Turkey's new central bank governor may loosen policy

2016 ◽  
Keyword(s):  
Central Bank ◽  
Financial Markets ◽  
Interest Rates ◽  
Commercial Banks ◽  
Prime Minister ◽  
Economic Conditions ◽  
Content Type ◽  
Lending Rate ◽  
Inflation Targets ◽  
Central Bank Governor

Significance Cetinkaya is an apparent compromise between President Recep Tayyip Erdogan and Prime Minister Ahmet Davutoglu. The MPC cut the overnight lending rate by 50 basis points to 10%, leaving other rates unchanged. Financial markets welcomed the decision in the hope that Cetinkaya would avoid more radical rate cuts that could make the lira plummet and further endanger inflation targets. Impacts Policy rate cuts will have little impact on growth given other risks and factors, particularly external financial and economic conditions. No serious effort will be made to reduce inflation to 5%, until and unless this becomes a government priority. Given better dialogue between government and TCMB, blame for high interest rates may fall increasingly on commercial banks.

Ultra-loose monetary policy will soon run its course

2016 ◽  
Keyword(s):  
Monetary Policy ◽  
Central Bank ◽  
Financial Markets ◽  
Interest Rates ◽  
Mutual Funds ◽  
Investor Sentiment ◽  
Central Banks ◽  
Target Range ◽  
Content Type ◽  
Equity Mutual Funds

Significance Expectations that the Fed will refrain from hiking its benchmark rates from its target range of 0.25-0.5% and that the Japanese central bank will provide further stimulus are suppressing volatility in financial markets and fuelling demand for risk assets. However, evidence that "overburdened" monetary policy is losing its efficacy triggered a sell-off in bonds and equities on September 9, increasing the scope for sharper price falls as investors worry that central banks have run out of ammunition. Impacts Services expanded in August at their slowest pace since 2010, making it less likely that the Fed will raise interest rates this month. EM bond and equity mutual funds have enjoyed a surge in inflows since the Brexit vote as yield-hungry investors pour money into risk assets Oil, a key determinant of investor sentiment, will stay below 50 dollars/barrel unless major producers agree measures to stabilise prices.

New Ukrainian cabinet raises fears of slowing reform

2020 ◽  
Keyword(s):  
Central Bank ◽  
Interest Rates ◽  
Land Reform ◽  
Prime Minister ◽  
Content Type ◽  
The People ◽  
Obvious Reason ◽  
The Government

Subject Ukraine's reshuffle. Significance A new cabinet was unveiled on March 4 after the resignation of Prime Minister Olexiy Honcharuk. The reshuffle was carried out in a hurry with no obvious reason for such haste. Honcharuk's team is being blamed for some problems that long pre-date its five-month tenure. President Volodymyr Zelensky may be seeking to shore up his formerly sky-high popularity ratings, which fell below 50% in early February. Impacts The dismissal of Prosecutor General Ruslan Ryaboshabka will add to concerns about the commitment to fight corruption. The government reshuffle has more implications for the economy than for the conflict in eastern Ukraine. Zelensky has tried to get a land reform passed; he may be less keen if it is liable to reduce his popularity. The reshuffle may be a sacrifice made to maintain disparate loyalties in Zelensky's Servant of the People party. A further fall in inflation would let the central bank keep cutting interest rates.

Philippines' Duterte could reshape courts and banks

2017 ◽  
Keyword(s):  
Political Economy ◽  
Central Bank ◽  
Interest Rates ◽  
Supreme Court ◽  
Legal System ◽  
The Philippines ◽  
Content Type ◽  
The Supreme Court ◽  
Legal Challenges ◽  
Central Bank Governor

Subject Bank and judiciary appointments in the Philippines. Significance This year, President Rodrigo Duterte has the chance to shape the future of the Philippine economy and legal system through his power of appointments, with implications stretching well beyond the conclusion of his single presidential term in 2022. Who the president selects as the central bank's next governor will affect perceptions of the Philippines' political economy and market risk. Duterte's appointments to the Supreme Court will influence the outlook for the Philippines' judiciary and legal system. Impacts A politically motivated central bank governor appointment would put pressure on the Philippines peso and interest rates. The Supreme Court is likely to become more pro-Duterte, even though his two latest appointees will have short tenures. This is likely to diminish the success of legal challenges against the drug crackdown, insulating Duterte's team politically.

Russia will hope to escape US sanctions on debt

2021 ◽  
Keyword(s):  
Central Bank ◽  
Interest Rates ◽  
Commercial Banks ◽  
Bond Market ◽  
Global Markets ◽  
Crowding Out ◽  
Content Type ◽  
Domestic Debt ◽  
Push Up

Significance Moscow is looking to its ruble bonds rather than global markets or sovereign reserves for funding its fiscal needs, so will view possible sanctions on domestic debt with particular concern. Impacts A sudden withdrawal of non-residents from the bond market would lead to ruble depreciation, its scale dependent on the nature of sanctions. If sanctions are imposed, the central bank will help commercial banks ramp up bond purchases to stabilise the market. As domestic interest rates continue rising, public borrowing could exert a more pronounced crowding-out effect. Rapidly rising inflation will push up debt yields and increase the probability of further key rate rises by July.

Turkey may be edging towards capital controls

2019 ◽  
Keyword(s):  
Central Bank ◽  
Financial Markets ◽  
Interest Rates ◽  
Foreign Exchange ◽  
Credit Rating ◽  
Capital Controls ◽  
Short Term ◽  
Content Type ◽  
Rating Agencies ◽  
Equity Funds

Significance A score below 100 indicates a pessimistic outlook -- the index has not exceeded 100 since March 2018. Increasingly frequent and heavy-handed interventions by the Turkish Central Bank (TCMB) to help shore up the lira have fuelled concerns in financial markets that Turkey is edging closer to full capital controls. Markets and credit rating agencies are particularly focused on Turkey’s dangerously low level of net foreign-exchange (FX) reserves, once short-term dollar borrowing is excluded. Impacts Renewed escalation of the trade conflict and continued dollar strength are turning inflows into EM bond and equity funds into outflows. Market expectations of a cut in US interest rates by the year-end will help mitigate recent marked declines in EM asset prices. The rise in the price of Brent crude since late 2018 will put pressure on major energy importers such as Turkey, fuelling inflation.

Proposed Mexican financial legislation sparks concerns

2021 ◽  
Keyword(s):  
Central Bank ◽  
Commercial Banks ◽  
Legal Change ◽  
Content Type ◽  
Investor Confidence ◽  
Potential Impact

Significance The move, however, has proven controversial, generating a backlash over its potential impact on commercial banks and the central bank (Banxico), which sees it as a threat to its autonomy. The proposals come amid an unusual surge in remittances flowing into the country. Impacts Any legal change that is seen as affecting Banxico’s autonomy would damage investor confidence significantly. AMLO may stop legislation changes if they cause a depreciation of the peso. Mexico’s economy looks set to become far more reliant on remittance income than it has been in past years.

Australian central bank holds rate as growth slips

2021 ◽  
Keyword(s):  
Economic Growth ◽  
Central Bank ◽  
Interest Rates ◽  
Labour Markets ◽  
Content Type ◽  
Commercial Lenders ◽  
The Government ◽  
Roll Out ◽  
Growth Forecasts

Significance The RBA has cut its growth forecasts amid rising job losses, weakening demand and increasing signs that the latest COVID-19 lockdowns will continue to slow the economy until the pace of the vaccine roll-out programme can be increased. Impacts Although the RBA is independent, the government will hope it keeps rates low ahead of the elections due next year. Commercial lenders could raise interest rates independently of the RBA if inflation remains high. Wage pressures will re-emerge as labour markets tighten but may be mitigated by the extent of underemployment. Economic growth will be uneven across the country in coming months as pandemic-related restrictions vary by location.

Determinants of commercial bank loan and advance disbursement: the case of private Ethiopian commercial banks

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Tekeste Birhanu ◽  
Sewunet Bosho Deressa ◽  
Hossein Azadi ◽  
Ants-Hannes Viira ◽  
Steven Van Passel ◽  
...  
Keyword(s):  
Credit Risk ◽  
Commercial Bank ◽  
Commercial Banks ◽  
Inflation Rate ◽  
Bank Loans ◽  
Bank Loan ◽  
Portfolio Investment ◽  
Negative Effects ◽  
Content Type ◽  
Lending Rate

PurposeThis paper aimed to investigate the determinants of loans and advances from commercial banks in the case of Ethiopian private commercial banks.Design/methodology/approachThe study randomly selected seven commercial banks to represent the population stratified on their asset, deposit and paid-up capital amounts. The study utilized an unbalanced panel data model as each bank started operation at a different period of time and considered the period 1995–2016 for secondary details.FindingsThe findings showed that the deposit size, credit risk, portfolio investment, average lending rate, real gross domestic product (GDP) and inflation rate had significant and optimistic effects on the lending and advancement of private commercial banks. On the contrary, liquidity ratio had significant and negative effects on private commercial bank loans and advances. Finally, the study forwarded a feasible recommendation for concerned organs to focus on deposit size, credit risk, portfolio investment, average lending rate, real GDP, inflation rate and liquidity ratio. The results of this study will help banking industry policymakers and planners understand how to minimize inflation and unemployment by improving development and sustainable economic growth.Originality/valueThe findings of this study can also affect the general attitudes of a society by increasing knowledge and improve the quality of life for the general public.

Central bank transparency, inflation targeting and monetary policy: a panel data approach

2018 ◽  
Vol 45 (6) ◽  
pp. 1159-1174 ◽  
Author(s):  
Gabriel Caldas Montes ◽  
Cristiane Gea
Keyword(s):  
Developing Countries ◽  
Monetary Policy ◽  
Panel Data ◽  
Interest Rate ◽  
Central Bank ◽  
Interest Rates ◽  
Inflation Targeting ◽  
Content Type ◽  
Central Bank Transparency ◽  
Policy Interest

Purpose The evidence concerning the effects of the inflation targeting (IT) regime as well as greater central bank transparency on monetary policy interest rates is not conclusive, and the following questions remain open. What is the effect of adopting IT on both the level and volatility of monetary policy interest rate? Does central bank transparency affect the level of the monetary policy interest rate and its volatility? Are these effects greater in developing countries? The purpose of this paper is to contribute to the literature by answering these questions. Hence, the paper analyzes the effects of IT and central bank transparency on monetary policy. Design/methodology/approach The analysis uses a sample of 48 countries (31 developing) comprising the period between 1998 and 2014. Based on panel data methodology, estimates are made for the full sample, and then for the sample of developing countries. Findings Countries that adopt the IT regime tend to have lower levels of monetary policy interest rates, as well as lower interest rate volatility. The effect of adopting IT on both the level and volatility of the basic interest rate is smaller in developing countries. Besides, countries with more transparent central banks have lower levels of monetary policy interest rates, as well as lower interest rate volatility. In turn, the effect of central bank transparency on both the level and volatility of the basic interest rate is greater in developing countries. Practical implications The study brings important practical implications regarding the influence of both the IT regime and central bank transparency on monetary policy. Originality/value Studies have sought to analyze whether IT and central bank transparency are effective to control inflation. However, few studies analyze the influence of IT and central bank transparency on interest rates. This study differs from the few existing studies since: the analysis is done not only for the effect of transparency on the level of the monetary policy interest rate, but also on its volatility; the central bank transparency index that is used has never been utilized in this sort of analysis; and the study uses panel data methodology, and compares the results between different samples.

Libya's economic track could undo political progress

2021 ◽  
Keyword(s):  
Central Bank ◽  
Trade Barriers ◽  
Content Type ◽  
Military Commander ◽  
Central Bank Governor ◽  
Business Ties

Significance Unifying the budget would in effect guarantee funding to eastern Libya for the year -- a prospect unpalatable to western Libyans who suffered from eastern military commander Khalifa Haftar’s assault on Tripoli in 2019-20. However, the dialogue is also essential to unify the country and begin rebuilding. Impacts Turkey is banking on the incoming government to enhance business ties. If a new central bank governor is more friendly to Egypt, or Cyrenaica, then Turkey could lose privileges and find new trade barriers. President Mohamed Mnefi will aim to grow his own constituency in Cyrenaica, opposing Haftar and Parliament Speaker Aguila Saleh.

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