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Down is the only way: Emerging central banks deliver more rate cuts

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By Karin Strohecker and Ritvik Carvalho

LONDON (Reuters) – Emerging market policymakers slashed interest rates further in September, taking their lead from major central banks and joining in efforts to shore up their economies.

Interest rate moves by central banks across a group of 37 developing economies showed a net 11 cuts last month.

In August they delivered a net 14 cuts – the largest number since policymakers ramped up measures to kick-start growth in the wake of the financial crisis.

The easing cycle – September was the eighth straight month of net cuts – follows a tightening phase that ended in early 2019. Then, emerging market hikes outstripped or matched cuts for nine months central banks battled fallout from a strong dollar, rising inflation and softer currencies.

For a graphic on shifting gears, click https://fingfx.thomsonreuters.com/gfx/editorcharts/EMERGING-MARKETS-CENTRALBANKS/0H001PBFX533/eikon.png

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:

MEXICO – For the second time in a row, Mexico’s central bank cut its key interest rate by 25 basis points to 7.75% on Sept. 26, citing slowing inflation, widening slack in the economy, and expectations for a slight economic recovery.

EGYPT – Egypt’s central bank trimmed its key interest rates by 100 basis points on Sept. 26, its second cut in as many months, after inflation fell further and as central banks globally ease monetary policy.

THEPHILIPPINES – The central bank cut its benchmark interest rate to 4.0% on Sept. 26, its third reduction this year to bolster a slowing economy against the risk of weakening global growth.

PARAGUAY – The central bank cut its policy rate by 25 basis points to 4.00% on Sept. 23. https://www.bcp.gov.py/comunicado-mensual-de-prensa-i15

CHINA – China cut its new one-year benchmark lending rate for the second month in a row on Sept. 20, to 4.20%, as the central bank seeks to guide borrowing costs lower for an economy hit by the Sino-U.S. trade war.

HONGKONG – The central bank lowered interest rates on Sept. 19 to 2.25% in step with a rate cut by the Federal Reserve, just as months of anti-government protests and fallout from U.S.-China trade tensions start to take a toll on the economy.

INDONESIA – The central bank on Sept. 19 stepped up efforts to help lift growth by cutting interest rates for a third straight month to 5.25%, while also relaxing some lending rules in a bid to further stimulate Southeast Asia’s biggest economy.

JORDAN – The central bank said on Sept. 18 it was cutting its benchmark interest rate by 25 basis points to 4.25% in a move to help spur economic growth.

SAUDIARABIA/ UNITEDARABEMIRATES / QATAR – The central banks of Saudi Arabia, the United Arab Emirates and Qatar cut their key interest rates on Sept. 18 and 19, following the U.S. Federal Reserve decision to slash rates for the second time this year.

BRAZIL – Policymakers cut the benchmark interest rate to a new record low of 5.50% on Sept. 18 as expected and suggested more rate cuts are in the pipeline, highlighting an increasingly uncertain global outlook and tame domestic inflation.

VIETNAM – The central bank said on Sept. 13 it was cutting several interest rates to increase liquidity and support economic growth, which the country hopes will stay near 7% this year.

AZERBAIJAN – The central bank said on Friday it had cut its refinancing rate to 8.00% from 8.25% on Sept. 13 and adjusted its rate corridor.

TURKEY – The central bank cut its policy rate by 325 basis points to 16.5% on Sept. 12, delivering its second aggressive policy easing in less than two months as it seeks to boost a recession-hit economy and put last year’s currency crisis behind it.

ARMENIA – The central bank cut its key refinancing rate to 5.50% from 5.75% on Sept. 10.

KAZAKHSTAN – Policymakers raised the key interest rate to 9.25% from 9.00% on Sept. 9, citing inflationary pressure from domestic demand boosted by extra spending.

RUSSIA – The central bank delivered its third rate cut this year, trimming the key interest rate to 7% on Sept. 6 amid slowing inflation, and said another rate cut was possible at one of the next three board meetings.

UKRAINE – The central bank cut its key interest rate for the third time this year amid slowing inflation, reducing the benchmark rate to 16.5% on Sept. 5.

GEORGIA – Georgian policymakers hiked rates twice in September, first raising the key refinancing rate to 7% from 6.5% on Sept. 4 after annual inflation topped its its 3% target. On Sept. 25, they hiked interest rates again by another 50 basis points to 7.5%.

CHILE – Chile’s central bank slashed the benchmark interest rate by 50 basis points to 2.0% – the lowest level in nine years – on Sept. 3, citing a sputtering economy hurt by global trade tensions.

DOMINICANREPUBLIC – Policymakers cut interest rates by 25 basis points to 4.50% on Aug. 30. https://bit.ly/2lOxRAv

BOTSWANA – The central bank cut the lending rate by 25 basis points to 4.75% on Aug. 29.

JAMAICA – Jamaica’s central bank cut its interest rate by 25 basis points to 0.50% on Aug. 28. http://www.boj.org.jm

MOZAMBIQUE – The central bank cut its benchmark interest rate by 50 basis points on Aug. 14 to 12.75%.

NAMIBIA – Policymakers reduced the lending rate by 25 basis points to 6.5% on Aug. 14.

MAURITIUS – The central bank on Aug. 9 cut the repo rate by 0.15 basis points to 3.35%. [nS8N24B004]

PERU – The central bank cut the benchmark interest rate to 2.5% on Aug. 9 amid growing expectations for an economic slowdown in the world’s No.2 copper producer, but stressed its decision did not necessarily mean the start of an easing cycle.

SERBIA – The Serbian central bank surprised markets by cutting its benchmark interest rate another 25 basis points to 2.5% on Aug. 8, the second cut in as many months, to further bolster lending and growth.

INDIA – The Reserve Bank of India (RBI) lowered its benchmark interest rates for a fourth straight meeting on Aug. 7 with a slightly bigger than expected cut, underscoring its worries about India’s near-five year low pace of economic growth.

BELARUS – The central bank said on Aug. 7 it was cutting its main interest rate to 9.5% from 10% with effect from Aug. 14 and that the intensity of inflationary processes had slowed in the second quarter.

THAILAND – Policymakers unexpectedly cut the benchmark rate on Aug. 7, expressing worry about strength of the baht and aiming to help support faltering growth.

MOLDOVA – The central bank raised its main interest rate to 7.5% from 7% on July 31 to fight rising inflation caused by wage increases and higher food prices.

SOUTHAFRICA – The central bank cut its main lending rate as expected on July 18, but struck a cautious tone that suggested future cuts in borrowing costs were not a foregone conclusion despite benign inflation.

SOUTHKOREA – The central bank delivered a surprise interest rate cut on July 18, and shaved this year’s growth forecast to the lowest in a decade, as a brewing dispute with Japan piled more pressure on the trade-dependent economy.

PAKISTAN – Policymakers hiked the main interest rate by 100 basis points on July 16 to 13.25%, citing increased inflationary pressures and a likely near-term rise in prices from higher utility costs.

COSTARICA – The central bank cut the key policy rate to 4.50% from 4.75% from June 20. https://bit.ly/2Wk9Qmf

SRILANKA – The central bank cut its key interest rates by 50 basis points on May 31, as widely expected, to support its faltering economy as overall business and consumer confidence slumped following deadly bomb attacks.

TAJIKISTAN – The central bank reduced the refinancing rate to 13.25% from 14.75% on May 31.

KYRGYZSTAN – Policymakers in the Central Asian nation cut the benchmark rate to 4.25% from 4.50% on May 28, citing slowing inflation.

ANGOLA – Angola’s central bank cut its benchmark lending rate by 25 basis points to 15.5% on May 24.

ZAMBIA – The central bank in Lusaka raised the benchmark lending rate to 10.25% from 9.75% on May 22 to counter inflationary pressure and support macroeconomic stability.

MALAYSIA – The central bank on May 7 became the first in Southeast Asia to cut its key interest rate this year, by 25 basis points to 3.0%, moving to support its economy at a time of concern about global growth.

RWANDA – Rwanda’s central bank cut its key repo rate by 50 basis points on May 6 to 5.0%.

MALAWI – Malawi’s central bank cut its benchmark lending rate by 100 basis points on May 3 to 3.5%.

CZECHREPUBLIC – The Czech National Bank raised interest rates on May 2, using a window of opportunity created by easing economic risks abroad to stem rising domestic inflation by fine-tuning a tightening cycle it had paused at the end of 2018.

NIGERIA – In a surprise move, the central bank cut its benchmark interest rate to 13.5% from 14% on March 26 as part of an attempt to stimulate growth in Africa’s biggest economy and signal a “new direction”.

TUNISIA – Policymakers in Tunisia raised the key interest rate to 7.75% from 6.75% on Feb. 19 to combat high inflation – the third such hike in the past 12 months.

(Reporting by Karin Strohecker; Graphic by Ritvik Carvalho; Editing by Catherine Evans and Mark Potter)

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