global central banks monetary policy highlights 2013

8/13/2019 Global Central Banks Monetary Policy Highlights 2013

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Global Central Banks Monetary Policy Highlights 2013

January to December 2013Month wise & Country wise

JANUARY 2013

TOTAL RATE CUTS: 400 basis points.RATE CUTS: The central banks of Albania, Angola, Colombia, Hungary, India, Kenya,Macedonia, Mongolia and PolandTOTAL RATE RISES: 35 basis points.RATE RISES: The central banks of Denmark and Serbia,GLOBAL MONETARY POLICY RATE (GMPR): 5.85 percent

KEY EVENTS:

Minutes from the Federal ReservesFederal Open Market Committee (FOMC)meeting in December released on Jan. 3reveal growing concern over the benefits ofongoing asset purchases with some committee members considering a slowing or haltto purchases well before end-2013.

The Central Bank of Mexico on Jan. 18changes course and says it may have tocut interest rates in light of lower growth and inflation. The central bank had warned formonths that it could raise rates if inflation accelerates but is now forecasting fallinginflation.

TheBank of Japan on Jan. 21adopts a formal 2.0 percent inflation target toreplace its previous goal of 1.0 percent inflation with the hope that it will raiseinflationary expectations and thus wrest the country from almost two decades ofdeflation. The BOJs adoption of the inflation target was widely expected following

intense pressure from Japans new government under Prime Minister Shinzo Abe. TheBOJ underlines that the new inflation target is flexible and will take into account financialimbalances, a policy that is increasingly adopted by central banks worldwide in thewake of the global financial crises.

TheBank of Canada on Jan. 23starts to soften its tightening bias from April 2012,saying a withdrawal of it monetary stimulus is less imminent than previously


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anticipated due to a weaker-than-expected global economic outlook, a more mutedoutlook for inflation and slower growth in household credit.

TheNational Bank of Denmark on Jan. 24raises its benchmark lending rate by 10basis points to 0.30 percent and the rate on certificates of deposit to minus 0.10

percent, a sign of the waning appeal of Denmark as a safe haven for jittery euro zoneinvestors. Denmark entered uncharted monetary policy territory in July 2012 when it cutthe rate on CDs to negative to weaken the demand for the krone currency after inflowspushed the currency above the central banks peg to the euro.

Bank of IsraelGovernor Stanley Fischer announces on Jan. 29that he will stepdown on June 30, two years earlier than expected. Fischer, who was appointed in 2005,was widely credited with steering Israels economy through the global financial crisesrelatively unscathed. Previously, Fischer was chief economist at the World Bank,International Monetary Fund first deputy managing director. At the MassachusettsInstitute of Technology, Fischers students included Federal Reserve Chairman BenBernanke and European Central Bank President Mario Draghi.

FEBRUARY 2013

TOTAL RATE CUTS: 200 basis pointsRATE CUTS: The central banks of Azerbaijan, Bulgaria, Colombia, Georgia, Hungary,India and Poland.TOTAL RATE RISES: 25 basis pointsRATE CUTS: The central bank of Serbia.GLOBAL MONETARY POLICY RATE (GMPR): 5.83 percent

KEY EVENTS:

Minutes from the Federal ReservesFederal Open Market Committee (FOMC)meeting in January released on Feb. 20reveal intense debate over asset purchases,with some members suggesting that purchases should be varied in response tochanges in the economic outlook and others proposing that purchases may be taperedbefore the outlook for the labor market improves. Another issue is how the Fed shouldcommunicate a commitment to a highly accommodative policy, for example by holdingsecurities for a longer period than envisoned in the Feds exit principles that were

outlined in June 2011 FOMC.

TheBank of England (BOE) on Feb. 7publishes an unusually lengthy statement,saying it would look through the temporary, albeit protracted, period of above -targetinflation and maintain, or even provide additional monetary stimulus, if warranted by theoutlook. The statement illustrates the widespread commitment by central banks toflexible inflation targeting.


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MARCH 2013

TOTAL RATE CUTS: 500 basis points

RATE CUTS: The central banks of Belarus, Colombia, Georgia, Hungary, India,Mexico, Poland, Vietnam and West African States.TOTAL RATE RISES: 75 basis pointsRATE RISES: The central banks of Egypt and Tunisia,GLOBAL MONETARY POLICY RATE (GMPR): 5.78 percent

KEY EVENTS:

Haruhiko Kuroda, nominated as the next Bank of Japangovernor, says on March3that it would be natural for the BOJ to buy longer-dated government bonds in hugeamounts.

The Central Bank of Brazil on March 7omits its guidance from November 2012 thatstable monetary conditions for a prolonged period was appropriate, foreshadowingfuture rate hikes to combat rising inflation.

The Bank of Mexico on March 8cuts its benchmark rate by a larger-than-expected50 basis points, its first rate cut since July 2009, due to weak economic global growth.The bank says it is not embarking on new cycle of easing.

Russian President Vladimir Putin on March 13picks Elvira Nabiullina, formereconomy minister and aide to Putin, as new chairman of the Bank of Russia. She

becomes the first woman to head at Group of Eight (G8) central bank.

Norges Bank, Norways central bank, onMarch 14further delays any rate rise untilthe first half of 2014 after it pushed back a planned rate rise by end-2012 to 2013 inOctober 2012. The central bank decides to impose an extra cushion of capital - knownas a countercyclical capital buffer - that banks should build up during good economictimes so they can draw on that reserve if the event of losses during an economicdownturn.

The South African Reserve Bank on March 20maintains interest rates but pointsto European policy makers decision to impose an unprecedented tax on bank deposits

in Cyprus as having the potential to reignite the banking and sovereign debt crises andundermine growth prospects further. The levy on Cyprus bank deposits was part of arescue package worth 10 billion euros and revived speculation of a breakup of the euroarea.

TheBank of England on March 20is given a new remit from the UK governmentthat formalizes the flexible inflation target and includes the ability to deploy explicitforward guidance. The 2 percent inflation target was also restated.


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The Central Bank of Egypt on March 21becomes the first emerging market centralbank to raise rates in 2013, increasing the overnight deposit rate by 50 basis points andsaying inflationary expectations are more harmful to an economy than the weak outlook

for economic growth.

APRIL 2013

TOTAL RATE CUTS: 776 basis pointsRATE CUTS: The central banks of Belarus, Botswana, Hungary, Moldova, Mongolia,Sierra Leone and Turkey.TOTAL RATE RISES: 25 basis pointsRATE RISES: The central bank of Brazil.GLOBAL MONETARY POLICY RATE (GMPR): 5.75 percent

KEY EVENTS:

TheBank of Japan (BOJ) on April 4 launches a "new phase of monetary easing"aimed at reaching the 2.0 percent inflation target "at the earliest possible time, with atime horizon of about two years. The objective is to rid the country of 15 years ofdeflation. Only two weeks after taking over as governor, Haruhiko Kuroda replaces theBOJs asset purchase program with "quantitative and qualitative monetary easing,"(known as QQE) under which the BOJ will no longer target the overnight call rate, whichhas been at effectively zero since December 2008, but the monetary base, or bankreserves at the central bank plus cash in circulation. The BOJ aims to double the

monetary base by 60-70 trillion yen annually by end-2014 and push down interest ratesacross all maturities by buying government bonds at an annual pace of about 50 trillionyen. The BOJ will no longer focus its purchases on shorter maturities but include 40-year bonds so the average remaining maturity of its new bond purchases will extend toabout seven years from less than three years.

The BOJ will also boost its annual purchases of Exchange Traded Funds (ETFs) andreal estate investment trusts, so-called J-REITs, by an annual 1.0 trillion and 30 billionyen, respectively. It will also purchase commercial paper and corporate bonds until theiroutstanding amounts reach 22 trillion and 3.2 trillion yen, respectively.

The BOJ is one of the pioneers in using its balance sheet to stimulate economicactivity and launched its first attempt at quantitative easing in March 2001 by raising the

target for banks current account balances (CAB) at the BOJ in excess of their requiredreserve levels. The BOJ raised the target for CAB nine more times before exitingquantitative easing in March 2006 amid signs the economy was emerging fromdeflation. In October 2010, following the Global Financial Crises, the BOJ introducedComprehensive Monetary Easing (CME), mainly purchasing government securities butalso private assets. CME, which aimed at purchasing assets worth 101 trillion yen by2014, was absorbed into QQE.


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TheCentral Bank of Barbados (CBB) on April 5starts guiding interest rates byintervening directly in the market for Treasury bills instead of using the minimum depositrate. The rationale behind the new policy was unveiled in a CBB working paper fromMarch that set out the limitations of using interest rates to control inflation in a countrylike Barbados where 80 percent of inflation is imported. In a small, open economy like

Barbados, the policy of targeting a deposit rate to guide the local availability of credit isweak because banks, firms and households go abroad for funds. Banks will be free toset all rates except for a minimum savings rate, which is set by the CBB, to insulatesmall savers and non-profit organizations against inflation. The CBB also realizes thatinterest rates have to be kept in line with international rates to avoid destabilizinginflows and outflows of capital."

The Central Bank of Brazil on April 17kicks off its widely-expected tighteningcampaign, raising rates by 25 basis points after inflation exceeds the central banksupper tolerance level for the first time since November 2011. The benchmark Selic ratehad been frozen at 7.25 percent since November 2012 after 10 consecutive rate

reductions from August 2011.

Swedens Riksbank on April17 keeps rates steady, but pushes back a plannedhike in interest rates by around a year to the second half of 2014 as it will take longertime for inflation to start to rise toward the banks target. The Riksbank says inflation islow due to weak demand, the strong value of the Swedish krone and a difficulty ofcompanies in passing on higher costs to consumers.

After seven rate cuts totaling 200 basis points, the Central Bank of Colombia onApril 26holds rates steady, saying its past easing and proposed fiscal measures shouldhelp strengthen economic growth push up inflation toward its target.

TheBank of Thailand on April 30voices its concern over the rapid rise in the valueof its baht currency and pledges to take action when needed. There are fears the bahtwill continue to rise in response to the BOJs aggressive easing, with money seekinghigher yield in other countries, such as Thailand and South Korea.

MAY 2013

TOTAL RATE CUTS: 885 basis pointsRATE CUTS: The central banks of Australia, Belarus, Denmark, Dominican Republic,Eurosystem, Georgia, Hungary, India, Israel, Kenya, Poland, Serbia, South Korea, SriLanka, Thailand, Turkey and VietnamTOTAL RATE RISES: 350 basis pointsRATE RISES: The central banks of Brazil, Bulgaria, Gambia and Ghana,GLOBAL MONETARY POLICY RATE (GMPR): 5.72 percent


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KEY EVENTS:

The European Central Bank (ECB) on May 2cuts benchmark refinancing rate by25 basis points and says it will provide banks with all they money they need for as longas necessary. ECB President Mario Draghi pledges that the monetary policy stance will

remain accommodative for as long as needed.

The Reserve Bank of Australia on May 6resumes its easing cycle by cutting itsbenchmark rate by 25 basis points, saying lower-than-expected inflation had given itscope to encourage growth. The RBA, which is striving to counter the dampeningeffects of lower mining investments, embarked on an easing cycle in October 2011 andlast cut rates in November 2012 before pausing to let the impact of the rate cuts takeeffect. The RBA says the A$ exchange rate is at a historically high level and the

Aussie dollar falls sharply following the rate cut.

The Bank of Korea on May 9cuts its base rate by 25 basis, citing considerable

downside risks to global growth and its latest forecast that the domestic economy willshow a negative output gap for a considerable time, due mostly to the slow recovery ofthe global economy, to the influence of the Japanese yen weakening, and to thegeopolitical risk in Korea."

The Bank of Israel on May 13cuts its policy rate by 25 basis points after anunscheduled meeting of its monetary policy committee and says it will buy some $2.1billion of foreign exchange in 2013 to hold back the appreciating shekel. The shekel hasrisen due to external demand for its natural gas, low interest rates in major economiesand an expected slowing of global growth.

The National Bank of Serbia on May 14cuts its policy rate by 50 basis points dueto significantly lower inflationary pressure. The central bank raised rates eightconsecutive times from June 2012 to February 2013 in response to acceleratinginflation but then paused in March and April before starting its current easing cycle.

Federal ReserveChairman Ben Bernanke on May 22tells a U.S. Congressionalcommittee that the Fed could in the next few meetings take a step down in our pace ofpurchases, of $85 billion of Treasury bonds and housing-related securities. Bernankesays monetary policy has helped offset incipient deflationary pressures and keptinflation from falling even further below the 2 percent longer-run objective and repeatsthat the Fed is prepared to either increase or decrease the pace of its asset purchasesdepending on economic conditions.

TheBank of Israel on May 27cuts its policy rate for the second time in May to to"narrow the gaps between the Bank of Israel's interest rate and the rates in majoreconomies worldwide, in order to weaken the forces for appreciation of the shekel."

The Bank of Thailand (BOT) on May 29cuts rate by 25 basis points, citing growingdownside economic risks and says it is ready to take appropriate action as warranted


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in light of the risks to financial stability from capital flows. Referring to exchange ratevolatility, the BOT says Thai exports could be affected by slower growth in China and

Asian economies while Japans economy is starting to benefit from stimulus measures.The Bank of Japans launch of monetary easing in April has led to a sharp fall in the yenand fears of capital inflows to higher-yielding currencies, such as the Thai baht. The

BOT and Thai finance ministry are considering measures to weaken the baht.

JUNE 2013

TOTAL RATE CUTS: 926 basis pointsRATE CUTS: The central banks of Belarus, Botswana, Bulgaria, Georgia, Hungary,Mauritius, Mongolia, Mozambique, Pakistan, Poland, Rwanda, Serbia, Sierra Leone,Uganda and Ukraine.TOTAL RATE RISES: 450 basis points

RATE RISES: The central banks of Gambia, Indonesia and Zambia.GLOBAL MONETARY POLICY RATE (GMPR): 5.63 percent

KEY EVENTS:

Bank Indonesia on June 13raises benchmark rate by 25 basis points in what itdescribed as a pre-emptive move to "rising inflation expectations and to maintainmacroeconomic stability and financial system stability amid increasing uncertainty inglobal financial markets." The rate hike, under the central banks new governor AgusMartowardojo, follows a 25 basis point increase in the overnight deposit rate on June11, underlining authorities' determination to defend and stabilize the rupiah. The rupiah,

along with other emerging market currencies, have come under pressure along asinvestors start to shift funds toward advanced economies with improving growthprospects and an expected reduction in asset purchases by the U.S. Federal Reserve.

Federal Reserve Chairman Ben Bernanke on June 19 firms up his comments fromMay 22 and says after a meeting of the Federal Open Market Committee (FOMC) thatasset purchases would be slowly reduced later this year and then wound up by mid-2014, assuming the economy continues to expand. "The Committee currentlyanticipates that it would be appropriate to moderate the monthly pace of purchases laterthis year; and if the subsequent data remain broadly aligned with our currentexpectations for the economy, we would continue to reduce the pace of purchases in

measured steps through the first half of next year, ending purchases around midyear,"Bernanke says. He adds, however, that the Fed is not fixed on any dates and if"conditions improve faster than expected, the pace of asset purchases could bereduced more quickly." Conversely, if the economic outlook deteriorates, the reductionsin purchases could be delayed.

Norges Bank on June 20drops its tightening bias from March and says the policyrate will remain at the current level, or somewhat lower, in the year ahead" as inflation


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will take longer to rise and economic activity is lower than expected. At its previousmeeting in March, the Norwegian central bank said it expected to maintain rates untilthe spring of 2014 and then raise the rate. It omits any mention of rate rises.

Jaime Caruana, general manager of the Bank for International Settlements (BIS)

on June 23says major central banks will decide how and when to exit fromextraordinary easy monetary policy with much less certainty that they probably will likebut they cannot afford to wait for irrefutable evidence. Caruana tells the annual BISmeeting that nobody really knows how central banks will exit, or what they will exit intoand major central banks will need to draw on all their communication skills to make theexit from such policy as smooth as possible. "And they will have to take decisions withmuch less certainty than they would probably like - waiting for irrefutable evidence maycomplicate exit and prove costly," Caruana says, adding:. "The bigger the scale andscope of their interventions, the more difficult it will be to reduce them."

The Bank for International Settlements (BIS)warns in its annual report onJune

23that a sharp rise in interest rates from major central banks exit from extraordinaryaccommodative policy could raise the risk of stress in the financial system as bankshold large portfolios of long-dated fixed income assets that will fall in value. Whilecentral banks have more tools at their disposal, are more transparent and experiencedin managing expectations that in 1994 - when a tightening of U.S. monetary policy leadto turbulence in global bond markets - BIS said the situation now is much more complexwith the exit requiring a sequencing of both interest rate increases and the unwinding ofbalance sheet policies. Central banks will be exiting at a time of very high levels of debtwith much issued at record low levels, raising the risk of public and government angerover higher interest payments and losses. A rise in U.S. Treasury yields by 300 basispoints, for example, would result in losses to holders of those securities that exceed $1trillion, or almost 8 percent of U.S. GDP. While yields are not likely to jump that muchovernight, BIS noted that yields in 1994 rose some 200 basis points during one year in anumber of countries, illustrating that a big upward move can happen relatively fast.

The Bank for International Settlements(BIS) says in its annual report on June23that central banks should stop influencing overall financial conditions and return totheir traditional role of controlling short-term rates now that the global financial crises isreceding. In response to extreme pressure on financial markets during the height of thecrises, central banks in advanced economies expanded their operations and influenceon markets; accepting a wider range of collateral, engaging in large-scale assetpurchases and creating special lending schemes. But the BIS says such tools weremost suitable for exceptional circumstances and central banks should now return toinfluencing short-term policy rates only as a way to affect monetary conditions. Sincelate 2007, central banks total assets have roughly doubled to over $20.5 trillion, up from$18 trillion last year, accounting for just over 30 percent of global Gross DomesticProduct (GDP), double the ratio of a decade ago.


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JULY 2013

TOTAL RATE CUTS: 190 basis pointsRATE CUTS: The central banks of Albania, Hungary, Latvia, Poland, Romania and

Tajikistan,TOTAL RATE RISES: 126 basis pointsRATE RISES: The central banks of Brazil, Bulgaria, Indonesia and Zambia.GLOBAL MONETARY POLICY RATE (GMPR): 5.62 percent

KEY EVENTS:

The National Bank of Poland (NBP) on July 3says its latest rate cut ends its cycleof easing. The NBP started cutting rates in November 2012 - a move that was criticizedas too late to cushion the economy from the euro area's recessionbut then froze ratesin April before cutting again in May and June.

The Bank of England (BOE) on July 4, in a rare statement accompanying its ratedecision, says the rise in market interest rates will have a negative impact on its outlookfor economic growth and inflation, and it does consider the implied rise in its policy rateto be warranted by economic developments. The BOE's Monetary Policy Committee,chaired for the first time by Governor Mark Carney after he arrived from the Bank ofCanada, says recent data have been consistent with the BOEs outlook and inflation isexpected to slowly fall back towards the bank's 2.0 percent target though it may risefurther in the near term. "The significant upward movement in market interest rateswould, however, weigh on that outlook; in the Committee's view, the implied rise in theexpected future path of Bank Rate was not warranted by the recent developments in the

domestic economy," the BOE says. Yields on government bond yields in the U.K. andU.S. have risen in recent weeks following better economic data and the FederalReserves statement on June 19 that the U.S. central bank is considering slowing downits asset purchases later this year.

The European Central Bank (ECB) on July 4broke with tradition and adopted aform of forward guidance to counter a rise in global interest rates, saying it will maintainan easy monetary policy stance for "as long as necessary" and may even cut ratesfurther. The ECB said the risks surrounding its economic outlook remain on thedownside and the recent rise in global bond yields "may have the potential to negativelyaffect economic conditions." "The Governing Council expects the key ECB interest rates

to remain at present or lower levels for an extended period of time," ECB PresidentMario Draghi says. Long-term interest rates rose worldwide following the FederalReserve's decision on June 19 to start winding up its asset purchase program later thisyear as long as the economy continues to recover.

Bank Indonesia on July 11raises benchmark BI rate by higher-than-expected 50basis points to "ensure that inflation will return to its target path after the fuel price hike."Indonesia's government cut fuel subsidies on June 22 to reduce budget deficits and the


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BI had forecast this would trigger higher inflation. The central bank, which cuts its 2013economic growth forecast, also says it will provide adequate liquidity to the foreignexchange market to maintain a stable exchange rate.

The Reserve Bank of India (RBI) on July 15raises its marginal standing facility

(MSF) rate by 200 basis points to 10.25 percent to restore stability to the foreignexchange market.

TheCentral Bank of the Republic of Turkey on July 23raises overnight lendingrate by a sharp 75 basis points and says it will tighten monetary policy further ifnecessary to support financial stability. The central bank says recent developmentshave an adverse affect on inflation, including a surge in unprocessed food prices andrising oil prices, and the increased exchange rate volatility may continue to adverselyimpact inflation in the short term. "Although the Committee sees these developments astemporary to a large extent, a measured tightening is deemed necessary in order tocontain a deterioration in the pricing behaviour," the central bank says, adding: "Capital

flows have weakened since May due to increasing uncertainty regarding the globalmonetary policies," and tighter policy would help support financial stability.

The Central Bank of Nigeria on July 23warns of the risks from rising governmentdeficits, pressure on the exchange rate from excess liquidity in the banking system anda possible reversal of capital flows. The central bank also raises to 50 percent from 12percent the Cash Reserve Requirement on banks public sector deposits, i.e. depositsthat originate from federal, state and local governments and ministries, department andagencies (MDAs). "The Committee observed the build-up in excess liquidity in thebanking system, and expressed concern over the rising cost of liquidity management aswell as the sluggish growth in private sector credit, which was traced to DMB's (depositmoney banks) appetite for government securities," the CBN said, adding: "The situationis made more serious by the perverse incentive structure under which banks sourcehuge amounts of public sector deposits and lend same to the government (throughsecurities) and the CBN (via OMO bills) at high rates of interest."

TheReserve Bank of New Zealand on July 24confirms that it will hold rates steadythrough the year but warns that will probably have to tighten policy in the future,depending on how much the housing market and construction sector fuels inflationpressures. Theintroduction of a tightening bias was not expected by economists, though the centralbank has often voiced its concern over the strength of the housing market and the effectthis may have on inflation.

The Reserve Bank of India (RBI) on July 30maintains its main policy rates but cutsthe growth forecast and appeals to politicians to take immediate steps to slash thecurrent account deficit and it says it is "ready to use all available instruments andmeasures at its command to respond proactively and swiftly to any key adversedevelopment." The RBI says it is "caught in a classic 'impossible trinity' trilemmawhereby we are having to forfeit some monetary policy discrection to address external


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sector concerns." The trilemma refers to a concept in international economics that saysit is impossible to have a fixed exchange rate, free capital movement and anindependent monetary policy at the same time. Under normal circumstances, the RBIwould have been able to continue last year's policy of easing to boost growth butdownward pressure on the rupee is limiting its options.

AUGUST 2013

TOTAL RATE CUTS: 645 basis pointsRATE CUTS: The central banks of Angola, Australia, Botswana, Egypt, Georgia,Hungary, Jordan, Mozambique, Romania, Sierra Leone and Ukraine.TOTAL RATE RISES: 350 basis pointsRATE CUTS: The central banks of Armenia, Brazil, Dominican Republic andIndonesia,

GLOBAL MONETARY POLICY RATE (GMPR): 5.58 percent

KEY EVENTS:

The Central Bank of Egypt on Aug. 1cuts its overnight deposit rate by 50 basispoint, saying the downside risks to economic growth outweigh the upside risks toinflation. The central bank raised rates in March to fend off inflationary pressure but nowsays inflationary risks have moderated as a rebound in international food prices isunlikely in light of slow global growth.

TheCzech National Bank on Aug. 1says it is now more likely to use intervention inforeign exchange markets to keep the koruna currency low. The Czech Republic'scentral bank first raised the issue of using foreign exchange market intervention to lowerthe koruna currency in September 2012 and in May it said it was ready to useintervention if further policy easing becomes necessary. In its presentation, the banksharpens its language, saying "the likelihood of launching foreign exchangeinterventions to ease monetary policy has increased further."

TheReserve Bank of Australia (RBA) on Aug. 6cuts its cash rate by a further 25

basis points, but omits a reference to having scope to adjust policy if required to supportdemand, a signal that it is approaching the end of its easing cycle. The RBA ,which hascut rates by 225 basis points since October 2011, says the Australian dollar remains ata high level although it has depreciated by around 15 percent since early April. "It ispossible that the exchange rate will depreciate further over time, which would help tofoster a rebalancing of growth in the economy," the RBA says, repeating last month'sstatement and acknowledging the benefits of a lower exchange rate on the internationalcompetitiveness of its exports.


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The Bank of England (BOE) on Aug. 7adopts forward guidance to better influence

market expectations about the conditions that may lead to a change in monetary policystance. The BOE says it intends to maintain its Bank Rate at the current level of 0.5percent and is ready to purchase further assets at least until the U.K. unemployment

rate falls to a threshold of 7.0 percent. But the BOE is also introduces two inflationconditions and a financial stability condition that would "knock out" the unemploymentthreshold. Under the inflation conditions, consumer prices should remain below 2.5percent in 1-1/2 to 2 years ahead and medium-term inflation expectations should remainanchored. Under the financial stability condition, the BOE's new Financial PolicyCommittee must not consider the monetary policy stance a "significant threat to financialstability." "The knock-outs would not necessarily trigger an increase in Bank Rate - theywould instead be a prompt for the MPC to reconsider the appropriate stance of policy,"says BOE Governor Mark Carney. "But until the unemployment threshold is reached theMPC intends not to reduce the stock of asset purchases from the current 375 billionpounds." The two inflation knockouts were included to ensure that the forward guidance

- known as a state-contingent guidance - is consistent with the BOE's primary objectiveof price stability, currently defined as inflation of 2.0 percent. The financial stabilityknockout was included because the BOE has been given responsibility for ensuringfinancial stability."It is important to stress that forward guidance does not mean the MPCis promising to keep interest rates low for a particular period of time. The path of BankRate and asset purchases will, as always, depend on economic conditions," Carneysays, adding: "So 7% is merely a 'way station' at which the MPC will reassess the stateof the economy, the progress of the economic recovery, and, in that context, theappropriate stance of monetary policy."

TheCentral Bank of Chile on Aug. 14again warns it may cut rates in comingmonths if the economy continues to slow down. The central bank, which last cut its ratein January 2012, said global economic activity in the second quarter was generallylower than expected and surveys show that domestic consumption, which remainsdynamic, is expected to ease and investment to moderate. "The consolidation of thetrends outlines in the last Monetary Policy Report could call for adjustments to themonetary policy interest rate in the coming months," the central bank said, repeating itsstatement from July.

TheCentral Bank of the Republic of Turkey on Aug. 20raises its overnightlending rate by 50 basis points and says "additional monetary tightening will beimplemented whenever needed" until the inflation outlook is in line with medium-termtargets. Turkey's lira has been hard hit from the change in global risk assessments asinvestors prepare for a reduction in quantitative easing by the U.S. Federal Reserve,and the central bank said the weakness in capital flows that started in May hadcontinued.

Bank Indonesia (BI) on Aug. 29raises its benchmark BI rate by 50 basis points,strengthens its currency intervention and liquidity management operations and signs a


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$12 billion swap agreement with the Bank of Japan to bolster its defenses in light of theoutflow of capital, pressure on the rupiah currency and high inflationary expectations.The central bank says, after an extraordinary meeting of its board, that it "was ready totake further measures to strengthen its monetary policy instruments and themacroprudential policy mix if required." Pressure on the rupiah is also continuing, the BI

says, partly from the general pressure on almost all emerging market currencies butalso because of the high current account deficit and inflation. "Bank Indonesia assessesthat the level of today's exchange rate reflects the fundamentals as well as supportsincreased exports and decreased imports as part of the process of adjusting the currentaccount deficit," the bank says. BI says the increase in interest rates should help itfurther control inflation expectations and "mitigate the risk of a possible influence of therupiah deprecation on inflation and vice versa." It adds the new measures should alsoreduce the current account deficit to a sustainable level.

The Federal Reserve Bank of Kansas Citys 2013Jackson Hole Economic PolicySymposium on Aug. 23publishes paper by Robert E. Hall: The Routes into and out of

the Zero Lower Bound. Paper says pent-up demand for investment on business plantsand equipment, homebuilding and consumer durables will strengthen the U.S. economyand the main danger over the next two years is that the Federal Reserve contracts itsportfolio of assets or raise rates on reserves before the economy has returned to anormal state. Hall writes that most of the forces that led the U.S. and other advancedeconomies into the 2007-2009 recession and investment flows are now beginning toreturn to normal and the labor market has returned to normal in terms of jobs valuenotwithstanding the continued high unemployment rate.

The Federal Reserve Bank of Kansas Citys 2013Jackson Hole Economic PolicySymposium on Aug. 23publishes paper byArvind Krishnamurthy and Annette Vissing-Jorgensen: The Ins and Outs of LSAPs. The authors write that the Federal Reserveshould spell out its conditions for winding down quantitative easing (QE) to avoid furtherdamaging rises in long-term interest rates. So far, the Fed has been deliberately vagueabout its plans for asset purchasesso-called large scale asset purchases or LSAPs -to retain flexibility in its policy given its limited knowledge of how this tool affects the realeconomy. But the jump in global bond yields and the plunge in stock markets followingthe Feds June 19 statement is evidence of the sensitivity of investors to the future ofLSAPs, mainly because QE targets long term bonds whose prices are very sensitive toexpectations of future policy. One of the distinguishing features of QE is that it entailsthe purchase of longer maturity assets, such as mortgage-backed securities (MBS) orTreasury bonds. This compares with traditional monetary policy that typically focuses onshort-term rates, and in the case of the Fed, the overnight fed funds rate.Since theprices of long maturity assets are much more sensitive to expectations about futurepolicy than short maturity assets, controlling those expectations is of central importancein the transmission mechanism of QE. Therefore, how an exit is communicated toinvestors matter greatly, they say.By being imprecise in the state-dependence ofLSAP policy, the Fed has left it to investors to form expectations over the future ofLSAPs, they write, adding that Investors only understand that LSAPs are a tool to beused when the zero-lower-bound is binding. Thus when the Fed communicates that it


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plans on not using LSAPs, investors assume that the zero-lower-bound will not bebinding and that rate hikes will follow.

The Federal Reserve Bank of Kansas Citys 2013Jackson Hole Economic PolicySymposium on Aug. 24publishes paper by Helene Rey: Dilemma not Trilemma: The

Global Financial Cycle and Monetary Policy Independence. Rey writes that a globalfinancial cycle, mainly determined by U.S. monetary policy, constrains nationalmonetary policies when capital is freely mobile regardless of the exchange rate regime.Rey shows how global capital flows, asset prices, credit growth and financial leveragetend to move in sync with the VIX, the ticker symbol for the Chicago-traded index thatmeasures uncertainty and risk aversion in financial markets. The VIX thus becomes aproxy for a global financial cycle that is independent of countries specific economicconditions.

SEPTEMBER 2013

TOTAL RATE CUTS: 220 basis pointsRATE CUTS:The central banks of Egypt, Hungary, Israel, Latvia, Mexico, Romaniaand West African States.TOTAL RATE RISES: 201 basis pointsRATE RISES: The central banks of Bulgaria, India, Indonesia, Pakistan and Uganda,GLOBAL MONETARY POLICY RATE (GMPR): 5.58 percent

KEY EVENTS:

The Bank of Mexico on Sept. 6surprises markets by cutting its interbank target rate

by 25 basis points, saying economic growth this year and 2014 will be weaker thanexpected, putting downward pressure on inflation. The central bank says downside risksto the economy had risen and growth this year will be "considerably" less than forecast,

just as growth in 2014 will be below the forecast. "With regard to inflation risks in theshort term, there is the possibility that the weakening of Mexico's economic activity isgreater and more prolonged than expected and that could cause downward pressure,"the bank says. The central bank notes the recent volatility and pressure on thecurrencies of emerging economies, including Mexico's, and higher medium and long-term interest rates due to the expected changes in U.S. monetary policy. "Mexico'ssovereign risk, unlike other emerging economies, has remained stable after havingincreased in May and June, contributing to the strength of Mexico's macroeconomic

fundamentals," the central bank says.

TheBank of Russia on Sept. 13 takes major step forward in its move toward aninflation-targeting regime on Feb. 1, 2014 and adopts the rate on one-week depositauctions as its main policy instrument to provide liquidity, replacing the refinancing rate.The one-week rate on deposit auctions is raised to 5.50 percent from 5.0 percent. Thebank also adopts a new interest rate corridor comprising one-day liquidity provisions as


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the upper limit and one-day absorption facilities as the lower limit. The rates are setat 6.50 percent and 4.50 percent.

TheReserve Bank of New Zealand (RBNZ) on Sept. 11 repeats that it expects to

maintain its benchmark Overnight Cash (OCR) steady this year but adds that "OCRincreases will likely be required next year" and the "the extent and timing of the rise inpolicy rates will depend largely on the degree to which the momentum in the housingmarket and construction sector spills over into broader demand and inflationpressures."The guidance by the RBNZ is slightly more specific than in July when it saida "removal of monetary stimulus will likely be needed in the future," omitting anymention of when it may tighten.

TheBank of Russia on Sept. 13 takes major step forward in its move toward aninflation-targeting regime on Feb. 1, 2014 and adopts the rate on one-week depositauctions as its main policy instrument to provide liquidity, replacing the refinancing rate.

The one-week rate on deposit auctions is raised to 5.50 percent from 5.0 percent. Thebank also adopts a new interest rate corridor comprising one-day liquidity provisions asthe upper limit and one-day absorption facilities as the lower limit. The rates are setat 6.50 percent and 4.50 percent.

The U.S. Federal Reserve on Sept. 18surprises markets by deciding to continuewith its monthly purchase of $85 billion worth of mortgage-backed securities and long-term Treasury bonds "until the outlook for the labor market has improved substantially ina context of price stability." The Federal Reserve's policy making body, the FederalOpen Market Committee (FOMC) says the economy and labor market has improvedover the last year when its began its latest asset purchase program, despite the impactof the cuts in the federal deficit. "However, the Committee decided to await moreevidence that progress will be sustained before adjusting the pace of its purchases," theFOMC says, adding that asset purchases were not on preset course and the pace ofthe purchases will depend on conditions in the labor market. The Fed affirms that it stillexpects to keep the federal funds rate between zero and 0.25 percent at least as longas the unemployment rate is above 6.5 percent and inflation is below 2.5 percent.

The Feds surprise decision to continue with its asset purchases, triggers debate overthe usefulness of forward guidance given that investors expectations were so wrong.By adding more predictability and transparency to central banks policy, forwardguidance was supposed to reduce market volatility. Most of the criticism of the Fed isdirected toward its ability to communicate but the consequence of the Feds deliberatepolicy of vagueness and uncertainty about winding down quantitative easing may haveconsequences for its policy, as witnessed by Richard Fisher, president of the DallasFed, who says the decision calls into question the credibility of the Fedscommunications.

The Reserve Bank of India (RBI) on Sept. 20 begins to wind up exceptionalmeasures aimed at shoring up the embattled rupee and raises the policy repo rate by


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25 basis points to combat inflation while cutting the marginal standing facility (MSF) rateby 75 basis points to ease short-term liquidity conditions. The RBI also cuts theminimum daily maintenance of the cash reserve ratio (CRR) to 95 percent from 99percent while keeping the overall CRR rate unchanged at 4.0 percent. "We believe thateasing the exceptional liquidity measures was warranted given that the external

environment has improved and given that the government and the RBI have used thetime since the measures were put in place to narrow the current account deficit andease its financing," the new governor of the RBI, Raghuram Rajan, says. He adds:"Recognizing that inflationary pressures are mounting and determined to establish anominal anchor which will allow us to preserve the internal value of the rupee, we haveraised the repo rate by 25 basis points."

TheBank of Israel (BOI) on Sept. 23cuts its policy rate by 25 basis points asinflation is below the midpoint of the bank's target range, domestic growth is slower-than-expected, the economies of advanced economies may slow down and the shekel

has continued to appreciate. The BOI also cuts its growth forecast for 2013.

The Czech National Bank (CNB) on Sept. 26says its "ready to use the exchangerate if further monetary policy easing becomes necessary." "The probability of launchingforeign exchange interventions has not changed and remains high," the CNB says,adding that interest rates are first forecast to rise in 2015 and "given the zero lowerbound on monetary policy rates, this points to a need for easing monetary policy usingother instruments." "The risks to the inflation forecast are slightly on the downside, tiltedtoward the need for slightly easier monetary conditions," the strongest sign to date thatthe CNB is ready to intervene in foreign exchange markets to push down the koruna'sexchange rate.

TheReserve Bank of Australia on Sept. 30 says the full effects of rate cuts sincelate 2011 "are still coming through, and will be for a while yet." While the RBA repeatedthat it would "continue to assess the outlook and adjust policy as needed," the banksoftened its description of the Australian dollar, saying that it is still about 10 percentbelow its level in April despite a recent rise. "A lower level of the currency than seen atpresent would assist in rebalancing growth in the economy," the RBA said, no longerdescribing the exchange rate of the A$ as high, as it has in recent months.

OCTOBER 2013

TOTAL RATE CUTS: 306 basis pointsRATE CUTS:The central banks of Bulgaria, Chile, Hungary, Jordan, Mexico,Mozambique, Serbia, Sri Lanka and Tajikistan,TOTAL RATE RISES: 75 basis pointsRATE RISES: The central banks of Brazil and India,


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GLOBAL MONETARY POLICY RATE (GMPR): 5.52 percent

KEY EVENTS:

The European Central Bank (ECB) on Oct. 2confirms that it expects to maintain its

policy rates "at present or lower levels for an extended period of time," but adds that it iskeeping a close eye on the rise in money market rates "which may have implications forthe stance of monetary policy and are ready to consider all available instruments."

U.S. President Barrack Obama on Oct. 9nominates Federal Reserve ViceChair Janet Yellento succeed Ben Bernanke, whose second term as chairman of theworlds most powerful central bank ends on January 31, 2014. If approved, Yellen willbecome the first woman to head a central bank in a Group of Seven (G7) leadingeconomic nation.

The Central Bank of Chile on Oct. 17cuts its policy rate by 25 basis points,surprising economists although the banks board had considering cutting in the previous

five meetings and warned it would cut if the economy continues to slow down. The banksaid the cut, the first since January 2012, came in response to slower global growth andsigns that domestic demand is slowing further and inflation is below forecasts.

Norges Bank on Oct. 24 omits its guidance from September that rates would bemaintained at the current level until next summer when they would be gradually raisedto a more normal level. The Norwegian central bank says growth among its main tradingpartners was fairly low but in line with its forecasts but the expected increase in keyrates abroad had again been pushed somewhat further into the future. In addition,household demand in Norway seems to be slightly weaker than assumed, house priceshave leveled off and inflation has slowed.

The Bank of Canada (BOC) on Oct. 23drops its slight tightening bias due tolower-than-expected economic activity from weaker global growth and says the"substantial monetary policy stimulus currently in place remains appropriate." The BOCstarted to warn financial markets in April 2012 that it would have to raise interest ratesat some point to keep inflation at bay but economic growth then slowed in the secondhalf of the year and in January 2013 the BOC conceded that a rate rise was lessimminent than expected. Although the BOC still maintained a tightening bias, the arrivalof new Governor Stephen Poloz, who took over from Mark Carney, now at the Bank ofEngland, was accompanied by a slight change to the wording of its guidance in July,though the BOC still maintained in September that it would eventually normalize ratesas economic conditions return to normal.

The Bank of Mexico on Oct. 25cuts its policy rate by another 25 basis points, itsthird rate cut this year, but says it is not considering further rate reductions in theforeseeable future and wants to ensure that inflation is not affected by changes totaxes and U.S. monetary policy.

The Reserve Bank of India (RBI) on Oct. 29raises its policy rate by another 25basis points to "curb mounting inflationary pressures and manage inflation expectations


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in a situation of weak growth." The RBI cuts the marginal standing facility (MSF) rate bya further 25 basis points to 8.75 percent to infuse liquidity into the system as it finishesunwinding Julys exceptional tightening measures.

NOVEMBER 2013

TOTAL RATE CUTS: 545 basis pointsRATE CUTS: The central banks of Albania, Angola, Armenia, Chile, Congo Dem. Repl.,Eurosystem, Hungary, Latvia, Peru, Romania, Serbia and Thailand,TOTAL RATE RISES: 125 basis pointsRATE RISES: The central banks of Brazil, Indonesia and Pakistan.GLOBAL MONETARY POLICY RATE (GMPR): 5.47 percent

KEY EVENTS:

The Reserve Bank of Australia (RBA) on Nov. 4describes the exchange rate ofthe Australian dollar as "uncomfortably high" and a "lower exchange rate is likely to beneeded to achieve balanced growth in the economy." The statement about the Aussie ismuch stronger than in recent months. In September, for example, the RBA dropped itsearlier description of the A$ exchange rate as "high" and merely said that a lowerexchange rate level would "assist" in rebalancing growth.

The National Bank of Poland (NBP) on Nov. 6pushes back any rate rise by

another six months, saying it would maintain rates "at least until the end of the first halfof 2014" as the latest forecast confirms low inflationary pressure and an expectedmoderate economic recovery. At its previous meeting in September, the NBP said itwould maintain its interest rate at "least until the end of 2013."

The Central Bank of Peru on Nov. 7cuts its policy rate by 25 basis points, its firstrate change since April 2011, describing the rate cut as "preventative and does notimply a sequence of reductions."

The European Central Bank (ECB) on Nov. 7surprises markets by cutting itsrefinancing rate by 25 basis points, its second cut this year, following a sharp drop inOctober inflation to 0.7 percent and says it will give banks all the money they need foras long as necessary, and at least until the second quarter of 2015, to boost economicgrowth. ECB says the euro area may experience a prolonged period of low inflation.The ECB also affirms its guidance that its monetary policy will "remain accommodativefor as long as necessary" and it "expects the key ECB interest rates to remain atpresent or lower levels for an extended period of time."


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The National Bank of Denmark on Nov. 7 maintains key rates, breaking with itstradition of following the European Central Banks rate changes, saying commercialbanks have "a large need to place funds" at the central bank. The bank enteredunchartered territory in July 2012 when it cut its rates, including the deposit rate by 25basis points to a negative 0.2 percent, in an attempt to weaken the crown which came

under upward pressure as investor sought safe haven outside the euro area's sovereigndebt crises. In January rates were raised by 10 basis points, leaving the deposit rate ata negative 0.10 percent and the key lending rate at 0.30 percent.

The Czech National Bank on Nov. 7says it will "start using the exchange rate as anadditional instrument for easing the monetary conditions" and "will intervene on theforeign exchange market to weaken the koruna so that the exchange rate against theeuro is close to CZK 27." The central banks board has been debating currencyintervention for months and in October it decided that it was "ready to use the exchangerate if further monetary policy easing becomes necessary," citing the risk that inflationmay decline further.

The Bank of Latvia on Nov. 11slashes its refinancing rate by 125 basis points to0.25 percent, mirroring the ECBs rate, saying "inflation indicators remain low in Latviaand the rate at which the economy develops does not pose risks to price stability in themedium term." Latvia becomes the 18th nation to adopt the single currency, the euro,on January 1, 2014.

The Central Bank of the Republic of Turkey (CBRT) on Nov. 19 scraps its one-month repurchase auctions to limit the impact of exchange rate fluctuations on inflationand the volatility of short term money market rates, saying this would strengthen thebank's "cautious stance," and result in interbank money market rates of around 7.75

percent. The bank also omits the reference to the one-week repo rate as its policy rateand on Nov. 20 explains that the one-week repo rate should no longer be considered itsreference rate and instead markets should focus on the overnight interbank lending orrepo rates .

Minutes from the October meeting of the Federal Reserves Federal Open MarketCommittee published on Nov. 20says some of the committee members pointed outthat, if economic conditions warranted, the Committee could decide to slow the pace ofpurchases at one of its next few meetings.

The South African Reserve Bank (SARB) on Nov. 21says that "given theincreased upside risks to the outlook, we do not see room for further monetaryaccommodation." Although the growth outlook remains fragile, upside risks to inflationand a possible further deprecation of the rand from a reduction in the U.S. FederalReserve's asset purchases outweighs this weak outlook for growth. "The challengefacing the MPC is not only to anticipate the timing and speed of Fed tapering, but alsoto try to assess the extent to which tapering is already priced into the exchange rate.


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There is a risk that, should there be a stronger or more disorderly response by themarkets to actual Fed tapering, the reaction of the exchange rate could be moreextreme," said Gill Marcus, SARB governor.

The Central Bank of Chile on Nov. 19cuts its policy rate for the second time in a

row, saying third quarter data confirmed its expectations that all components of demandare slowing down.

The Bank of Thailand (BOT) surprises markets on Nov. 27by cutting its rate forthe second time this year, saying there is room for monetary policy to mitigate thegrowing downside risks to the economy "given the benign inflation outlook andmoderating household credit growth. The BOT had been expected to maintain ratesdue to concern over high household debt and fears that an expected reduction in assetpurchases by the U.S. Federal Reserve in coming months could lead to outflow ofcapital and downward pressure on the Thai baht.

The Central Bank of Brazil on Nov. 27 raises its benchmark Selic rate for the sixthtime in a row but omits its usual reference to the decision contributing to reducinginflation and ensuring that this trend would persist into next year. This stokesspeculation that the central bank will pause in its tightening cycle. Brazil's inflation rateeased slightly to 5.84 percent in October from 5.86 percent in September, continuing itsdecline since hitting a year-high of 6.7 percent in June.

The Bank of England on Nov. 28 rolls back support for the U.K. housing sector,saying additional stimulus for lending to households is no longer required. BOEGovernor Mark Carney explains the shift toward neutral in the banks support of homelending would in fact allow the banks key rates to stay low for longer. The move comestwo weeks after the BOEs upgraded its view of the UK economy in its Novemberinflation report with the implication that interest rates may be raised in 2015 rather than2016.

DECEMBER 2013

TOTAL RATE CUTS: 495 basis pointsRATE CUTS:The central banks of Albania, Armenia, Botswana, Egypt, Hungary,Serbia, Sweden, Uganda and Uzbekistan.TOTAL RATE RISES: 50 basis points

RATE RISES: The central bank of Tunisia.GLOBAL MONETARY POLICY RATE (GMPR): 5.42 percent

KEY EVENTS:


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The Bank of Canada on Dec. 4says the "substantial monetary policy stimuluscurrently in place remains appropriate" but cautions that the downside risks to inflation"appear to be greater."

The Central Bank of Egypt on Dec. 5surprises financial markets by cutting its

benchmark rate by 50 basis points, its third cut in a row, despite rising inflation. Thecentral bank has been under pressure to maintain high rates to attract capital and notdeplete foreign currency reserves, which have been under pressure since the politicaluprising in 2011 that toppled President Hosni Mubarak. But the bank says there arelimited risks to higher inflation due to pronounced downside risks to domestic GDPcombined with the persistently negative output gap since 2011.

The European Central Bank (ECB) on Dec. 5says economic activity should slowlyrecover in 2014 and 2015 but the euro area may experience a prolonged period of lowinflation. The ECB cuts its inflation forecast for 2013 and 2014 and says the lowerforecast confirms the ECBs decision to cut rates in November.

Norways central bank,Norges Bank on Dec. 5pushes back its forecast for a raterise by one year until the summer of 2015, saying inflation had been lower thanexpected in the past two months, economic growth will be lower than forecast, houseprices have declined and wage growth may be somewhat lower than projected. InSeptember Norges Bank forecast that rates would be maintained at the current leveluntil the summer of 2014 and then gradually raised, but then in October the bankdropped this guidance, saying rate rises by key trading partners had been pushedfurther into the future.

Bank Indonesia on Dec. 12holds rates steady but says it will remain "watchful ofthe planned tapering policy by the Federal Reserve and will bolster the ongoing policy

response. The bank has raised its rates five times to curb inflation, also said its currentstance was "consistent with ongoing efforts to bring inflation back towards the targetcorridor as well as to reduce the current account deficit to a more sustainable andsound level."

The Reserve Bank of New Zealand on Dec. 11 warns it "will increase the OCR asneeded in order to keep future average inflation near the 2 percent target," a morehawkish statement than in October when it said an increase in the Official Cash Rate(OCR) will likely be required next year. The central bank raises its forecast for the 90 -day rate, which has closely tracked the OCR rate ever since it was introduced in March1999, by about 50 basis points, projecting a rise to 3.8 percent by December 2014 fromaround 2.5 percent.

The Reserve Bank of India on Dec. 18surprises markets by holding its maininterest rates steady and emphasizes that it is not soft on inflation and is poised to act ifinflation does not fall in coming months. The RBI describes its decision as a close oneand says "there are obvious risks to waiting for more data, including the possibility thattapering of quantitative easing by the US Fed may disrupt external markets and that theReserve Bank may be perceived to be soft on inflation." But the RBI expects inflation to


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fall in coming months and does not want to tighten policy too much and damage theeconomy given the long lag before any rate rise takes effect.

SwedensRiksbank on Dec. 17cuts its repo rate by 25 basis points and pushesback any rate rise until early 2015 from late 2014 due to lower-than-expected inflation.

The Federal Reserve on Dec. 18decides to trim its purchase of bonds and housing-related securities assets by a modest $10 billion to $75 billion a month starting inJanuary 2014 due to the improved situation on the labor market and will then probablycontinue to reduce the pace of asset purchases "in further measured steps" in comingmonths if the jobless rate continue to fall and inflation rises towards the central bank's2.0 percent objective. But the Fed adds that its asset purchases were not on a presetcourse and decisions about the future pace of purchases are contingent on theeconomic outlook. But to reinforce the message that it rates will remain low, the Fedsays it expects to keep its fed funds rate at essentially zero "well past the time that theunemployment rate declines below 6-1/2 percent, especially if projected inflation

continues to run below the Committee's 2 percent longer-run goal."

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global central banks monetary policy highlights 2013

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