes so far this year to 10, while Indonesia also began tightening its policy stance by raising the reserve requirement for banks in March, June and September.
And while Norway – the first developed market central bank to raise rates in 2021 – kept its rate steady last week, it confirmed it was still on track to raise rates for the third time in March as the economy continues to improve despite the Omicron variant of COVID-19 and persistent inflationary pressures.
But China, the first major economy to bounce back from the pandemic, this week lowered its Loan Prime Rate (LPR) for the second month in a row as authorities seek to strike the right balance between deflating a bubble in the property sector without causing a credit crunch and a economic downturn.
2019: 17 central banks tightened monetary policy and 67 eased, global net easing by 50 banks
2018: 43 central banks tightened monetary policy and 32 eased, global net tightening by 11 banks
2017: 28 central banks tightened monetary policy and 34 eased, global net easing by 6 banks
2016: 29 central banks tightened monetary policy and 46 eased, global net easing by 17 banks
2015: 48 central banks tightened monetary policy and 34 eased, global net tightening by 14 banks
2022 MONETARY POLICY CHANGES BY MONTH:
ARGENTINA
Jan 6: benchmark 28-day Leliq rate raised 200 bps to 40.0% as part of a redesign of monetary policy instruments to meet the 2022 goal of setting interest rates that result in a positive real return on investments in pesos, and preserve monetary and exchange rate stability.
CHINA
Jan 20: Loan Prime Rate (LPR) cut 10 bps to 3.70%, the same week the rate on the medium-term lending facility (MLF) was cut by 10 bps to 2.85%.
CONGO
Jan 2: key interest rate cut 100 bps to 7.50%, helping strengthen the financing of the economy in Congolese francs and thus support de-dollarization of the economy amid greater control of inflation.
INDONESIA
Jan 20: To normalize the loose liquidity conditions the rupiah reserve requirement for conventional banks will be gradually raised in three steps. As of March 1, the reserve requirement will be raised 150 bps to 5.0%, then on June 1 it will be raised 100 bps to 6.0% and on Sept. 1 the requirement will be raised 50 bps to 6.5%. BI will provide reserve requirement remuneration of 1.5%.
MOLDOVA
Jan 13: interest rate on short-term monetary policy operations raised 200 bps to 8.50% and ratio on required reserves on leu by 200 bps to 28.0% to temper inflationary pressures and the effects of shocks on the economy.
PARAGUAY
Jan 21: monetary policy rate raised 25 bps to 5.50% but pace of tightening slowed due to a weaker economic outlook from drought and the latest wave of COVID-19 pandemic.
PERU
Jan 6: reference rate raised 50 bps to 3.0% and board expects to continue normalizing monetary policy stance in coming months based on current information.
POLAND
Jan. 4: reference rate raised 50 bps to 2.25% to reduce inflation to its target, with extent of monetary tightening needed to reach goal to depend on new information about inflation, economic growth and the labour market.
ROMANIA
Jan 10: monetary policy rate raised 25 bps to 2.0% as monetary policy is gradually normalizes amid a worsening outlook for inflation in the near term while economic activity came to a standstill in the fourth quarter of 2021 due to a fourth wave of the pandemic, supply bottlenecks and the energy crises.
SOUTH KOREA
Jan 14: base rate raised 25 bps to 1.25% and degree of monetary policy accommodation will be appropriately adjusted as Korean economy is expected to continue its sound growth and inflation to run above the target for a considerable time.
SOUTH SUDAN
Jan 11: central bank rate cut 300 bps to 12.0% and minimum reserve requirement on local deposits 500 bps to 15.0% to achieve 1.0% economic growth in fiscal 2021/22, maintain inflation in single digits at 8.0%, plus/minus 1 percentage points, boost lending to the private sector and increase international reserves.
SRI LANKA
Jan 20: Standing Deposit Facility Rate (SDFR) and Standing Lending Facility Rate (SLFR) raised 50 bps each to 5.50% and 6.50% respectively, and further measures taken to boost foreign exchange reserves to curtail the possible build-up of underlying demand pressures in the economy, which will also help ease pressures in the external sector.
UKRAINE
Jan 20: discount rate raised 100 bps to 10.0% and central bank will continue the cycle of strengthening monetary policy and is ready to act decisively in the event of further implementation of pro-inflationary factors, such as an escalation of the conflict with Russia or further spikes in prices.
URUGUAY
Jan 5: reference rate raised 75 bps to 6.50% and rate expected to be raised by the same magnitude at the next two monetary policy meetings so the rate reaches a neutral level by the beginning of the second quarter.
Source: http://www.centralbanknews.info/2022/01/10-rate-hikes-in-2022-as-china.html
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