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South Africa Inflation Stays at 3.7%, Adding to Unchanged Rate Expectation
By Nasreen Seria - Mar 23, 2011
Business ExchangeBuzz up!DiggPrint Email .South African inflation was unchanged at 3.7 percent in February, giving the central bank room to keep interest rates on hold tomorrow even as food and fuel prices climb.
Prices rose 0.7 percent in the month, the Pretoria-based statistics office said on its website today. Annual inflation was in line with the median estimate of 22 economists surveyed by Bloomberg.
Reserve Bank Governor Gill Marcus, who cut the benchmark interest rate three times to 5.5 percent last year, said on March 15 that the “upside risks” to inflation have increased because of rising food and fuel prices. The bank, which aims to keep inflation within a range of 3 percent to 6 percent, will probably leave its key rate unchanged tomorrow, according to all 23 economists surveyed by Bloomberg.
“While the inflation profile is currently benign, we believe that the tensions in the Middle East could drive oil even higher,” Shireen Darmalingam, an economist at Johannesburg-based Standard Bank Group Ltd., said in an e-mailed note before today’s data. “We believe that the Reserve Bank will keep the repo rate unchanged.”
Brent crude has surged 22 percent this year and was trading as high as $116.40 a barrel in London today. The government increased gasoline prices by 3 percent on Feb. 2 after raising them by 3.3 percent on Jan. 5 as crude oil prices surged.
The Reserve Bank cut its key rate to a 30-year low last year to spur consumer spending and economic growth, which the bank expects to reach 3.4 percent this year.
Turkey’s Central Bank Leaves Benchmark Rate Unchanged at 6.25%
By Steve Bryant - Mar 23, 2011
Business ExchangeBuzz up!DiggPrint Email .Turkey’s central bank left its benchmark interest rate unchanged for a second month as it waits to see whether restrictions on bank lending will offset the inflationary effect of rising oil prices.
The central bank in Ankara kept its one-week repo lending rate at a record low of 6.25 percent, according to an e-mailed statement today. That matched the forecast of all nine economists surveyed by Bloomberg. The bank will release minutes of the meeting within eight working days.
Governor Durmus Yilmaz, who retires April 18, lowered the rate in December and January, at the same time as increasing the reserves banks must set aside against liabilities in a bid to tame a boom in consumer credit. The bank held policy unchanged in February and said rising energy and commodity prices now pose “an additional risk to inflation,” which slowed to a four- decade low of 4.2 percent in February.
The bank “sounds inclined to stay put for one more month to observe the impact of the reserve hikes,” Inan Demir, chief economist for Finansbank AS in Istanbul, said in a telephone interview. “The global backdrop has changed since they began this policy and inflation can only go up from here.”
The central bank in January predicted year-end inflation of 5.9 percent. Higher oil prices, driven by unrest in the Middle East, are likely to drive that forecast higher when the bank reviews its predictions next month, Yilmaz said Feb. 25.
Naming Successor
Deputy Prime Minister Ali Babacan said Jan. 27 that no successor will be named until Yilmaz’s term ends on April 18 to avoid creating a “lame duck” governor. Whoever takes over will inherit a policy mix that aims to weaken the lira through low rates and limit domestic demand through higher reserve requirements for banks.
A boom in consumer demand has swollen the current-account deficit, which almost doubled in January from a year earlier, and is leading to growth that is “not balanced,” Yilmaz said this month. Turkey’s economy probably grew more than 8 percent last year, according to the International Monetary Fund, helping boost Prime Minister Recep Tayyip Erdogan’s prospects of winning a third term in elections due on June 12.
The policy adopted by Yilmaz in the past three months aims to restrain demand by slowing credit growth. Consumer loans have jumped about 40 percent in the past year, and Babacan says a pace of 25 percent would be healthier.
The central bank has doubled to 12 percent the proportion of short-term liabilities that banks must set aside, and stopped paying interest on the money.
Turkey Yields Rise Most in 16 Months on Rise in Banks’ Reserves
By Aydan Eksin - Mar 23, 2011
Business ExchangeBuzz up!DiggPrint Email .Turkey’s benchmark bond yields jumped the most in 16 months and stocks slumped after the central bank increased banks’ reserve requirements for the third time since December to stem credit growth.
Yields on benchmark two-year bonds rose as much as 36 basis points to 8.95 percent, the biggest increase since Oct. 26, 2009. Yields rose 30 basis points to 8.89 percent at 4:49 p.m. The main ISE National 100 share index dropped 1.9 percent to 63,648.64, led by banks.
“We should expect substantial pressure on t-bill rates” after the central bank’s decision, Istanbul-based broker Oyak Securities said in an e-mailed report to clients today.
Banks have sold bonds to pay for the higher reserve requirements, with yields rising to as high as 9.11 percent on March 8 from a record low of 6.9 percent in January. Banking stocks have fallen 21 percent from a November high, partly on concern the measure will hurt earnings.
Turkiye Garanti Bankasi AS (GARAN), part-owned by Banco Bilbao Vizcaya Argentaria SA of Spain, dropped 2.4 percent to 7.42 liras. Akbank TAS declined 2.6 percent to 7.46 liras.
The central bank today increased the reserve requirements to 15 percent for lira deposits of less than one month from as low as 10 percent. The measures, which include higher reserves for all lira deposits of less than a year, will be effective April 15, the bank said in a statement on its Web site.
The measure will drain 19.1 billion liras ($12.2 billion) of liquidity from the market, the central bank said.
Istanbul-based broker Standard Unlu said it may cut estimates for banks earnings per share this year and in 2012 after the increase in reserves. Akbank TAS (AKBNK) is most exposed to government bonds, with half of its interest income coming from the debt, while Yapi & Kredi Bankasi AS is least exposed, it said in an emailed report to investors today.
The central bank also left the benchmark one-week repo lending rate unchanged for a second month. It had cut the rate by a total of 0.75 percentage points in December and January to help curb foreign capital inflows that had brought gains for the lira and made exports less competitive in terms of price.
By Nasreen Seria - Mar 23, 2011
Business ExchangeBuzz up!DiggPrint Email .South African inflation was unchanged at 3.7 percent in February, giving the central bank room to keep interest rates on hold tomorrow even as food and fuel prices climb.
Prices rose 0.7 percent in the month, the Pretoria-based statistics office said on its website today. Annual inflation was in line with the median estimate of 22 economists surveyed by Bloomberg.
Reserve Bank Governor Gill Marcus, who cut the benchmark interest rate three times to 5.5 percent last year, said on March 15 that the “upside risks” to inflation have increased because of rising food and fuel prices. The bank, which aims to keep inflation within a range of 3 percent to 6 percent, will probably leave its key rate unchanged tomorrow, according to all 23 economists surveyed by Bloomberg.
“While the inflation profile is currently benign, we believe that the tensions in the Middle East could drive oil even higher,” Shireen Darmalingam, an economist at Johannesburg-based Standard Bank Group Ltd., said in an e-mailed note before today’s data. “We believe that the Reserve Bank will keep the repo rate unchanged.”
Brent crude has surged 22 percent this year and was trading as high as $116.40 a barrel in London today. The government increased gasoline prices by 3 percent on Feb. 2 after raising them by 3.3 percent on Jan. 5 as crude oil prices surged.
The Reserve Bank cut its key rate to a 30-year low last year to spur consumer spending and economic growth, which the bank expects to reach 3.4 percent this year.
Turkey’s Central Bank Leaves Benchmark Rate Unchanged at 6.25%
By Steve Bryant - Mar 23, 2011
Business ExchangeBuzz up!DiggPrint Email .Turkey’s central bank left its benchmark interest rate unchanged for a second month as it waits to see whether restrictions on bank lending will offset the inflationary effect of rising oil prices.
The central bank in Ankara kept its one-week repo lending rate at a record low of 6.25 percent, according to an e-mailed statement today. That matched the forecast of all nine economists surveyed by Bloomberg. The bank will release minutes of the meeting within eight working days.
Governor Durmus Yilmaz, who retires April 18, lowered the rate in December and January, at the same time as increasing the reserves banks must set aside against liabilities in a bid to tame a boom in consumer credit. The bank held policy unchanged in February and said rising energy and commodity prices now pose “an additional risk to inflation,” which slowed to a four- decade low of 4.2 percent in February.
The bank “sounds inclined to stay put for one more month to observe the impact of the reserve hikes,” Inan Demir, chief economist for Finansbank AS in Istanbul, said in a telephone interview. “The global backdrop has changed since they began this policy and inflation can only go up from here.”
The central bank in January predicted year-end inflation of 5.9 percent. Higher oil prices, driven by unrest in the Middle East, are likely to drive that forecast higher when the bank reviews its predictions next month, Yilmaz said Feb. 25.
Naming Successor
Deputy Prime Minister Ali Babacan said Jan. 27 that no successor will be named until Yilmaz’s term ends on April 18 to avoid creating a “lame duck” governor. Whoever takes over will inherit a policy mix that aims to weaken the lira through low rates and limit domestic demand through higher reserve requirements for banks.
A boom in consumer demand has swollen the current-account deficit, which almost doubled in January from a year earlier, and is leading to growth that is “not balanced,” Yilmaz said this month. Turkey’s economy probably grew more than 8 percent last year, according to the International Monetary Fund, helping boost Prime Minister Recep Tayyip Erdogan’s prospects of winning a third term in elections due on June 12.
The policy adopted by Yilmaz in the past three months aims to restrain demand by slowing credit growth. Consumer loans have jumped about 40 percent in the past year, and Babacan says a pace of 25 percent would be healthier.
The central bank has doubled to 12 percent the proportion of short-term liabilities that banks must set aside, and stopped paying interest on the money.
Turkey Yields Rise Most in 16 Months on Rise in Banks’ Reserves
By Aydan Eksin - Mar 23, 2011
Business ExchangeBuzz up!DiggPrint Email .Turkey’s benchmark bond yields jumped the most in 16 months and stocks slumped after the central bank increased banks’ reserve requirements for the third time since December to stem credit growth.
Yields on benchmark two-year bonds rose as much as 36 basis points to 8.95 percent, the biggest increase since Oct. 26, 2009. Yields rose 30 basis points to 8.89 percent at 4:49 p.m. The main ISE National 100 share index dropped 1.9 percent to 63,648.64, led by banks.
“We should expect substantial pressure on t-bill rates” after the central bank’s decision, Istanbul-based broker Oyak Securities said in an e-mailed report to clients today.
Banks have sold bonds to pay for the higher reserve requirements, with yields rising to as high as 9.11 percent on March 8 from a record low of 6.9 percent in January. Banking stocks have fallen 21 percent from a November high, partly on concern the measure will hurt earnings.
Turkiye Garanti Bankasi AS (GARAN), part-owned by Banco Bilbao Vizcaya Argentaria SA of Spain, dropped 2.4 percent to 7.42 liras. Akbank TAS declined 2.6 percent to 7.46 liras.
The central bank today increased the reserve requirements to 15 percent for lira deposits of less than one month from as low as 10 percent. The measures, which include higher reserves for all lira deposits of less than a year, will be effective April 15, the bank said in a statement on its Web site.
The measure will drain 19.1 billion liras ($12.2 billion) of liquidity from the market, the central bank said.
Istanbul-based broker Standard Unlu said it may cut estimates for banks earnings per share this year and in 2012 after the increase in reserves. Akbank TAS (AKBNK) is most exposed to government bonds, with half of its interest income coming from the debt, while Yapi & Kredi Bankasi AS is least exposed, it said in an emailed report to investors today.
The central bank also left the benchmark one-week repo lending rate unchanged for a second month. It had cut the rate by a total of 0.75 percentage points in December and January to help curb foreign capital inflows that had brought gains for the lira and made exports less competitive in terms of price.
