Czech vote may raise chances of new ANO-led government

2018 ◽  
Keyword(s):  
Monetary Policy ◽  
Interest Rates ◽  
Household Consumption ◽  
Capacity Constraints ◽  
Consumer Confidence ◽  
Structural Reforms ◽  
Medium Term ◽  
Short Term ◽  
Public And Private ◽  
Content Type

Significance Now that Zeman has successfully retaken the presidency with 152,000 more votes than his pro-Western rival Jiri Drahos after a campaign that was dominated by domestic issues, attention will focus once again on forming a majority government after the largest parliamentary party, ANO 2011, lost a vote of confidence on January 16. Impacts Consumer confidence may strengthen in the short term as the old ANO-CSSD government’s policies take effect, providing an economic boost. Robust household consumption and public- and private-backed investment may also contribute to stronger GDP this year. Although monetary policy is set to tighten, in response to signs of overheating, interest rates will remain at historic lows. The outlook for the economy in the short term is upbeat, with a strong outturn expected for the fourth quarter of 2017. Structural reforms will be required over the medium term to reduce the risk of capacity constraints, especially in industry.

Angolan oil sector reform will require innovation

2018 ◽  
Keyword(s):  
Exchange Rate ◽  
Foreign Exchange ◽  
Oil Price ◽  
Structural Reforms ◽  
Medium Term ◽  
Short Term ◽  
Sector Reform ◽  
Content Type ◽  
Oil Sector ◽  
Oil Company

Subject Sonangol priorities. Significance Early structural reforms by new President Joao Lourenco and more positive economic projections for 2018 suggest a potential uptick in Angola’s fiscal fortunes. Since assuming power in September, Lourenco has overhauled the leadership of state-owned oil company Sonangol and dismissed several prominent officials associated with his predecessor Jose Eduardo dos Santos. Separately, Lourenco has moved to tackle the overvalued kwanza. While this will raise debt-servicing costs, this will be partly ameliorated by the recent oil price of over 60 dollars per barrel. Impacts Scrapping the dollar currency peg will help ease the foreign exchange crisis and end payment constraints in the aviation and oil sectors. A more realistic exchange rate will fuel inflation in the short term but will likely improve medium-term economic prospects. Urban support for the People's Movement for the Liberation of Angola (MPLA) could decline further if reforms remain elite-focused.

New measures will provide temporary relief for Greece

2021 ◽  
Keyword(s):  
Public Debt ◽  
Labour Force ◽  
Structural Reforms ◽  
Medium Term ◽  
Short Term ◽  
Content Type ◽  
Temporary Relief ◽  
Growth Prospects ◽  
Better Than ◽  
Public Opposition

Significance The new forecast is based on strong results in the second quarter, better-than-expected tourism revenues over the summer months and the approval of the Greek Recovery and Resilience Plan by the European Commission in July. Mitsotakis also announced several new measures, including tax cuts to stimulate spending. Impacts High unemployment (14.2% of the labour force) and structural labour market weaknesses will constrain growth. Structural reforms lost momentum during the pandemic, dampening medium-term economic growth prospects. Public opposition to vaccination might necessitate new movement restrictions by year-end, inhibiting growth. Availability of a EUR30bn liquidity buffer will support sovereign ratings and investor interest in the short term. Short- and medium-term public debt refinancing risks remain low as 75% of debt stock is held by the official sector.

Nigerian central bank faces short-term debt hazards

2019 ◽  
Keyword(s):  
Exchange Rate ◽  
Central Bank ◽  
Interest Rates ◽  
Foreign Currency ◽  
Capital Controls ◽  
Financial Inclusion ◽  
Medium Term ◽  
Short Term ◽  
Content Type ◽  
Double Digit

Significance Emefiele has vowed that the CBN will significantly increase financial inclusion, recapitalise banks and help the economy achieve double-digit growth over his second term. However, the significant amount of CBN bills in circulation, a key but costly component of the Bank’s recent exchange rate strategy, poses serious medium-term risks. Impacts The CBN's continued focus on exchange rate stability leaves limited space for reducing interest rates over the short term. Effective foreign currency yields of over 10% are appealing for portfolio investors, but a sudden naira slide would prompt major losses. Significant divestment by foreign portfolio investors may make the CBN resort to temporary capital controls to limit damage to the naira.

Growth worries and politics will let Turkish lira fall

2016 ◽  
Keyword(s):  
Monetary Policy ◽  
International Relations ◽  
Interest Rates ◽  
The United States ◽  
Global Market ◽  
Short Term ◽  
Content Type ◽  
Monetary Policy Committee ◽  
Global Liquidity ◽  
Turkish Lira

Subject Turkey's economic and monetary policy. Significance After the Central Bank (TCMB) left policy interest rates unchanged at the December 20 Monetary Policy Committee (MPC) meeting, the lira drifted above the 3.50/dollar mark. The currency has depreciated sharply since September, thanks to a combination of global market conditions, concerns about domestic political trends and Turkey’s international relations. As the United States prepares to tighten monetary policy further, the Turkish administration seems to have no strategy for dealing with lower global liquidity. Impacts Lira volatility will create short-term buying and selling opportunities for financial investors. Bank lenders may select their Turkish customers more carefully and demand higher returns. Demand from Turkey for most products other than essential commodities could be limited in 2017. The administration will go on blaming international factors for the problems of the economy while seeking to direct attention elsewhere.

Mozambican reshuffle will not ease donors' concerns

2017 ◽  
Keyword(s):  
Private Sector ◽  
Interest Rates ◽  
Short Term ◽  
Ruling Elite ◽  
Public And Private ◽  
Content Type ◽  
The Government ◽  
Leadership Changes ◽  
Public And Private Sector ◽  
Party Congress

Subject Mozambican cabinet reshuffle. Significance President Filipe Nyusi dismissed four ministers on December 12-13, subsequently reappointing two with different portfolios the next day. The reshuffle was expected following leadership changes at the ruling FRELIMO party congress in September/October. It brought in new ministers for the crucial energy and minerals and agriculture portfolios. The government is now focused on pushing through key investment decisions in the liquefied natural gas (LNG) sector in the resource-rich Cabo Delgado province, where ruling elite struggles over land, gas and access to harbour facilities are intensifying. Impacts High interest rates due to government borrowing are crowding out private-sector funding. LNG developments in Cabo Delgado could be slowed due to factional fighting within FRELIMO. Although budgetary support is frozen, there could be a short-term spike in donor aid to specific public and private sector initiatives.

Further South African interest rate cuts are unlikely

2018 ◽  
Keyword(s):  
Interest Rates ◽  
South African ◽  
Structural Reforms ◽  
Short Term ◽  
Content Type ◽  
Reserve Bank ◽  
Capital Outflows ◽  
Repo Rate ◽  
Low Levels ◽  
Domestic Inflation

Subject South African inflation dynamics. Significance South African Reserve Bank (SARB) Governor Lesetja Kganyago highlighted in a May 8 speech the increasingly unpredictable global environment and risks to inflation. Domestic inflation has been at unusually low levels in recent months, surprising the market and SARB on the downside thanks mainly to currency strength and moderating food price pressures. On March 28, the SARB cut the benchmark repo rate for only the second time in six years. However, international factors have seen the currency come under pressure recently, reversing the gains seen following President Cyril Ramaphosa’s ascent to the ANC leadership in December. Impacts With monetary policy likely proving cautious in the short term, pressure will grow on Ramaphosa to push through structural reforms. Holding interest rates constant will help to mitigate capital outflows and provide some support for the currency. Barring a currency crash, the next interest rates move will likely be up -- late this year or next year.

Economic orthodoxy will face challenges in Argentina

2020 ◽  
Keyword(s):  
Risk Exposure ◽  
Structural Reforms ◽  
Economic Policies ◽  
High Poverty ◽  
Medium Term ◽  
Short Term ◽  
Social Unrest ◽  
Content Type ◽  
Fiscal Adjustment ◽  
Primary Deficit

Significance The 2021 budget implies a significant fiscal adjustment, with the primary deficit falling from 7-8% of GDP in 2020 to 4.5% in 2021, mainly due to the end of the pandemic relief package, a reduction of energy and transport subsidies and slower pension increases. These measures are in line with recent moves towards more orthodox economic policies. Impacts More prudent policies could ease fears of populism, but investors will remain reluctant to increase their risk exposure. Given high poverty rates, austerity may drive social unrest, affecting the government’s prospects in 2021 mid-term ballots. While fiscal adjustment and structural reforms could aid medium-term sustained economic growth, they will cut short-term growth.

Impacts of monetary instruments on overnight spread under the interest rate corridor framework: evidence from China

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Chiu-Lan Chang ◽  
Ming Fang ◽  
Bin Hong ◽  
Kung-Cheng Ho
Keyword(s):  
Monetary Policy ◽  
Interest Rate ◽  
Interest Rates ◽  
Policy Instruments ◽  
Short Term ◽  
Content Type ◽  
Interest Rate Policy ◽  
Interest Rate Liberalization ◽  
The Interest Rate ◽  
Financing Market

PurposeTo verify the effectiveness of the monetary policy, the impacts of monetary instruments on overnight spread under the interest rate corridor (IRC) are examined. The People's Bank of China (PBC) has operated the IRC since 2014. To understand the impacts of monetary instruments on overnight spread before and after the IRC framework, the complete samples are divided into two periods.Design/methodology/approachTo model the overnight spread, an exponential GARCH (EGARCH) approach is used which can examine the interbank market interest rates for monetary policy purposes. The overnight money market plays an important role in the implementation of monetary policy.FindingsChinese interest rate liberalization and the implementation of IRC affect the overnight spread in the short-term financing market. Before the implementation of the IRC, the key factor to affect the overnight spread is mainly affected by the PBC's monetary policy control on the liquidity supply side. After the implementation of IRC, the overnight spread can be the largest part explained by the liquidity demand side and the PBC's multiple monetary instruments have significant impacts on the reduction of overnight spread.Originality/valueThe overnight spread has recently been influenced by various factors that are directly or closely related to the monetary policy instruments and the interest rate policy of the PBC. Chinese interest rate liberalization and the implementation of interest rate corridor policy affect the overnight spread in the short-term financing market.

Perspectives on inflation Targeting Regime in Russia

2014 ◽  
pp. 107-121 ◽  
Author(s):  
S. Andryushin
Keyword(s):  
Monetary Policy ◽  
Financial Markets ◽  
Interest Rates ◽  
Inflation Targeting ◽  
Short Term ◽  
Indirect Control ◽  
Financial Account ◽  
Domestic Prices ◽  
Macroeconomic Indicators ◽  
Private And Public

The paper analyzes monetary policy of the Bank of Russia from 2008 to 2014. It presents the dynamics of macroeconomic indicators testifying to inability of the Bank of Russia to transit to inflation targeting regime. It is shown that the presence of short-term interest rates in the top borders of the percentage corridor does not allow to consider the key rate as a basic tool of monetary policy. The article justifies that stability of domestic prices is impossible with-out exchange rate stability. It is proved that to decrease excessive volatility on national consumer and financial markets it is reasonable to apply a policy of managing financial account, actively using for this purpose direct and indirect control tools for the cross-border flows of the private and public capital.

scholarly journals South Africa’s economic response to monetary policy uncertainty

2017 ◽  
Vol 44 (2) ◽  
pp. 282-293 ◽  
Author(s):  
Mehmet Balcilar ◽  
Rangan Gupta ◽  
Charl Jooste
Keyword(s):  
Monetary Policy ◽  
Interest Rates ◽  
Stochastic Volatility ◽  
Stochastic Volatility Model ◽  
Economic Consequences ◽  
Policy Uncertainty ◽  
Dsge Model ◽  
Content Type ◽  
Volatility Model ◽  
Central Bankers

Purpose The purpose of this paper is to study the evolution of monetary policy uncertainty and its impact on the South African economy. Design/methodology/approach The authors use a sign restricted SVAR with an endogenous feedback of stochastic volatility to evaluate the sign and size of uncertainty shocks. The authors use a nonlinear DSGE model to gain deeper insights about the transmission mechanism of monetary policy uncertainty. Findings The authors show that monetary policy volatility is high and constant. Both inflation and interest rates decline in response to uncertainty. Output rebounds quickly after a contemporaneous decrease. The DSGE model shows that the size of the uncertainty shock matters – high uncertainty can lead to a severe contraction in output, inflation and interest rates. Research limitations/implications The authors model only a few variables in the SVAR – thus missing perhaps other possible channels of shock transmission. Practical implications There is a lesson for monetary policy: monetary policy uncertainty, in isolation from general macroeconomic uncertainty, often creates unintended adverse consequences and can perpetuate a weak economic environment. The tasks of central bankers are incredibly difficult. Their models project output and inflation with relatively large uncertainty based on many shocks emanating from various sources. It matters how central bankers react to these expectations and how they communicate the underlying risks associated with setting interest rates. Originality/value This is the first study that looks into monetary policy uncertainty into South Africa using a stochastic volatility model and a nonlinear DSGE model. The results should be very useful for the Central Bank as it highlights how uncertainty, that they create, can have adverse economic consequences.

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