By Karin Strohecker and Ritvik Carvalho
LONDON (Reuters) – Emerging market central banks interest rate cuts outstripped interest rate hikes for a second straight month in March, taking their cue from major central banks from the U.S. Federal Reserve to the ECB taking a dovish turn.
Interest rate moves by central banks across a group of 37 developing economies showed three net rate cuts – the same as in February and compared to one net rate hike in January.
The second month of net rate cuts marks the end of a tightening cycle in which interest rate rises by emerging market central banks had outstripped or matched cuts for nine straight months. This was the longest such run since the summer of 2011 – as policymakers battled the fallout from a strong dollar, rising inflation and softer currencies which dominated most of 2018.
(Graphic: Shifting gears png, https://tmsnrt.rs/2VtMo1c)
For an interactive version of the above graphic, click here https://tmsnrt.rs/2VtMl5w.
Below is a list of recent emerging market central bank monetary policy changes.
PAKISTAN – The central bank raised its key interest rate to 10.75 percent on March 29, citing continuing inflationary pressures and a high fiscal and current account deficit.
NIGERIA – In a surprise move, the central bank cut its benchmark interest rate to 13.5 percent from 14 percent on March 26 as part of an attempt to stimulate growth in Africa’s biggest economy and signal a “new direction”.
PARAGUAY – Paraguay’s central bank cut its policy rate by 25 basis points to 4.75 percent on March 22.
JAMAICA – Jamaica’s central bank cut its interest rate by 25 basis points to 1.25 percent on March 19 – the third cut since December.
AZERBAIJAN – Azerbaijan’s central bank said on March 15 it had cut its refinancing rate to 9 percent from 9.25 percent.
GEORGIA – The central bank cut its refinancing rate to 6.5 percent from 6.75 percent on March 13, citing forecasts suggesting that annual inflation would stay close to its 3 percent target this year.
KYRGYZSTAN – Kyrgyzstan’s central bank cut its policy rate to 4.50 percent from 4.75 percent on Feb. 26, citing deflation and the need to stimulate economic growth.
EGYPT – Egypt’s central bank made a surprise cut to its overnight deposit rate on Feb. 14, citing a strong drop in inflation and an improvement in other macroeconomic indicators. The bank lowered its deposit rate to 15.75 percent from 16.75 and its lending rate to 16.75 percent from 17.75, its first rate cuts since March, 2018.
INDIA – India’s central bank unexpectedly lowered interest rates on Feb. 6 and, as anticipated, changed its policy stance to “neutral” to boost a slowing economy after a sharp slide in the inflation rate. The cut is welcome news for Prime Minister Narendra Modi’s government, which wants to boost lending and lift growth as it faces elections in May.
TUNISIA – Policy makers in Tunisia raised the key interest rate to 7.75 percent from 6.75 percent to combat high inflation in a third such hike in the past 12 months.
(Reporting by Karin Strohecker, graphic by Ritvik Carvalho; Editing by Ed Osmond)