Global Central Banks Highlights for Monetary

Policy Rates in month of August 2014

Global Central Banks Highlights
for Monetary Policy Rates in
month of August 2014



Colombia Central Bank :
The Board of Directors of Banco de la Repblica Raises the Benchmark Interest
Rate by 25 Basis Points
At todays meeting, the Board of Directors of Banco de la Repblica decided to raise the benchmark
interest rate by 25 bp, placing it at 4.25%. The following aspects were taken into consideration by the
Board in reaching this decision.
After climbing and moving towards the 3% target faster than expected, annual consumer inflation declined
to 2.79% in June. This movement in inflation is due mainly to changes in the price of food and regulated
items. The average of the various measurements of core inflation behaved similarly, and one-year-ahead
inflation expectations remain near or slightly above 3%.
Average growth for Colombias major trading partners proved to be weaker than was anticipated several
months back, given the sharp drop in GDP in the United States during the first quarter and less growth
reported by several countries in the region. However, based on recent real and financial indicators, the
Bank's technical staff continues to project increased momentum in external demand during the coming
quarters. On the other hand, energy mining revenues are still at high levels, but with a tendency to decline.
In Colombia, recent figures prompted an upward revision of the economic growth forecast for 2014. It is a
well known fact that GDP growth in the first quarter was more than initially predicted, driven partly by
consumption and investment in the construction of civil works and structures. The good performance
shown by these items is likely to continue during the rest of the year. Moreover, consumer confidence has
improved, the slowdown in consumer lending has come to a halt, the momentum in retail sales continues
to be strong, and there is a downward trend in the unemployment rate. All this suggests that real
household spending will remain forceful this year. Consequently, the Banks technical staff set the new
forecast range for growth in 2014 at 4.2% to 5.8%, with 5% being the most likely figure.
Growth in aggregate demand remained strong in the midst of a context marked by almost full use of
productive capacity. At the same time, inflation expectations are near or slightly above 3%. All this is taking
place in an environment where growth in lending has increased and real interest rates on loans are at
levels conducive to spending. Given these circumstances, the Board of Directors felt it was appropriate to
raise the benchmark interest rate by 25 bp.
The Board will continue to carefully monitor performance and forecasts with respect to economic activity
and inflation in Colombia, asset markets and the international situation. Finally, it reiterated that monetary
policy will depend on the information that is available.
Tuesday, 12 August 2014
14:33









Reserve Bank Of Fiji :
MONETARY POLICY STANCE REMAINS UNCHANGED
The Reserve Bank of Fiji Board, at its monthly meeting on 31 July, agreed to maintain the Overnight Policy
Rate (OPR) at 0.5 percent.

The Governor and Chairman of the Board, Mr Barry Whiteside, stated that, while recovery continues in
the global economy, growth prospects remain broadly fragile and uneven. In its latest update, the
International Monetary Fund downgraded its 2014 global growth projection to 3.4 percent from 3.6
percent, largely reflecting weak quarter one activity especially in the United States and the subdued
outlook for several emerging market economies. In addition, increased geopolitical tensions which could
escalate energy prices present prominent downside risks to the current global economic outlook.

The Governor also highlighted that indicators of domestic activity in the first half of 2014 suggest that
outcomes are broadly consistent with the growth projection of 3.8 percent. Consumption and investment
activity remained firm in the review period, supported by the growth in household income and private
sector credit. Furthermore, apart from the fish and gold industries, sectoral performances were largely
positive.

On the external front, relatively higher import demand, underpinned by buoyant domestic activity,
outpaced the growth in exports and resulted in the widening in the trade deficit. Nevertheless, improved
tourism earnings and remittances continue to support the countrys balance of payments position. For long
term sustainability, the Governor emphasised the continuation of policies geared towards boosting the
export and import substitution sectors.
Mr Whiteside stated that given the stable outlook for its twin objectives of inflation and foreign reserves,
the accommodative monetary stance remains appropriate. Inflation was 1.1 percent in June while foreign
reserves were around $1,611.3 million as at 31 July 2014, sufficient to cover 4.4 months of retained
imports of goods and non-factor services.

The Governor concluded that, the Reserve Bank will continue to monitor international and domestic
developments, particularly the impact of growth on the Banks objectives, and align its policy decisions
accordingly.
RESERVE BANK OF FIJI



National Bank of Romania :
Press Release of the Board of the National Bank of Romania
In its meeting of 4 August 2014, the Board of the National Bank of Romania decided the following:
To lower the monetary policy rate to 3.25 percent per annum from 3.50 percent starting with August 5,
2014;
To pursue an adequate liquidity management in the banking system;
To maintain the existing levels of minimum reserve requirement ratios on both leu- and foreign currency-
denominated liabilities of credit institutions.

The NBR examined and approved the quarterly Inflation Report which will be presented to the public in a
news conference scheduled for August 6, 2014.
The analysis of the latest macroeconomic data shows the annual inflation rate remaining on a downward
path and temporarily running below the lower bound of the variation band of the flat target. The new
projected inflation path is significantly lower than that forecasted in May.
Behind this stood one-off factors (the dynamics of volatile food prices, the nominal appreciation of the
local currency, the influence of import prices partly reflecting subdued euro area inflation) overlapping
with the persistent effects of the negative output gap and the downward adjustment in inflation
expectations.
The annual inflation rate fell to a new historic low of 0.66 percent in June 2014 from 0.94 percent in the
previous month and 1.55 percent in December 2013. At the same time, the average annual inflation rate
came in at 1.7 percent in June 2014 compared to 2.1 percent in May. The average annual inflation rate
based on the Harmonised Index of Consumer Prices which is relevant for ensuring comparability at
European level and assessing convergence with the European Union continued to decrease, reaching 1.5
percent in June versus 1.8 percent in May. Romania thus ranks among the countries meeting the
corresponding nominal convergence criterion at EU level.
The improvement in economic activity in Romania has further been fostered by the favourable
performance of industrial output, fuelled mainly by external demand growth and the gradually rebounding
domestic demand, amid a further narrow current account deficit. The international reserves remain in a
comfortable zone while a substantial part of the IMF loan under the 2009-2011 arrangement has been
repaid.
The annual dynamics of total credit to the private sector fell deeper into negative territory, solely on
account of the steeper decline in the rate of change of the foreign currency component, whereas the
annual pace of increase in real terms of leu-denominated credit gained momentum and peaked at a five-
year high in June. Consequently, the share of foreign exchange loans in total credit to the private sector
(stocks) continued to narrow to 58 percent at end-June 2014 against 62 percent in June 2013, thus helping
consolidate the monetary policy transmission mechanism.





In todays meeting, the NBR Board examined and approved the quarterly Inflation Report, which points to
the outlook for the annual inflation rate to run at markedly lower readings than previously forecasted, i.e.
below the midpoint of the flat target until mid-2015 and in the upper half of the variation band in the latter
part of the projection horizon. According to the new projection, the annual inflation rate will be 2.2 percent
at end-2014 and 3 percent at end-2015, while the average annual inflation rate is anticipated to stand at
1.4 percent in 2014 and 2.4 percent in 2015.
Similarly to the previous assessments, the risks associated with this outlook stem chiefly from external
sources, being largely generated by possibly higher volatility of capital flows in Romania following
unfavourable developments in investors risk aversion to the emerging economies.
This could materialise amid the recent geopolitical and regional tensions, the ongoing cross-border
deleveraging and restructuring of some Eurozone banking groups, as well as in the context of uncertainty
surrounding the impact of possible monetary policy stance adjustments by major central banks worldwide.
Domestically, the main risks relate to the persistence of uncertainties about the consistent implementation
of the set of structural reforms and other measures agreed with international institutions in the context of
elections later this year.
Against this background, the Board of the National Bank of Romania has decided to lower the monetary
policy rate to 3.25 percent per annum from 3.50 percent previously. Hence, starting with 5 August 2014,
the interest rate on the NBRs lending facility (Lombard) will fall to an annual 6.25 percent from 6.50
percent and its deposit facility rate will stand at 0.25 percent per annum. The NBR Board has also decided
to continue to pursue adequate liquidity management in the banking system and to maintain the existing
levels of minimum reserve requirement ratios on both leu- and foreign currency-denominated liabilities of
credit institutions, reiterating that their harmonisation with European levels over the medium term will
carry on gradually, at an appropriate pace and time, conditional on the economic and financial
environment domestically and externally.
These decisions help attain the overriding objective of preserving medium-term price stability as well as
financial stability, together with paving the way for balanced and lasting economic growth.
In this context, the consistent implementation of an adequate macroeconomic policy mix, in line with the
provisions of the external financing arrangements, and the resumption, by observing prudential rules, of
financial intermediation in parallel with an appropriate remuneration of bank deposits, conducive to
fostering domestic saving, are pivotal to consolidating favourable prospects for the Romanian economy,
thereby enhancing its resilience to external shocks.
The NBR monitors closely the domestic and global economic developments so as, by calibrating the
monetary policy conduct and making adequate use of its available tools, to maintain medium-term price
stability and preserve financial stability.
The new quarterly Inflation Report will be presented to the public in a news conference on 6 August 2014.
According to the approved calendar, the next NBR Board meeting dedicated to monetary policy issues is
scheduled for 30 September 2014.







Reserve Bank of Australia :
Statement by Glenn Stevens, Governor: Monetary Policy Decision
At its meeting today, the Board decided to leave the cash rate unchanged at 2.5 per cent.
Growth in the global economy is continuing at a moderate pace, helped by firmer conditions in the
advanced countries. China's growth remains generally in line with policymakers' objectives. Commodity
prices in historical terms remain high, but some of those important to Australia have declined this year.
Financial conditions overall remain very accommodative. Long-term interest rates and risk spreads remain
very low. Emerging market economies are receiving capital inflows. Volatility in many financial prices is
currently unusually low. Markets appear to be attaching a very low probability to any rise in global interest
rates, or other adverse event, over the period ahead.
In Australia, growth was firmer around the turn of the year, but this resulted mainly from very strong
increases in resource exports as new capacity came on line; smaller increases in such exports are likely in
coming quarters. Moderate growth has been occurring in consumer demand. A strong expansion in
housing construction is now under way. At the same time, resources sector investment spending is starting
to decline significantly. Signs of improvement in investment intentions in some other sectors are emerging,
but these plans remain tentative as firms wait for more evidence of improved conditions before
committing to significant expansion. Public spending is scheduled to be subdued. Overall, the Bank still
expects growth to be a little below trend over the year ahead.
There has been some improvement in indicators for the labour market this year, but it will probably be
some time yet before unemployment declines consistently. Recent data showed an increase in inflation,
with both headline and underlying measures affected by the decline in the exchange rate last year. But
growth in wages has declined noticeably and is expected to remain relatively modest over the period
ahead, which should keep inflation consistent with the target even with lower levels of the exchange rate.
Monetary policy remains accommodative. Interest rates are very low and for some borrowers have
continued to edge lower over recent months. Savers continue to look for higher returns in response to low
rates on safe instruments. Credit growth has picked up a little, including most recently to businesses. The
increase in dwelling prices has been slower this year than last year, though prices continue to rise. The
exchange rate remains high by historical standards, particularly given the declines in key commodity prices,
and hence is offering less assistance than it might in achieving balanced growth in the economy.
Looking ahead, continued accommodative monetary policy should provide support to demand and help
growth to strengthen over time. Inflation is expected to be consistent with the 23 per cent target over the
next two years.
In the Board's judgement, monetary policy is appropriately configured to foster sustainable growth in
demand and inflation outcomes consistent with the target. On present indications, the most prudent
course is likely to be a period of stability in interest rates.







Reserve Bank Of India :

Monetary and Liquidity Measures
On the basis of an assessment of the current and evolving macroeconomic situation, it has been decided
to:
keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 8.0 per cent;
keep the cash reserve ratio (CRR) of scheduled banks unchanged at 4.0 per cent of net demand and
time liabilities (NDTL);
reduce the statutory liquidity ratio (SLR) of scheduled commercial banks by 50 basis points from
22.5 per cent to 22.0 per cent of their NDTL with effect from the fortnight beginning August 9, 2014;
and
continue to provide liquidity under overnight repos at 0.25 per cent of bank-wise NDTL and
liquidity under 7-day and 14-day term repos of up to 0.75 per cent of NDTL of the banking system.
Consequently, the reverse repo rate under the LAF will remain unchanged at 7.0 per cent, and the marginal
standing facility (MSF) rate and the Bank Rate at 9.0 per cent.
Assessment
2. Since the second bi-monthly monetary policy statement of June 2014, global economic activity has been
picking up at a modest space from a sharp slowdown in Q1. Investor risk appetite has buoyed financial
markets, partly drawing strength from assurances of continuing monetary policy support in industrial
countries. Portfolio flows to emerging market economies (EMEs) have risen strongly. This implies, however,
that EMEs remain vulnerable to changes in investor risk appetite driven by any reassessment of the future
path of US monetary policy or possible escalation of geopolitical tensions.
3. Sentiment on domestic economic activity appears to be reviving, with incoming data suggesting a firming
up of industrial growth and exports. The June round of the Reserve Banks industrial outlook survey also
points to improvement in business expectations in Q2. Leading indicators of the services sector are mixed,
although there are early signs of modest strengthening of corporate sales and business flows. While the
initial slow progress of the monsoon and its uneven spatial distribution raised serious concerns regarding
agricultural production, these have been mitigated, though not entirely dispelled, by the pick-up in the
monsoon through much of the country in July. The implementation of government policy actions that have
been announced should create a congenial setting for a steady improvement in domestic demand and
supply conditions.
4. Retail inflation measured by the consumer price index (CPI) has eased for the second consecutive month
in June, with a broad-based moderation accompanied by deceleration in momentum. Higher prices of
vegetables, fruits and protein-based food items were offset by the muted increase in the prices of non-
food items, particularly those of household requisites and transport and communication. CPI inflation
excluding food and fuel decelerated further, extending the decline that began in September 2013.


However, with some continuing uncertainty about the path of the monsoon, it would be premature to
conclude that future food inflation, and its spill-over to broader inflation, can be discounted.

5. Liquidity conditions have remained broadly stable, barring episodic tightness on account of movements
in the cash balances of the Government maintained with the Reserve Bank. While the systems recourse to
liquidity from the LAF, and regular and additional term repos has been around 1.0 per cent of the NDTL of
banks, access to the MSF has been minimal and temporary. In order to manage transient liquidity pressures
associated with tax outflows and sluggish spending by the Government, the Reserve Bank injected
additional liquidity aggregating over ` 940 billion through nine special term repos of varying maturities
during the months of June and July. Despite the reduction in the export credit refinance effected in early
June, average utilisation of the facility has only been around 70 per cent of the available limit. The Reserve
Bank will review existing liquidity arrangements and continue to monitor and manage liquidity to ensure
adequate flow of credit to the productive sectors.
6. With the buoyancy in export performance sustained through Q1, the trade deficit has narrowed from its
level a year ago. While oil imports rose in June partly on higher international crude prices, gold import
growth picked up in response to some liberalization of import restrictions, and non-oil non-gold import
growth has turned positive since May. Turning to external financing, all categories of capital flows have
been buoyant. Surges in capital inflows in excess of the current account financing requirement and the
repayment of swaps by oil marketing companies have bolstered international reserves.
Policy Stance and Rationale
7. The moderation in CPI headline inflation for two consecutive months, despite the seasonal firming up of
prices of fruits and vegetables since March, is due to both base effects and the steady deceleration in CPI
inflation excluding food and fuel. The recent fall in international crude prices, the benign outlook on global
non-oil commodity prices and still-subdued corporate pricing power should all support continued
disinflation, as should measures undertaken to improve food management. There are, however, upside
risks also, in the form of the pass-through of administered price increases, continuing uncertainty over
monsoon conditions and their impact on food production, possibly higher oil prices stemming from geo-
political concerns and exchange rate movement, and strengthening growth in the face of continuing supply
constraints. Accordingly, the upside risks to the target of ensuring CPI inflation at or below 8 per cent by
January 2015 remain, although overall risks are more balanced than in June (Chart 1). It is, therefore,
appropriate to continue maintaining a vigilant monetary policy stance as in June, while leaving the policy
rate unchanged.



8. Prospects for reinvigoration of growth have improved modestly. The firming up of export growth should
support manufacturing and service sector activity. If the recent pick-up in industrial activity is sustained in
an environment conducive to the revival of investment and unlocking of stalled projects, with ongoing
fiscal consolidation releasing resources for private enterprise, external demand picking up and
international crude prices stabilising, the central estimate of real GDP growth of 5.5 per cent within a likely
range of 5 to 6 per cent that was set out in the April projection for 2014-15 can be sustained. On the other
hand, if risks relating to the global recovery, the monsoon and geo-political tensions intensify, the balance
of risks could tilt to the downside (Chart 2).

9. The Reserve Bank will continue to monitor inflation developments closely, and remains committed to
the disinflationary path of taking CPI inflation to 8 per cent by January 2015 and 6 per cent by January
2016. While inflation at around 8 per cent in early 2015 seems likely, it is critical that the disinflationary
process is sustained over the medium-term. The balance of risks around the medium-term inflation path,
and especially the target of 6 per cent by January 2016, are still to the upside, warranting a heightened
state of policy preparedness to contain these risks if they materialise. In the months ahead, government
actions on food management and to facilitate project completion should improve supply, but as consumer
and business confidence pick up, aggregate demand will also strengthen. The Reserve Bank will act as
necessary to ensure sustained disinflation.


10. In the second bi-monthly monetary policy statement of June 2014, the Reserve Bank reduced the SLR to
22.5 per cent of NDTL in anticipation of recovery in economic activity. With the Union Budget for 2014-15
renewing commitment to the medium-term fiscal consolidation roadmap and budgeting 4.1 per cent of
GDP as the fiscal deficit for the year, space has opened up further for banks to expand credit to the
productive sectors in response to its financing needs as growth picks up. Accordingly, the SLR is reduced by
a further 0.5 per cent of NDTL.
11. In consonance with the calibrated reduction in the SLR, it is necessary to enhance liquidity in the money
and debt markets so that financial intermediation expands apace with a growing economy. Currently,
banks are permitted to exceed the limit of 25 per cent of total investments under the held to maturity
(HTM) category provided the excess comprises only SLR securities, and banks total holdings of SLR
securities in the HTM category is not more than 24.5 per cent of their NDTL as on the last Friday of the
second preceding fortnight. In order to enable banks greater participation in financial markets, this ceiling
is being brought down to 24 per cent of NDTL with effect from the fortnight beginning August 9, 2014.
12. The Reserve Bank has taken a number of steps to enhance efficiency, increase entry, speed up
resolution, and improve access to financial services, such as modified regulations on long term lending and
borrowing, proposals for licensing payment banks and small banks, a framework to deal with stressed
assets, actions to further the use of mobile phones in banking, and efforts to simplify know your customer
(KYC) norms, among others. The Reserve Bank will continue to carry forward its banking sector reforms
agenda.
13. The fourth bi-monthly monetary policy statement is scheduled on Tuesday, September 30, 2014.



Bank Of Zambia :
GOVERNORS MONETARY POLICY STATEMENT 5TH AUGUST 2014
The Monetary Policy Committee (MPC) met today, 5th August 2014, to consider developments in the
domestic economy over the second quarter of the year. The MPC now meets on a quarterly basis and
following the meeting, issues a statement outlining its deliberations and its policy decision in order to
enhance transparency. The Bank of Zambias mandate is to maintain price and financial system stability
that supports balanced economic development. In its deliberations, the MPC considered recent
developments in the global economy and the possible ramifications of these developments on our
economy and the Central Banks ability to achieve its core objective of maintaining price stability.

GLOBAL ECONOMIC DEVELOPMENTS
Global economic growth continues to proceed at a moderate pace. The underlying strength appears to be
emanating from the USA and the UK economies. However, monetary policy easing measures undertaken
by their central banks are likely to be terminated by year end. Growth in Europe remains challenging
outside Germany, and this is compounded by geopolitical events in Europe, specifically in Ukraine and the
middle-east. Growth is likely to remain low and the recovery long. Global commodity prices are likely to be
impacted by the developments in Europe and the Middle-East, although the extent and direction of this
impact remains unclear at the current time. Underlying demand for commodities may remain supported,
however, by the growth in China, which is unlikely to slip below 7% as earlier feared.

MONETARY POLICY
Monetary policy over the second quarter of the year was challenging. Inflationary pressures were
persistent and these were compounded by excessive volatility in the foreign exchange market. Measures
taken to tighten monetary policy in April 2014, by upward adjustments in the policy rate to 12% and raising
of the statutory reserve ratio from 8% to 14%, had to be augmented at the end of May. Specifically, the
Bank of Zambia extended the application of statutory reserve ratios to Government and other deposits not
already subject to the reserve ratio. In addition, the penal rate on the overnight lending facility was raised
and access limited to once a week. Finally, the maintenance of statutory reserves by commercial banks was
tightened from a weekly average to a daily average basis.
In implementing the additional measures at the end of May, the Bank of Zambia was mindful of the fact
that the significant tightening in liquidity would have an impact on the interbank rates, but the primary
objective was to support price stability by arresting the excessive depreciation in the exchange rate. Indeed
in subsequent communications, we indicated that as stability returned to the foreign exchange market, we
would reassess these measures whilst taking into account wider developments in the economy. In this
regard, the measures the Bank of Zambia implemented have been successful in restoring relative stability
in the foreign exchange market and in the financial sector in general. In July, the Bank of Zambia was able
to begin the process of easing the tight liquidity conditions in a gradual manner. In its deliberations, the
MPC therefore, has taken into account this relative stability and assessed developments in the wider
economy in determining the appropriate monetary policy stance going forward.
INFLATION
Inflationary pressures appear to have stabilized between June and July, 2014. During the second quarter,
annual inflation rose to 7.9% in June from 7.7% in March, 2014 with both food and non-food inflation
rising. Food inflation rose to 7.8% from 7.6% having risen to 8% in May. Non-food inflation rose to 8.0% in
June form 7.8% in March. In July, annual inflation marginally rose to 8.0%. However, annual food inflation
fell from 7.8% in June to 6.9% in July, whilst non-food inflation rose from 8.0% in June to 9.2% in July. The
Committee noted, however, that the increase in non-food inflation was to a large extent driven by the
increase in the Housing, Water, Electricity, Gas and Other fuels component of the consumer price index.


This in turn was largely due to the rise in electricity tariffs effected in July as ZESCO looks to migrate to cost
reflective tariffs that support increased investment in power generation and transmission.
Over the third quarter the upside risks to inflation include the second round effects of the upward revision
in electricity tariffs, the lagged effects of the depreciation in the exchange rate, particularly over the second
quarter, and the upward adjustment in the FRA maize floor price from K65 to K70. Downside risks to
inflation largely relate to the seasonal decline in food prices, exemplified by the record maize harvest as
well as the stabilization in the exchange rate which are expected to exert downward pressure on prices.
THE DOMESTIC MONEY MARKET AND GOVERNMENT SECURITIES
For much of the second quarter, money market liquidity was tight with the weighted interbank rate rising
to as high as 25% at the end of May from around 16% at end of March. Reflecting these tight conditions,
the overnight interbank rate remained significantly higher than the BoZ policy rate over the second quarter
of the year. One consequence of the higher interbank rates were that the wholesale funding costs for
banks also rose, putting pressures on lending margins and bank profitability. This was further compounded
by the rise in the Government security yield rates. The weighted average yield rate on Treasury bills and
Government bonds actually rose to 19.4% and 18.1% from 14.8% and 16.0%, respectively over the second
quarter. In July when pressures in the foreign exchange market receded, the Bank of Zambia was able to
ease liquidity in a measured way, by injecting liquidity into the banking system through Open Market
Operations. The result has been that the interbank rate has now fallen back to 14.5% from 25% in June,
easing the pressure on the wholesale funding costs for banks. At the end of June the stock of outstanding
Government securities registered a modest increase of 1.3% to K20.5 billion compared with K20.2 billion at
end March 2014. However, foreign investor holdings of Government securities declined by 5.9% to K1.2
billion from K1.3 billion. The decline was mainly attributed to maturities of securities during the quarter
which were not rolled-over. The modest increase in Government securities also reflects the fact that the
financing of the Government budget during the second quarter was within the budget projections.
DOMESTIC CREDIT AND INTEREST RATES
The growth in domestic credit and money supply, witnessed early in the year, eased at the end of the
second quarter. This reflected the stabilizing of conditions in the financial markets. Domestic credit fell by
22.1% to K24.8 billion from K31.9 billion in March 2014. This largely reflected a drop in credit to
Government following the receipt of the Eurobond proceeds. However, lending to private enterprises grew
by 9.3%. In terms of the provision of credit to the private sector, households (personal loans category)
continued to account for the largest share of outstanding credit of about 34.5% in June 2014 compared
with 34.8% in March 2014. The agricultural sector remained second at 17.6%, followed by Manufacturing
10.5%. The credit shares of these two sectors in March were 17.4% and 8.7%, respectively.
Broad money (M3), declined by 2.2% to K32.7 billion in June 2014 from K33.4 billion in March 2014 and
was 3.4% below the second quarter projected target of K33.8 billion. This largely reflected the 35.9%
contraction in Net Domestic Assets to K11.4 billion following the fall in lending to Government. The Net
Foreign Assets, however, increased by 36.3% to K21.2 billion, largely on account of the rise in the Bank of
Zambia foreign assets by 40.6%. Money supply growth excluding foreign currency deposits (M2), has,
however, fallen consistently throughout the quarter, partly reflecting a shift into foreign currency deposits.
Commercial banks nominal average lending rate rose by 1.7 percentage points to 18.7% in June 2014 from
17.0% in March 2014, partly due to the rise in the Bank of Zambia policy rate. In June, following the sharp
increase in the wholesale funding costs of commercial banks, the fixed margin between the policy rate and
the lending rates was adjusted upwards. Some banks subsequently adjusted upwards their lending rates.
The Bank of Zambia has subsequently eased liquidity conditions and the MPC has therefore also
deliberated on what the appropriate margin between the policy rate and the lending rates should be now
that liquidity conditions had eased. Deposits rates also edged upwards, with the 30-day deposit rate for
amounts exceeding K20,000 rising to 6.7% from 5.6% in March 2014. The average savings rate for amounts


not exceeding K20,000, however, remained unchanged at 3.5% in the quarter under review.

FOREIGN EXCHANGE MARKET AND THE EXTERNAL SECTOR
The foreign exchange market has stabilized with a significant reduction in volatility. Over the second
quarter the Kwacha depreciated by 2% to K6.26 against the US Dollar at the end of June from K6.10 per US
Dollar at the end of March. The Kwacha, however, crossed above K7 per US dollar at the end of May in
intra- day interbank trading, a depreciation of approximately 25% on a year to date basis. Following the
measures taken to tighten monetary policy, the Kwacha has subsequently shown relative stability at the
current level of K6.15 per US Dollar. During the second quarter, the real effective exchange rate
depreciated by 1.9% as reflected in the index, which rose to 106.07 in June 2014 from 104.12 recorded in
March 2014. This was largely driven by the 3.3% depreciation of the nominal effective exchange rate, of
which the South African rand and the Swiss franc accounted for 1.9 and 0.6 percentage points, respectively.
Preliminary data show that Zambia recorded a favourable Balance of Payments position, with an overall
BoP surplus of US $740.1 million compared with a surplus of US $8.4 million recorded during the first
quarter of 2014. This was driven by improvements in the financial account, largely attributed to the
sovereign bond proceeds, which compensated for unfavourable performance in the current account.
Zambia recorded current account deficit for the second consecutive quarter during the period under
review. However, Zambias trade balance remained positive over the second quarter, at US $330.6 million
compared to a trade balance of US $422.4 million during the first quarter of the year.

FISCAL POLICY
Fiscal performance improved in the second quarter of 2014. Preliminary data indicate that a central
Government fiscal deficit of K1.3 billion was recorded against the programmed deficit of K1.8 billion during
the second quarter of 2014, due to lower than programmed expenditure. Total revenue and grants were
K7.4 billion, hence 7.9% lower than the programmed amount of K8.1 billion. Total expenditure at K8.7
billion was 12.7% lower than programmed, mainly attributed to lower than programmed expenditure on
non-financial assets, use of goods and services as well as social benefits.

INDICATORS OF ECONOMIC ACTIVITY
Available indicators of economic activity suggest that the Government is on track in meeting its growth
objective for 2014, estimated at 6.5% using the rebased GDP. Most of the selected real sector development
indicators recorded tracked by the Monetary Policy Committee recorded higher output during the second
quarter of the year, particularly when assessed against developments in the corresponding quarter of
2013.
In the agricultural sector, the country continued to hold adequate maize stocks on the back of a bumper
harvest. However, the stock of maize grain held by the Food Reserve Agency (FRA) decreased by 20.3% to
343,581.3 mt from 431,130.0 mt at the end of March 2014 due to domestic sales. Copper output declined
by 2.5% to 276,075.0 mt from 283,042.3 mt in the first quarter. However, on a year-to-date basis, copper
production was 559,117.3 mt, 16.3% higher than the 480,892.6 mt produced in the first half of 2013.
Electricity generation increased by 3.1% to 3,509,053 Mwh in the second quarter 2014 from 3,403,077
Mwh during the first quarter. On a year-to-date basis, total electricity generation amounted to 6,912,130
Mwh in the first half of 2014, higher than the 6,601,175 Mwh generated in the first half of 2013.
In the manufacturing sector, production of soft drinks rose by 16.9% to 456,326.8 hectolitres in the second
quarter of 2014 from 390,501.0 in the first quarter. This output was 39.1% higher than the 327,996.6
hectolitres in the corresponding quarter in 2013. Similarly, production of mineral water increased by 38.7%
over the second quarter to 1,872,672 litres from 1,349,730 litres in the first quarter. This level of
production was 56.3% higher than the 1,197,984 litres produced in the second quarter of 2013

THE BANK OF ZAMBIA POLICY RATE


The measures taken by the Bank of Zambia during the second quarter in tightening monetary policy are
beginning to bear the intended results. However, inflationary pressures remain and, therefore, the
Monetary Policy Committee decided to maintain the policy rate at the current level of 12%.
The stabilization of the financial sector provides an opportunity for the Bank of Zambia to normalise money
market conditions. The measures taken to supply liquidity to the market through open market operations
have now seen the interbank rate fall to 14.5%. The wholesale funding costs rose sharply during the second
quarter, and the Bank of Zambia adjusted the effective interest rate margin which raised the lending rate
ceiling to 28% from 21%. With the interbank rate having returned to levels consistent with the policy rate,
the maximum annual effective lending rate ceiling has been adjusted down to 24% from 28%.
Statutory reserve ratios remain unchanged at 14%. However, the Bank will continue to monitor the
liquidity conditions in the market and stands ready to provide further support to the market should this be
required, including through the reduction of the statutory reserve ratios.
The Bank is further determined to ensure that it maintains price and financial system stability as the best
way of supporting the investment and growth of the economy. In this regard, the Bank will take
appropriate measures when this stability is challenged or under threat.
The next meeting of the monetary policy committee will be held on Friday 21 November, 2014.



Bank Of Thailand :
Monetary Policy Committees Decision on 6 August 2014
Mr. Paiboon Kittisrikangwan, Secretary of the Monetary Policy Committee (MPC), announced the outcome
of the meeting on 6 August 2014 as follows.

The global economy continued to improve steadily. The US economy grew at a firmer pace from
accelerating domestic demand and stronger labour market. The euro area and Japan recovered slowly,
entailing continued accommodative monetary policy. Growth in China and Asia stabilized on the back of
improving exports to major economies. Some central banks in the region have begun to raise policy
interest rates in light of domestic developments.

The Thai economy showed signs of improvements in the second quarter of 2014, from private spending
following the political resolution. Exports recovered modestly, while public spending fell slightly short of
previous assessment. In the second half of the year, firmer domestic demand and fiscal policy, particularly
public investment, should lend further impetus to growth recovery. Exports of goods and tourism are
expected to expand at a subdued pace. Inflationary pressure remains contained.

The committee judges that current accommodative monetary policy remains appropriate in supporting
economic recovery. The policy stance is deemed consistent with longterm financial stability, which should
complement governments reform efforts to lift the economys potential growth. The committee thus
voted unanimously to maintain the policy rate at 2.00 percent per annum.


Bank Of England :

Minutes of the Monetary Policy Committee Meeting held on 6 and 7 August 2014

The Governor invited the Committee to vote on the propositions that:
Bank Rate should be maintained at 0.5%;
The Bank of England should maintain the stock of purchased assets financed by the
issuance of central bank reserves at 375 billion.
Regarding Bank Rate, seven members of the Committee (the Governor, Ben Broadbent, Jon Cunliffe, Nemat Shafik,
Kristin Forbes, Andrew Haldane and David Miles) voted in favour of the proposition.
Ian McCafferty and Martin Weale voted against the proposition, preferring to increase Bank Rate by 25 basis points.
Regarding the stock of purchased assets, the Committee voted unanimously in favour of the proposition.







European Central Bank :
Monetary policy decisions 7 August 2014 -
At todays meeting the Governing Council of the ECB decided that the interest rate on the main refinancing
operations and the interest rates on the marginal lending facility and the deposit facility will remain
unchanged at 0.15%, 0.40% and -0.10% respectively.
The President of the ECB will comment on the considerations underlying these decisions at a press
conference starting at 2.30 p.m. CET today.

National Bank of Serbia :
Key Policy Rate Stays at 8.5 Percent
At its meeting today, the NBS Executive Board voted to keep the key policy rate at 8.5%.
Y-o-y inflation is moving below the lower bound of the target tolerance band and is expected to return
within the target band by the year-end. Such movements are attributable to low inflationary pressures,
reflecting mainly low aggregate demand and the continuing disinflationary impact of prices of primary
agricultural commodities, relative stability of the dinar exchange rate and inflation expectations.
However, considering the expected depletion of effects of low food prices and the risks that may adversely
affect economic developments at home in the coming period, the NBS Executive Board decided to keep the
key policy rate on hold.
In taking the decision, the NBS Executive Board also took into account the persistent uncertainties
emanating from the international environment, which may negatively impact the countrys risk premium
and foreign capital flows. The risks of further heightening of geopolitical tensions also relate to the
postponement or slowdown of the initiated economic recovery of euro area. The NBS Executive Board
expects that consistent implementation of fiscal consolidation measures and structural reforms in the
period ahead may contribute to the alleviation of external risks.
At its meeting today, the NBS Executive Board adopted the August Inflation Report, to be presented at the
press conference on Wednesday, 13 August.
The next rate-setting meeting is scheduled for 11 September 2014.
Governors Office
07.08.2014



Central Bank of The Gambia
Since the previous meeting of the Monetary Policy Committee (MPC), the International Monetary Fund
(IMF) has revised global growth projections for 2014 from 3.7 percent to 3.0 percent. The earlier optimism
of robust US growth of around 3.0 percent in 2014 has been revised downwards following the 2.1 percent
contraction in economic activity in the first quarter partly due to temporary factors such as the slowdown
in inventory investment, the expiration of some fiscal measures at the beginning of 2014 and severe winter
weather.
Growth in advanced economies is forecast at 1.8 percent in 2014, higher than the 1.3 percent in 2013.
Economic activity in the Euro zone continues to expand, albeit modestly. Growth was uneven with
economic expansion in Germany offset by contraction in many other countries in the region. Growth is
expected to strengthen to 1.1 percent in 2014 and 1.5 percent in 2015. The outlook for emerging market
economies remains relatively subdued. The Chinese economy is expected to grow by 7.4 percent, the
weakest pace since 2009. In other emerging economies, activity is weighed down by political uncertainty
and tightening financial conditions. The outlook is for a modest 4.6 percent growth in 2014.
The GDP growth for Sub-Saharan Africa is projected at 5.4 percent from 4.8 percent in 2013, premised on
improved agricultural production, increased private consumption and expansion in commodity related
projects.
Global inflation remains benign in advanced economies, although the risk of deflation in the Euro zone
persists reflecting the combination of the substantial output gap, the decline in the prices of commodities,
especially fuels and food and low inflation expectations. In emerging markets and developing economies,
inflation is expected to decline from about 6 percent in 2014 to about 5 percent in 2015. To the extent
that the decline in global commodity prices should help reduce price pressures, this reduction is more than
offset by recent exchange rate depreciations in a number of emerging and developing countries, including
The Gambia.
Global crude oil prices have fluctuated in recent months reflecting mainly geopolitical developments. Year-
to-date, oil prices averaged US$105.3 per barrel, slightly higher than the average of US$105.09 per barrel a
year earlier. The FAO Food Price Index averaged 206 points in 2014, 6 points lower than in June 2013. The
decline was the third in succession and was largely the result of marked drop in cereal and vegetable oil
prices.
The Domestic Economy
Growth
The growth outlook for the Gambian economy has moderated since the previous meeting of the MPC.
Owing to uncertainties surrounding agricultural production due to the prospects of inadequate rainfall, real
GDP is projected at 5.3 percent in 2014, slightly lower than the 5.6 percent in 2013 and the earlier forecast
of between 6.06.5 percent. Agriculture value-added is forecast to increase by 12.5 percent, industry (2.9
percent) and services (3.6 percent).
Money and Banking Sector Developments
In the year to end-June 2014, money supply grew by 8.1 percent, lower than the 14.8 percent a year ago
and the target of 15.0 percent. The deceleration in the growth of money supply was mainly the result of
slower pace of expansion of the net domestic assets (NDA) and the contraction in the net foreign assets
(NFA) of the banking system. The NDA rose to D13.6 billion, or 12.6 percent, but lower than the growth
rate of 15 percent a year earlier. The NFA contracted to D4.95 billion, or 2.5 percent.


Reserve money, the Banks operating target increased to D5.78 billion, or 19.7 percent. Although reserve
money growth was above the target of 13.5 percent, it was lower than the strong expansion of 26.4
percent a year earlier. The decrease in the pace of expansion of reserve money was mainly the result of the
contraction in the NFA of the Central Bank by 8.4 percent compared to the robust growth of 21.4 percent a
year ago. The NDA of the Central Bank, on the other hand, increased significantly to D2.5 billion, or 97.2
percent. Central Bank net claims on government rose from D1.3 billion in June 2013 to D2.2 billion in June
2014.
The banking sector remains fundamentally sound. Recent data indicate that capital and reserves increased
to D3.45 billion in June 2014, or 16.2 percent from June 2013. The risk-weighted capital adequacy ratio
averaged 35.1 percent, higher than the minimum requirement of 10.0 percent. All the banks met the
capital adequacy requirement.
Total assets increased to D25.57 billion, or 14.2 percent from a year earlier. Gross loans and advances,
which accounted for 23.4 percent of total assets, decreased to D5.97 billion, or 2.3 percent from June 2013.
Private sector credit, net of provisions declined from D4.42 billion in June 2013 to D4.09 billion in June
2014. The non-performing loans (NPL) ratio increased from 11.3 percent in June 2013 to 16.0 percent in
June 2014. Deposit liabilities totaled D15.15 billion in June 2014, higher than the D14.28 billion in June
2013.
The industry recorded a net income of D197.0 million in the first six months of 2014 compared to D80.6
million in the corresponding period in 2013. The return on assets was 3.3 percent and return on equity
(21.3 percent) compared to 1.7 percent and 10.8 percent respectively in the first half of 2013.
In the year to end-June 2014, the domestic debt rose to D14.7 billion, or 29.3 percent from a year earlier.
Treasury bills and Sukuk-Al Salaam bills, accounting for 82.4 percent and 4.0 percent of the domestic debt
stock, increased by 36.1 percent and 50.1 percent respectively.
Yields in all the maturities rose reflecting in the main the tight monetary policy stance. The yield on the
91-day, 182-day and 364-day bills increased from 12.40 percent, 13.44 percent and 14.54 percent in June
2013 to 14.31 percent, 15.95 percent and 18.12 percent respectively in June 2014. The weighted average
interbank rate also increased from 10.45 percent in June 2013 to 14.54 percent in June 2014.
Government Fiscal Operations
Provisional data on Government fiscal operations for the first half of 2014 indicate that total revenue and
grants increased to D4.12 billion (22 percent of GDP), or 26.0 percent from the corresponding period in
2013. The outturn was also higher than the target of D4.10 billion (21.0 percent of GDP). Domestic
revenue, comprising tax and non-tax revenue, amounted to D3.16 billion, higher than the D2.82 billion in
the first half of 2013 and the target of D3.14 billion attributed mainly to the 14.0 percent increase in tax
revenue. Non-tax revenue, on the other hand, rose by only 2.0 percent.
Expenditure and net lending totaled D4.9 billion (26 percent of GDP), higher than the outturn of D4.2
billion (25 percent of GDP) and the projection of D4.83 billion. Current and capital expenditure rose to D3.3
billion and D1.5 billion compared to D3.0 billion and D1.2 billion respectively in the corresponding period in
2013.
The overall budget balance (including grants) recorded a deficit of D778.5 million (4.0 percent of GDP)
which was financed by both domestic and foreign sources.
External Sector Developments


Provisional balance of payments estimates indicate an overall surplus of US$10.12 million in the first
quarter of 2014, higher than the deficit of US$4.70 million in the corresponding quarter in 2013. The
current account deficit widened from US$16.70 million in the first quarter of 2013 to US$19.41 million in
the quarter under review. Of the components of the current account, the goods account deficit narrowed
to US$37.30 million compared to a deficit of US$44.5 million in the same period in 2013. Merchandise
exports rose to US$41.1 million, or 101.4 percent. Total imports also rose to US$87.9 million, but at a
slower pace of 25.0 percent.
The surplus in the services account and the transfers account narrowed to US$12.8 million and US$13.5
million compared to US$17.7 million and US$16.0 million respectively in the corresponding quarter in 2013.
Furthermore, the deficit in the income account widened from US$5.9 million to US$8.4 million during the
same period. The capital and financial account, on the other hand, recorded increased surplus from
US$11.97 million to US$29.54 million in the first quarter of 2014.
At end-June 2014, gross international reserves totaled US$163.5 million, equivalent to 4.0 months of
import cover compared to US$176.06 million, or 4.8 months of import cover a year ago.
Volume of transactions in the foreign exchange market decreased to US$1.33 billion in the year to end-July
2014, or 10.7 percent from a year earlier. In the year to end-June 2014, the Dalasi depreciated against the
US Dollar by 19.4 percent, Euro (20.8 percent) and Pound Sterling (30.5 percent).
Inflation Outlook
Consumer price inflation, measured by the National Consumer Price Index (NCPI), declined to 5.4 percent
in June 2014, from 5.8 percent in June 2013. Both food and non-food inflation decelerated to 6.2 percent
and 4.4 percent respectively from 6.8 percent and 4.6 percent in June 2013 respectively. However, core
inflation, which excludes the prices of volatile food items and energy, accelerated to 5.5 percent in June
2014 from 3.8 percent a year earlier.
At the last MPC meeting in May 2014, the MPC decided to leave the policy rate unchanged having
assessed the policy stance to be appropriate.
Monetary policy is forward looking because policy actions take time to work their way through the
economy and have their full effect on inflation.
Although headline inflation trajectory has not deteriorated, the MPC sees the risks to the inflation outlook
to be skewed to the upside. Apart from weather-related risks, the sharp depreciation of the Dalasi is
expected to put upward pressure on inflation as higher import prices would pass-through to domestic
consumer prices. In addition, readings of the latest private sector business sentiment survey indicate
heightened inflationary expectations which could affect the price behaviour of agents in the economy.
Decision
Against this backdrop, the MPC has decided to increase the policy rate by 2.0 percentage points to 22.0
percent. The MPC would continue to monitor price developments and take appropriate action.

Central Reserve Bank Of Peru :

MONETARY PROGRAM FOR AUGUST 2014


BCRP MAINTAINED THE REFERENCE INTEREST RATE AT 3.75%
1. The Board of the Central Reserve Bank of Peru approved to maintain the monetary policy reference rate
at 3.75 percent. This level of the reference rate is compatible with an inflation forecast according to which
inflation will converge to the target range in 2014 and to 2.0 percent in 2015. This forecast takes into
account that: i) inflation expectations remain anchored within the inflation target range; ii) GDP continues
to show lower growth rates than the countrys potential level of growth, which is expected to be a
temporary situation; iii) recent indicators show signals of recovery in the U.S. economy, and iv) the supply
factors that led inflation to increase are moderating at a slower pace than expected.
2. Inflation in July showed a rate of 0.43 percent, as a result of which inflation in the last 12 months fell
from 3.45 percent in June to 3.33 percent in July. The rate of inflation excluding food and energy was 0.24
percent, as a result of which the rate of inflation in the last 12 months fell from 2.77 percent in June to 2.73
percent in July. Inflation is forecast to remain initially close to the upper band of the target range due to
the persistent effect of the supply shocks and to converge thereafter to the 2 percent target.
3. Current and advanced indicators of activity continue to show a weaker economic cycle than the one
expected, with lower GDP growth rates than the potential output due mainly to the lower dynamism
observed in investment and exports.
4. The Board oversees the inflation forecasts and inflation determinants, and will implement additional
monetary easing measures if it is necessary.
5. The Board of the Central Bank also approved to maintain the annual interest rates on lending and
deposit operations in domestic currency (not included in auctions) between the BCRP and the financial
system, as described below:
a. Overnight deposits: 2.55 percent.
b. Direct repos and rediscount operations: 4.55 percent.
c. Swaps: a commission equivalent to a minimum annual effective cost of 4.55 percent.
6. The Monetary Program for September will be approved on the Boards meeting of
September 11, 2014.














The Central Bank of Armenia :
Lowered the refinancing rate by 0.25 percentage points, 6.75% 2014 On August 12, the Central Bank has
decided to reduce refinancing rate by 0.25 percentage point to 6.75%. 2014 July recorded a 0.9% drop from
the previous year. 0.4% increase for the month, while the 12-month inflation rate has decreased to 0.4%
The Board believes that the 12-month inflation in the coming months. Gradually increase in 2015. The first
quarter is expected to stabilize its target indicator surroundings.
The Board notes that geopolitical developments the external sector increased uncertainties
associated with partner economic prospects, but external significant inflationary pressures are expected.
The Council estimates that in 2014.
The second quarter was maintained weak domestic and foreign demand, which contributed to the
low level of inflation formation: August Energy Prices and fourth Quarter of a number of products on the
introduction of compulsory labelling expand somewhat inflationary environment, however, short-term part
of the 12-month inflation still remain below the end of the year the target index, the lower the allowable
variation border monetary policy easing, combined with 2014.
The second half of the expected expansionary fiscal policy, will lead to the expansion of aggregate
demand and inflation rates during the restoration of 2015. However, the Board noted that the external and
internal further adjustments are possible depending on economic developments Monetary policy
directions, providing inflation purpose forecast horizon. Interest rate decisions are based on detailed
information can be published on 22 August Inflation report (2014 monetary policy in the third quarter of
the program).
Reported, the source is required. CBA press service tel / fax. 56 37 61 e-mail. mcba@cba.am
PRESS RELEASE 12.08.2014

The Bank of Korea :
The Monetary Policy Committee of the Bank of Korea decided today to lower the Base Rate by 25 basis
points, from 2.50% to 2.25%.

Based on currently available information the Committee considers that, although the trend of economic
recovery in the US has been sustained, the euro area economic recovery still appears weak, while trends of
economic growth in emerging market countries have differed from country to country. The Committee
forecasts that the global economy will sustain its modest recovery going forward, centering around
advanced economies, but judges that the possibility exists of its being affected by the changes in global
financial market conditions stemming from the shift in the US Federal Reserves monetary policy stance, by
the weakening of economic growth in some emerging market countries and by geopolitical risks.


In Korea, exports have maintained their buoyancy but the Committee judges that improvements in
domestic demand, which had contracted due mainly to the impacts of the Sewol ferry accident, have been
insufficient, and that the consumption and investment sentiments of economic agents also continue to
show sluggishness. On the employment front, the scale of increase in the number of persons employed has
expanded in line with increases in the 50-and-above age group and in the service sector. The Committee
expects that the negative output gap in the domestic economy will gradually narrow going forward,
although its pace of narrowing will be moderate.
Consumer price inflation fell from 1.7% the month before to 1.6% in July, due mainly to increases in the
extents of decline in the prices of agricultural and petroleum products. Core inflation excluding agricultural
and petroleum product prices rose slightly to 2.2%, from 2.1% in June. The Committee forecasts that
inflation will gradually rise, but judges that for the time being inflationary pressures will not be high.
Housing prices in the country excluding Seoul and its surrounding areas showed a slight upward
movement, while leasehold deposit prices both in Seoul and its surrounding areas and in the rest of the
country continued their modest uptrends. In the domestic financial markets, after having risen
substantially owing chiefly to the governments announcement of economic policies, stock prices have
fallen back somewhat due for example to geopolitical risks. The Korean won has depreciated under the
influence of the US dollars strength globally, and long-term market interest rates have fallen. Looking
ahead, the Committee will conduct monetary policy so as to keep consumer price inflation within the
inflation target range over a medium-term horizon while supporting the recovery of economic growth. In
this process it will closely monitor external risk factors such as shifts in major countries monetary policies,
changes in economic agents sentiment and movements of future economic indicators including the
household debt trend, while observing the effects of this months Base Rate cut and the governments
economic policies.
Indonesias Central Bank :
It was decided at the Board of Governors Meeting, convened on 14th August 2014, to hold the BI rate at a
level of 7.50%, with the lending facility and deposit facility rates maintained at 7.50% and 5.75%
respectively. Such policy is consistent with efforts to guide inflation towards its target corridor of 4.51% in
2014 and 4.01% in 2015, as well as reduce the current account deficit to a more sustainable level. Bank
Indonesia acknowledges the ongoing economic rebalancing process, underpinned by tenacious
macroeconomic stability, as corroborated by moderating domestic demand and falling inflation despite a
burgeoning current account deficit in line with seasonal trends during the second quarter of 2014. Looking
ahead, there remain a number of external and domestic risk factors that demand vigilance due to their
potential to undermine achievement of the inflation target and delay improvements in the current
account. To this end, Bank Indonesia will continue to strengthen its monetary and macroprudential policy
mix along with policies to bolster the structure of the domestic economy and manage external debt, in
particular corporate external debt. Furthermore, Bank Indonesia will also tighten policy coordination with


the Government with respect to controlling inflation and reducing the current account deficit in order to
ensure economic rebalancing continues unimpeded by maintaining sustainable economic growth moving
forward.

Internationally, BI assessments indicate that the global economic recovery continued during the reporting
period. Supported by economic momentum in advanced countries as accommodative monetary policy
endured and fiscal pressures eased. Revised up GDP figures for the first quarter of 2014 along with sound
actual GDP data in the subsequent quarter indicate growing traction in the US recovery as investment,
consumption and the external sector expand. Meanwhile, economic growth in developing countries is
expected to remain relatively limited, thereby exacerbating the ongoing downward trend in international
commodity prices. Economic growth in China picked up during the second quarter of 2014 due to the
stimuli introduced. Looking forward, a number of global risks require monitoring, for instance the
normalisation policies of the Federal Reserve and Bank of England, as well as the risk of spillover and
spillback from sluggish emerging market economies.

Domestically, the economy cooled off during the second quarter of 2014 due to a contraction in exports,
specifically natural resource based commodities. The domestic economy expanded by 5.12% (yoy) in the
second quarter of 2014, down from the 5.22% (yoy) posted in the preceding quarter as a result of weaker
export performance of natural resource based commodities, such as coal, CPO and minerals. Such
conditions are evidenced by regional economic performance, with torpid economic conditions in the
second quarter stemming from plantations and mines on the islands of Sumatra and Kalimantan.
Concerning domestic demand, the economic slowdown is primarily attributable to a contraction in
government spending due to the postponement of social assistance disbursements, coupled with sluggish
non-construction investment activity. Notwithstanding, dogged household consumption bolstered
economic growth in the second quarter of 2014, credited to activities associated with the presidential
election as well as maintained public purchasing power in line with lower inflation. Moving forward,
economic growth is projected to continue moderating as domestic demand wanes despite stronger export
performance. In general for 2014, the domestic economy is expected to expand in line with the previous BI
projection of 5.1-5.5%, with a bias towards the lower end of the range.

The Indonesia balance of payments improved in the second quarter of 2014 despite a growing current
account deficit. The surplus Indonesia balance of payments was supported by stronger capital and financial
account performance. The current account deficit was USD9.1 billion (4.27% of GDP) in the second quarter
of 2014, which is down on the deficit reported in the same period of the previous year at USD10.1 billion


(4.47% of GDP) in accordance with stabilisation policy instituted by Bank Indonesia and the Government
but up dramatically from the USD4.2 billion (2.05% of GDP) reported in the previous quarter in line with
seasonal trends. The growing non-oil/gas trade surplus was again insufficient to offset the burgeoning oil
and gas trade deficit. Furthermore, exports of commodities such as coal, CPO and minerals experienced a
decline in line with moderating economic growth in emerging market countries along with enforcement of
the Mineral and Coal Mining (Minerba) Act. Conversely, manufacturing exports such as automotive, textiles
and clothing continued to expand as recoveries persisted in advanced countries. Imports of consumer
goods and oil remained high in the second quarter of 2014 in line with strong demand in the approach to
Ramadan and Eid-ul-Fitr. Meanwhile, servicing external debt and repatriation of dividends/coupons, which
increased in line with seasonal trends in the second quarter, aggravated pressures on the current account
deficit. In terms of the capital and financial accounts, a larger surplus than that registered in the preceding
quarter was reported due to a surge in portfolio investment inflows and FDI in line with the favourable
perception of investors regarding the domestic economic outlook. Consequently, foreign exchange
reserves in Indonesia swelled to US$110.5 billion, equivalent to 6.4 months of imports or 6.2 months of
imports and servicing external debt, which is well above international adequacy standards of around three
months. The current account deficit is expected to recover in upcoming quarters as manufacturing exports
rebound and exports of minerals recommence, accompanied by a deceleration of non-oil/gas imports.

The rupiah experienced depreciatory pressures but volatility was mitigated. Point to point, in the second
quarter of 2014 the rupiah declined by 4.18% (mtm) to a level of Rp11,855 per US dollar, while on average
the rupiah appreciated during the reporting period 1.76% to Rp11,629 per US dollar. Strong corporate
demand in harmony with seasonal trends that favour servicing external debt and repatriating
dividends/coupons placed additional pressures on the rupiah. Additionally, the wait-and-see attitude of
investors concerning the results of the presidential election, coupled with external conditions such as
geopolitical tensions in Ukraine and the ongoing conflict in Iraq, also affected rupiah performance. In July
2014, the rupiah appreciated on the back of a peaceful and orderly presidential election. On average, the
rupiah strengthened 1.8% (mtm) to a level of Rp11,682 per US dollar, compared to 2.4% point-to-point,
and closed at a level of Rp11,578 per US dollar. Looking ahead, Bank Indonesia will consistently maintain
rupiah exchange rates in accordance with its fundamental value.

Inflation was controlled and continued to follow a downward trend, thereby supporting achievement of
the inflation target in 2014, namely 4.51%. Headline inflation in the second quarter of 2014 was recorded
at 6.70% (yoy), down from 7.32% (yoy) posted in the previous quarter. Controlled inflation endured into
July 2014, at a rate of 0.93% (mtm) or 4.53% (yoy), which is relatively low compared to the seasonal
average during Ramadhan over the past three years. Lower inflation is credited to less intense inflationary


pressures on volatile foods along with controlled core inflation. Inflation of volatile foods eased as supply
increased upon the arrival of the harvest season at a number of production centres. Meanwhile,
moderating domestic demand, minimal international price pressures and well-anchored inflation
expectations helped control core inflation. There remain several risk factors that require vigilance, for
instance potential corrections to administered prices such as electricity rates as well as rising food prices.

Solid financial system stability was supported by banking system resilience and relatively well maintained
financial market performance during the reporting period. Banking industry resilience was resolute, with
credit risk, liquidity risk and market risk all well mitigated and supported by a sound capital base. At the
end of the second quarter of 2014, the Capital Adequacy Ratio (CAR) of the banking industry was high at
around 19.40%, which is well above of the minimum 8% threshold. In addition, non-performing loans (NPL)
were low and stable at around 2.00%. Credit growth to the private sector decelerated to 16.6% (yoy) from
19.1% (yoy) in the previous quarter in line with the ongoing economic rebalancing process. Sound liquidity
conditions in the economy and banking industry were maintained during the reporting period, as reflected
by growth of M2 and deposits that expanded 13.1% (yoy) and 13.6% (yoy) respectively, accompanied by
relatively stable interest rates on the money market. Tight liquidity was experienced at several banks,
especially those pursuing aggressive expansion strategies and due to internal conditions, which helped
drive healthy competition for funds and raised bank interest rates. Meanwhile, the capital market
performed well during the second quarter and July of 2014, substantiated by gains in the JSX Composite.
Bank Indonesia will continue to coordinate with the Financial Services Authority (OJK) to maintain future
financial system stability, thereby supporting more balanced and sustainable economic growth.
Jakarta, 14th August 2014 Communication Department
Bank of Uganda :
Monetary Policy Statement 14
th
August 2014
Inflation remains subdued. Annual Headline inflation edged down in the last three months to July 2014 due
to food crop inflation that has averaged minus 5.1 percent month-on-month. Core inflation averaged 3.1
percent in the same period, which is below the Bank of Ugandas (BoU) medium-term target of 5 percent.
In July 2014, annual Headline inflation declined to 4.3 percent from 5.0 percent in June 2014, largely on
account of a decline in food inflation, which fell from 17.2 percent to 12.9 percent during the same period.
Monthly core inflation has picked up slightly in the past 3 months mainly as a result of exchange rate
depreciation.
The latest economic indicators suggest that the domestic economy continues to register favourable
performance and economic growth is projected to be in the range 5.5 6.5 percent in FY 2014/15. Over


the last twelve months, lending interest rates have declined somewhat and private sector credit has picked
up strongly.
The expansionary financial conditions continue to have the expected effects on the economy as reflected in
the strengthening of private consumption growth. Going forward, I expect economic growth momentum to
be sustained, anchored by domestic demand with additional support from the improved external
environment.
The key uncertainties for the domestic economy continue to be centred on the timing and extent of the
pickup in domestic investment and the prospects for export demand. It is possible that consumption and
investment could be stronger than expected. In addition, there are external risks as the global economic
outlook remains subject a considerable degree of uncertainty. Prospects for global economic activity in
2014 are weaker than earlier anticipated but are expected to gather momentum in 2015. Financial and
commodity markets also remain vulnerable to instability as geopolitical risks remain elevated.
The BoU macroeconomic forecasts remain unchanged since the last Monetary Policy Committee meeting.
Core inflation is forecast to remain in the range of 4 - 5 percent in the third quarter of 2014, increasing to
5.5 6.5 percent over the next 12 months. Given the assessment, the BOUs judgement is that the current
monetary policy stance is appropriately configured to foster sustainable growth in demand and inflation
outcomes consistent with the medium term target of 5 percent. Therefore, the BOU will maintain the
Central Bank Rate (CBR) at 11.0 percent in August - September 2014. The band on the CBR will be
maintained at +/-2 percentage points and the margin on the Rediscount rate at 3 percentage points on the
CBR. Consequently, the Rediscount rate and the Bank rate for August-September 2014 will remain at 14.0
percent and 15.0 percent, respectively.
The BoU will continue to carefully assess the evolution of risks to the global and domestic economy and the
implications of these risks for the overall outlook of domestic inflation and growth. Any future changes in
the monetary policy stance will be guided by the implications of domestic and external macroeconomic
conditions on the inflation outlook.

Central Bank of Chile :

In its monthly monetary policy meeting, the Board of the Central Bank of Chile decided to lower the
monetary policy interest rate by 25 basis points, to 3.75% (annual).

Internationally, incoming information confirms the outlook of recovery of the developed economies,
particularly the United States, while growth forecasts for emerging markets have deteriorated. External
financial conditions have remained favorable. With respect to commodity prices, an increase in the copper
price stands out, while agricultural prices have declined. Higher inflation in Latin America contrasts with the
low inflation rates that still prevail in developed economies.



Local economic indicators show that the pace of expansion of output and demand has slowed further. The
drop in investment was compounded by a slowdown in private consumption. Despite signs of less
dynamism in the labor market, the unemployment rate remains low. In June, headline inflation reached
4.3% annually and core inflation measures declined. Y-o-y growth in nominal wages accelerated. Medium-
term inflation expectations remained around 3% annually.

The most likely scenario continues to consider that inflation will stay above the upper bound of the
tolerance range still for some months, and then return to the target. This evolution will continue to be
monitored with special attention.
The Board will consider the possibility of making additional cuts to the monetary policy rate in line with the
evolution of domestic and external macroeconomic conditions and its implications on the inflationary
outlook. At the same time, the Board reiterates its commitment to conduct monetary policy with flexibility,
so that projected inflation stands at 3% over the policy horizon. Data released on : 15 July 2014










The Central Bank of Sri Lanka :

Monetary Policy Review August 2014

Headline inflation continued to remain in low single digit levels, although it increased to 3.6 per cent on a
year-on-year basis in July 2014 from 2.8 per cent in the previous month reflecting higher prices of certain
food items caused by adverse weather conditions. Meanwhile, core inflation, which reflects underlying
price movements, rose marginally to 3.7 per cent in July compared to 3.5 per cent in June 2014. Although
supply disturbances triggered by adverse weather conditions could cause temporary price fluctuations, the
outlook for inflation remains benign supported by relatively stable international commodity prices as well
as well contained demand pressures and inflation expectations.

Market interest rates have continued to adjust downwards in response to monetary policy measures taken
by the Central Bank in the recent past. Reflecting the impact of the low inflation environment, the
secondary market yield curve for Government securities has shifted downwards.



Short term interest rates, including the average weighted prime lending rate (AWPR) have decreased to
historic low levels while longer term lending rates such as interest rates on housing loans and leasing are
adjusting downwards as expected. Deposit rates, which fell in tandem with policy interest rates, appear to
have stabilised at their new levels. Continued low inflation has enabled depositors to receive a positive real
interest rate on deposits while encouraging financial institutions to introduce new products offering long
term benefits to savers.

The growth of broad money (M2b) on a year-on-year basis was 13.3 per cent in June 2014 in comparison to
13 per cent in the previous month. Credit obtained by the private sector rose by Rs. 8 billion in June,
although on a year-on-year basis, private sector credit growth decelerated to 2 per cent by end June 2014.
Credit obtained by the private sector is expected to increase gradually with high levels of liquidity in the
domestic money market, low short term lending rates and declining longer term rates.

Considering available information for the first half of the year, real economic growth is likely to remain
broadly on target in 2014. Nevertheless, reflecting the continued low inflation environment, the Implicit
GDP Deflator is expected to be lower than the originally projected level of 6 per cent, and consequently,
nominal GDP growth is expected to be lower than the initially projected rate of 14.3 per cent. Accordingly,
the Central Bank expects broad money to grow by around 13 per cent, on a year-on-year basis by end
2014, compared to the previously expected 14 per cent for 2014.

The external sector strengthened further in recent months supported by timely and appropriate policies of
the Central Bank and the Government. Favourable developments in exports observed from June 2013 are
expected to continue during the remainder of 2014.

Higher inflows attributed to rising workers remittances and receipts from tourism along with the lower
trade deficit have positively impacted the external current account. Consequently, gross official reserves
surpassed the historic milestone of US dollars 9 billion, and currently stand at around US dollars 9.2 billion.
In the meantime, the Central Bank has purchased over US dollars 1 billion from the domestic foreign
exchange market on a net basis so far during the year.
In this background, the Monetary Board, at its meeting held on 14th of August 2014, decided to maintain
the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) of the Central Bank
unchanged at their current levels of 6.50 per cent and 8.00 per cent, respectively.

The date for the release of the
next regular statement on
monetary policy would be
announced in due course.
Monetary Policy Decision:
Policy rates unchanged
Standing Deposit Facility Rate
(SDFR)
6.50%
Standing Lending Facility Rate
(SLFR)
8.00%
Statutory Reserve Ratio (SRR) 6.00%



The Bank of Botswana :
The meeting of the Monetary Policy Committee held on August 15, 2014 concluded that the
medium-term outlook for price stability remains positive, with inflation forecast to remain within
the 3 6 percent objective range.

Economic Outlook and Assessment of Risks

Global output is estimated to have grown by 3 percent in 2013 and is projected to increase by 3.6
percent in 2014 and 3.9 percent in 2015, buoyed by improved growth in advanced economies and
continuing strong performance in emerging markets. However, overall GDP growth remains
moderate, with subdued demand and capacity underutilisation in major economies, as well as the
high unemployment rates that continue to constrain worldwide inflation.

Botswanas output growth is estimated at 5.9 percent in the twelve months period to March 2014,
thus reflecting the 14.2 percent and 4.6 percent increase in mining and non-mining output,
respectively. It is anticipated that non-mining economic activity will be below potential in the
medium term. The impact of domestic demand on economic activity is projected to be modest,
largely indicating trends in government expenditure and personal incomes.

Inflation eased marginally from 4.6 percent in June to 4.5 percent in July 2014. Weak domestic
demand and the projected benign external price developments result in a positive inflation
outlook for the medium term. However, this outlook could be adversely affected by any
unanticipated large increase in administered prices and government levies as well as international
oil prices that are higher than currently forecast.

Monetary Policy Stance

The current state of the economy, domestic and external economic prospects, and the inflation
outlook, suggest that the current monetary policy stance is consistent with maintaining inflation
within the Banks 3 6 percent objective in the medium term. Accordingly, the Monetary Policy Committee
decided to maintain the Bank Rate at 7.5 percent.



The Central Bank of Iceland :

The Monetary Policy Committee (MPC) of the Central Bank of Iceland has decided to keep the Banks
interest rates unchanged. According to the Banks updated forecast, published today, the outlook for the
real economy over the next three years is broadly similar to that described in the May issue of Monetary
Bulletin. However, the outlook is for slightly stronger growth in domestic demand this year and throughout
the forecast horizon.

The inflation outlook has improved somewhat since May, and it now appears that inflation will remain
close to target during the forecast horizon. A positive output gap is forecast to develop later than was
assumed in the last forecast and will be less pronounced. Inflation expectations have changed little in the
recent past, and long-term expectations are still above target.

The Banks foreign exchange transactions in the past year have contributed to greater exchange rate
stability. This year the Bank has bought significantly more foreign currency than it has sold, in both regular
and ad hoc purchases. The Bank intends to continue its regular purchases in the current amount as long as
conditions remain relatively unchanged. As before, the Bank will intervene in the foreign exchange market
as needed to mitigate exchange rate volatility.

The slack in the monetary policy stance has probably disappeared, and it appears, based on the Banks
baseline forecast, that the current interest rate will suffice to keep inflation at target. Robust
growth in domestic demand in the near term and growing tension in the labour market could generate
increased inflationary pressures, however, and necessitate an increase in the Banks nominal interest.

20
th
August 2014.



The Bank of Namibia :

REPO RATE INCREASED TO 6.0 PERCENT


The Monetary Policy Committee (MPC) decided to increase the Repo rate by
0.25 percentage points to 6.0 percent. The decision was taken to contain the strong growth in
household credit, which is largely financing unproductive imported luxury goods and
putting additional pressure on the international reserves of the country.

Recent Economic Developments

Global economic growth improved slightly, during the second quarter of 2014, though below
expectations, and is projected to expand, going forward.

1. Global growth improved slightly during the second quarter of 2014, compared with an
unexpected weakening in the first quarter. This was mainly supported by stronger growth in the US
and China. Growth in the Euro Area remained relatively weak, while the Japanese economy
contracted. Some emerging market economies, such as India and China are projected to continue
registering strong positive growth. Going forward, global growth is expected to perform better
compared with 2013, supported by activities in some major advanced and emerging economies.
2. The monetary policy environment in advanced economies continued to support growth, although
the pace of the monetary expansion program in the US was reduced further in July 2014. In
emerging market economies, the stance of monetary policy was mixed. South Africa and Russia
raised policy rates to tame inflationary pressures. In contrast, China reduced the reserve
requirement ratio for small commercial banks to stimulate growth in some parts of the country.
Brazil and India left their policy rates unchanged to support economic activities.

Domestic growth prospects continued to be encouraging with inflation remaining
manageable, however risks remain. Strong growth in household credit remains a concern,
especially when used to finance unproductive imported luxury goods.

3. Available data shows that the domestic economy improved during the first half of

2014, driven mainly by construction, wholesale and retail trade, diamond mining, cereal
production and the public sector. In contrast, activities such as uranium and zinc production
performed poorly.

4. Going forward, the domestic economy is expected to improve for the remainder of 2014,
supported by construction activities and strong domestic demand. The risk to growth remains


the declining international commodity prices, due to depressed demand.


5. Annual inflation, which has been rising in the past six months, slowed in July

2014. Inflation rose steadily from 4.9 percent in January 2014 to 6.1 percent in May and June
2014, before dropping to 5.6 percent in July 2014. The slowdown in July was reflected mainly in
food, transport and housing categories. Going forward, inflation is expected to average around 6
percent for 2014.

6. Credit to the private sector increased strongly to an average growth rate of 15.3 percent during
the first half of 2014, from 13.9 percent registered during the last six months of 2013. This strong
demand for credit came from both households and business sectors. The growth in household
credit was mainly dominated by installment credit, overdrafts and other loans and advances,
which regrettably are also used to finance unproductive imported luxury goods.

7. During the first half of 2014, the trade deficit widened further as a result of the higher import
bill. These imports consisted mainly of capital inputs, vehicles and other consumer goods. The
Bank of Namibia remains concerned about the importation of unproductive goods, especially
passenger vehicles and other luxury goods, which continue to exert pressure on the
international reserves of the country.

Monetary Policy Stance

On the 19th of August 2014, the Monetary Policy Committee (MPC) of the Bank of Namibia held its
bi-monthly meeting to decide on the monetary policy position for the next two months. The meeting
reviewed the global, regional and domestic economic and financial developments since the last
meeting, held on the 1ih of June 2014, and the decision was taken to increase the Repo rate to
6.0 percent. The next meeting of the MPC will be held on the 21st October 2014.



The Bank of Israel :
The Monetary Committee reduces the interest rate for September 2014 by 0.25 percentage points, to
0.25 percent

Inflation data: The Consumer Price Index (CPI) for July increased by 0.1 percent, slightly below forecasters
projections for an increase of 0.2 percent, on average. There were significant increases in the fruit and
vegetables, housing, and transport and communication components, and marked declines in the clothing
and footwear and furniture components. The inflation rate over the preceding 12 months was 0.3 percent,
compared with 0.5 percent over the 12 months ended in June. The tradable goods components of the CPI
declined by 1.3 percent over the past 12 months. There was a further decline in the rate of increase in
components consisting of nontradable products, and they increased by only 1.1 percent.

Inflation and interest rate forecasts: This month, inflation expectations, from all sources and for all ranges,
continued to decline. Private forecasters projections for the next 12 CPI readingsas well as inflation
expectations for the coming year derived from the capital market (seasonally adjusted)declined to 1.1
percent, and two-year projections declined to 1.3 percent. (In the recent period there has been a difficulty
in calculating 1-year expectations because there arent CPI-indexed bond series for that range.)
Expectations for the next 12 CPI readings derived from banks internal interest rates declined to 0.8
percent, below the lower bound of the inflation target range. Continuing an extended decline since the
April CPI was published, inflation expectations for medium terms declined by about 0.2 percentage points,
to 1.7 percent, and expectations for longer terms declined by about 0.1 percentage points, to 2 percent.
According to most forecasters, as well as data from the makam and Telbor curves, the Bank of Israel
interest rate is not expected to be reduced in the coming three months.

Real economic activity: Data on real economic activity which became available this month indicate
moderation in growth of activity even before Operation Protective Edge. Preliminary indicators for July
signal further moderation due to the operation, part of which, primarily that related to tourism, is likely to
last for a relatively long time, while moderation related to private consumption is expected to be of a
temporary nature, and consumption may compensate for that moderation over time. Based on the first
estimate of second quarter National Accounts data, GDP growth slowed to only 1.7 percent (National
Accounts data are in annual terms, seasonally adjusted), while growth of business sector product increased
to 2.3 percent. The decline in growth is mainly the result of a contraction of 10.1 percent in exports
(excluding diamonds and startups), led by goods exports, and by a contraction in investment (1.6 percent,
excluding ships and aircraft), primarily in housing. Private consumption increased at a decent rate of 3.1
percent. The Composite State of the Economy Index was unchanged in July, after increasing moderately in
previous months, and this deterioration partly reflects the effect of the security situation. Goods exports
(excluding ships and aircraft and diamonds) increased by 1.1 percent in July, and their level is similar to the
monthly average for the second quarter. Goods imports (excluding diamonds, ships and aircraft, and fuels)
declined by 1.8 percent in July. In the first week of July, there was an impressive increase in tourist entries
into Israel compared with the corresponding period of the year before. However, with the beginning of the
fighting, there was a sharp turnaround, and overall in July tourist entries were 26 percent lower than in July
2013. Various indicators of retail trade mostly point to a decline in the volume of trade during the fighting,
primarily reflecting deferred purchases which are likely to be carried out afterward. As was the case in
previous security events, consumer confidence indices apparently were not affected by the security
situation: the Globes and the Bank Hapoalim indices increased in July. The Central Bureau of Statistics index
continued to decline, but that began in earlier months. The Purchasing Managers Index declined to 46.8
points in July, and has been indicating contraction in manufacturing activity for two months now. The
Business Tendency Survey of the Central Bureau of Statistics indicates a decline in business sector activity


in July, and the Climate Index derived from that survey declined, reflecting a monthly growth rate of 0.22
percent.
The labor market: Data which became available this month continue to indicate a halt in labor market
expansion. Labor Force Survey data for the second quarter indicate an increase of 0.2 percentage points in
the unemployment rate among the principal working ages (2564), to 5.3 percent, with a decline in the
employment rate by 0.3 percentage points. The overall unemployment rate increased by a similar degree,
to 6 percent, and there was no change in the overall employment rate. At the same time, there was a
decline in the average weekly work hours per employed person, from 36.1 hours to 35.5 hours, due
to, inter alia, the expansion in part time employment at the expense of full time employment. The number
of employee posts declined in MarchMay by 0.14 percent compared with the preceding three months
(DecemberFebruary, seasonally adjusted data). Nominal wages increased by 0.8 percent, and real wages
increased by 0.7 percent, in MarchMay, compared to the preceding three months (DecemberFebruary,
seasonally adjusted data). Health tax receipts, which provide an indication of total wage payments in the
economy, continue to indicate expansion of employment, and were 4.3 percent higher in JuneJuly, on a
nominal basis, than in the corresponding period of the previous year.

Budget data: Since the beginning of the year, the deficit in the governments domestic activity (excluding
net credit) was about NIS 4.7 billion, which is about NIS 2.6 billion smaller than the deficit in the seasonal
path consistent with meeting the deficit target for 2014, because the level of expenditure is below the
seasonal path consistent with full performance of the budgetdomestic expenditures (excluding credit) in
JanuaryJuly were about NIS 5.2 billion lower than the path, despite a deviation of NIS 0.6 billion relative to
the expenditure path in July, the result of payments to suppliers in the South being brought forward and of
a supplement to the defense budget. Tax revenues in July were lower, by about NIS 1.4 billion, than the
seasonal path consistent with the revenue forecast, of which NIS 0.4 billion was the result of deferring the
date for tax payments by companies in the South. Indirect taxes declined, and gross domestic VAT receipts,
(net of legislative changes and deferred collection due to the fighting) declined by about 0.6 percent, in real
terms, compared with July 2013. The government has still not decided what the extent of the addition to
the defense budgetin respect of the costs of the operationwill be, and how it will be spread out over
the coming years.

The foreign exchange market: From the monetary policy discussion on July 27, 2014, through August 22,
2014, the shekel weakened by about 2.7 percent against the dollar and by 1.4 percent against the euro. In
terms of the nominal effective exchange rate, the shekel weakened by about 1.7 percent this month. For
the year to date, the shekel, in terms of the effective exchange rate, has strengthened by about 0.4
percent.

The capital and money markets: This month as well, the security situation did not have a notable effect on
financial markets. From the monetary policy discussion on July 27, 2014, through August 21, 2014, the Tel
Aviv 25 Index declined by 1.2 percent, while the trend on equity markets worldwide was mixed. Yields in
the government bond market declinedyields on the unindexed-bond yield curve declined by up to 20
basis points, with the yield on the 10-year unindexed bond declining by about 8 basis points to 2.72
percent. The yield differential between 10-year Israeli government bonds and corresponding 10-year US
Treasury securities narrowed to about 24 basis points, a low level compared with recent
years. Makam yields declined along the entire curve, and the 1-year yield is 0.45 percent. Israel's sovereign
risk premium as measured by the five-year CDS spread remained virtually unchanged at 89 basis points,
despite Operation Protective Edge.
The money supply: In the twelve months ending in July, the M1 monetary aggregate (cash held by the
public and demand deposits) increased by 19.0 percent, and the M2 aggregate (M1 plus unindexed
deposits of up to one year) increased by 8.2 percent.



The credit markets: Total outstanding debt of the business sector declined by about NIS 8 billion (1.0
percent) in June, to NIS 777 billion, as a result of a decrease in outstanding bank credit and corporate
bonds. In July, the nonfinancial business sector issued about NIS 2.7 billion in bonds, compared with a
monthly average of NIS 3.9 billion since the beginning of the year. Net new investment in corporate bond
mutual funds, which turned negative after the publication of the July interest rate notice, did not renew in
August, and it appears that the interest rate reduction in August led primarily to funds being diverted from
money market funds to government bond funds. Bond market spreads declined slightly, after increasing in
the previous two months, and their level is still low. Outstanding household debt increased by about NIS
2.3 billion (0.6 percent) in June, to about NIS 419 billionthe portion of that balance which is made up of
housing debt increased by about 1.6 percent. In July, new mortgages taken out were at an elevated level of
about NIS 5 billion, as most risk characteristics continued to decline to low levels, after declining in previous
months as well. In July, the interest rate on new mortgages taken out increased moderately on the indexed
tracks(0.020.04 percentage points), and the interest rate on unindexed tracks declined moderately
(0.050.09 percentage points).

The housing market: The housing component of the CPI (based on residential rents) increased by 0.9
percent in July. In the 12 months ending in July, this component increased by 2.2 percent, a similar annual
rate to that of the previous two months. Home prices, which are measured in the Central Bureau of
Statistics survey of home prices but are not included in the CPI, declined by 0.2 percent in MayJune, for
the first time in 8 months. Over the 12 months ending in June, home prices increased by 7.7 percent,
compared with an increase of 9 percent in the 12 months ended in May. The number of new homes that
remain for sale declined by 2.4 percent in June compared with the previous month (seasonally adjusted
data). A deferral of Israel Land Authority tenders due to Operation Protective Edge, a closure which
prevented the entrance of Palestinian workers, the shutdown of construction sites in the South due to the
fighting, and the uncertainty related to the application of a zero VAT rate on new homes can all possibly
negatively impact the increase in supply of homes. The number of housing transactions declined by 13
percent in the second quarter, reaching its lowest level since the trough of 2011.

The global economy: The picture arising this month from the global economic data which became available
continues to indicate a limited recovery, with accelerated growth in US and further moderation in Europe.
The US economy grew by 4 percent (in annual terms) in the second quarter, a higher rate than forecast,
though an increase in inventories explains a large part of the growth. Purchasing manager indices indicate
continued growth in the third quarter. In the past half year, nonfarm payrolls have increased to their
highest level in more than 8 years, while the average salary continues to increase only moderately. The
tapering process is expected to end in October, and the federal funds target rate, according to
assessments, is still not expected to be increased before the second half of 2015. Eurozone GDP did not
grow in the second quarter (0 percent)GDP in Germany and Italy contracted, and this was offset by
positive growth in, among others, Spain and the Netherlands. The unemployment rate declined only
moderately, by 0.1 percentage point, to 11.5 percent. The crisis in the Ukraine is negatively impacting
sentiment in Europe. Eurozone inflation is not recovering, and in the 12 months ending in July it was 0.4
percent. The ECB emphasized that it is accelerating preparations for the possible operation of a
quantitative easing program. The banking system continues to deal with significant challenges, and this
month the government of Portugal announced a rescue plan for one of the countrys largest banks. In
Japan, Aprils increase in the VAT rate led to a marked negative impact on economic activity, and GDP
contracted by 6.8 percent in the second quarter. Assessments increased that the Bank of Japan will expand
the incentive program it announced earlier this year. Emerging markets presented a mixed picture this
month: most of those countries benefited from low market volatility and from the improvement in the US
economy. In China, some slowdown is apparent in the third quarter and inflation pressures remain low. In
India, the stable recovery continues; in Brazil, the ramifications of political instability on economic activity


are seen, and the crisis in the Ukraine has negative effects on Russias economic situation. The price of a
barrel of crude oil declined by about 6 percent this month, and the commodities excluding energy index
declined by 2.3 percent.

The main considerations behind the decision
The decision to reduce the interest rate for September 2014 by 0.25 percentage points, to 0.25 percent, is
consistent with the Bank of Israel's monetary policy which is intended to return the inflation rate to within
the price stability target of 13 percent a year over the next twelve months, and to support growth while
maintaining financial stability. The path of the interest rate in the future depends on developments in the
inflation environment, growth in Israel and in the global economy, the monetary policies of major central
banks, and developments in the exchange rate of the shekel.
The following are the main considerations underlying the decision:
There was an additional decline in the inflation environment this month. Inflation measured over the
preceding 12 months declined to 0.3 percent, and the decline in inflation expectations for all terms
continued. Forecasters projections for the coming year, and 1-year expectations derived from the capital
market, are very near the lower bound of the target range, and expectations derived from banks internal
interest rates declined below the range.
Based on the first estimate of second quarter National Accounts data, there was a further slowdown in
economic growth, particularly in goods exports, even before the deterioration in the security situation.
There was some increase in the growth rate of business sector product compared to previous quarters.
Labor market data indicate a halt to the improvement in employment. Data which have become available
so far do not yet allow the assessment of the loss of GDP that will derive from the fighting, which still
continues, but it occurs against the background of a slowdown in growth of the economy, and an
environment of low economic growth worldwide. In particular, an extended negative impact is expected in
tourism, and a negative impact, apparently temporary, in private consumption.
The shekel weakened by 1.7 percent this month in terms of the nominal effective exchange rate.
Continued depreciation will support a recovery in exports and in the tradable sector. The shekel has
appreciated by about 0.4 percent since the beginning of the year.
The global picture continues to indicate limited recovery, with renewed growth in the US and moderation
in Europe and Japan. Major central banks are expected to continue accommodative monetary policy for an
extended period of time.
Home prices increased by 7.7 percent in the previous 12 months, and the rate of new mortgages taken out
remains elevated. The uncertainty regarding the application of a zero VAT rate on new homes continues to
have an impact on housing market activity.




The Bank of Israel will continue to monitor developments in the Israeli and global economies and in
financial markets. The Bank will use the tools available to it to achieve its objectives of price stability, the
encouragement of employment and growth, and support for the stability of the financial system, and in
this regard will continue to keep a close watch on developments in the asset markets, including the housing
market.
The minutes of the monetary discussions prior to the interest rate decision for September 2014 will be
published on September 8, 2014. The decision regarding the interest rate for October 2014 will be
published at 16:00 on Monday, September 22, 2014.



Central Bank of Hungary :
PRESS RELEASE ON THE MONETARY COUNCIL MEETING OF 26 AUGUST 2014
At its meeting on 26 August 2014, the Monetary Council reviewed the latest economic and financial
developments and voted to leave the central bank base rate unchanged at 2.10%.

In the Councils judgement, Hungarian economic growth is likely to continue. While the pace of economic
activity is strengthening, output remains below potential and is only likely to approach that level in the
course of next year. Despite the pick-up in the components of domestic demand, capacity utilisation is
expected to improve only gradually due to the protracted recovery in Hungarys export markets. With
employment rising, the unemployment rate has been broadly flat since the start of the year, but still
exceeds its long-term level determined by structural factors. Inflationary pressures in the economy are
likely to remain moderate for an extended period.

Based on the inflation data for July, consumer prices continue to show historically low dynamics. The
Banks measures of underlying inflation capturing the medium-term outlook still indicate moderate
inflationary pressures in the economy, reflecting low inflation in external markets, the degree of unused
capacity in the economy, subdued wage dynamics, the fall in inflation expectations and the reductions in
administered prices, implemented in a series of steps. Domestic real economic and labour market factors
continue to have a disinflationary impact and low inflation is likely to persist for a sustained period.
However, domestic demand-side disinflationary pressures are weakening gradually as activity gathers pace,
and inflation is likely to reach levels around 3 per cent consistent with price stability by the end of the
forecast horizon.

Based on data available since the previous interest rate decision, economic growth continued, in line with
the June projection, as reflected in data for industrial production and retail trade. In the Councils
judgement, the Hungarian economy returned to a growth path in 2013. Looking ahead, economic growth
may continue in a more balanced pattern than previously, with the recovery in domestic demand likely to
make a greater contribution. The increasing use of EU funding and the easing in credit constraints also due
to the Banks Funding for Growth Scheme are expected to sustain the recovery in investment. Household
consumption is also likely to grow gradually, mainly as a result of the expected increase in the real value of
disposable income and the reduced need for deleveraging. However, propensity to save is expected to
remain above levels seen prior to the crisis. Based on labour market data for June, the number of
employees continued to rise and the unemployment rate was unchanged.

International investor sentiment deteriorated somewhat in the past month, mainly reflecting the
escalation of geopolitical conflicts and revised expectations of an interest rate increase by the US Federal
Reserve. Hungarian risk premia remained broadly unchanged in the period and the forint exchange rate
depreciated, mostly along with other currencies of the region. Hungarys persistently high external
financing capacity and the resulting decline in external debt have contributed to the reduction in its
vulnerability. The Banks self-financing programme may contribute to an improvement in perceptions of
the risks associated with the economy. In the Councils judgement, a cautious approach to policy is still
warranted due to uncertainty about future developments in the global financial environment.

In the Councils judgement, there remains a degree of unused capacity in the economy and inflationary
pressures are likely to remain moderate in the medium term. The negative output gap is expected to close
gradually at the monetary policy horizon. Looking ahead, therefore, the disinflationary impact of the real


economy is likely to diminish and, with current monetary conditions maintained, inflation is likely to move
into line with the target over the medium term. The Council judges that, based on available information the
current level of the central bank base rate is consistent with the medium-term achievement of price
stability and a corresponding degree of support for the economy. If the assumptions underlying the Banks
projection hold, achieving the medium-term inflation target points in the direction of maintaining current
loose monetary conditions for an extended period. The abridged minutes of todays Council meeting will
be published at 2 p.m. on 10 September 2014.
The Monetary Policy Committee (the Committee) has decided to set the short term
interest rates as follows:
a) Overnight Interest Rates: Marginal Funding Rate has been reduced from 12 percent to 11.25 percent, the
interest rate on borrowing facilities provided for primary dealers via repo transactions has been reduced
from 11.5 to 10,75, and borrowing rate has been kept at 7.5 percent.
b) One-week repo rate has been kept at 8.25 percent.
c) Late Liquidity Window Interest Rates (between 4:00 p.m. 5:00 p.m.): Borrowing rate has been kept at 0
percent, and lending rate has been reduced from 13.5 percent to 12.75 percent. Loan growth continues at
reasonable levels in response to the tight monetary policy stance and macroprudential measures. In line
with these developments, private final domestic demand follows a modest course.
The adverse impact of exchange rate developments since mid-2013 on annual inflation is gradually
tapering off. However, elevated food prices continue to delay the improvement in the inflation outlook. In
this respect, the Committee also evaluated the possible impact of the drought and the geopolitical risks on
the inflation outlook.
In light of these assessments the Committee decided to maintain the current stance within a more
symmetric interest rate corridor. Inflation expectations, pricing behaviour and other factors that affect
inflation will be closely monitored and the tight monetary policy stance will be maintained, by keeping a
flat yield curve, until there is a significant improvement in the inflation outlook. It should be emphasized
that any new data or information may lead the Committee to revise its stance. The summary of the
Monetary Policy Committee Meeting will be released within five working days.
National Bank of Angola :
The Monetary Policy Committee of the National Bank of Angola (CPM) met on August 28 at its thirty-fifth
regular session, the eighth of 2014.

With a view to taking monetary policy measures that contribute to the maintenance of price stability in the
domestic economy, we analyzed the evolution of inflation, the real economy, fiscal and monetary accounts,
as well as the latest information about the international economic situation, including the SADC region. The
analysis was based on data for the month of July 2014.

I. EVOLUTION OF MONETARY AND FINANCIAL NATIONAL ECONOMY

- In July, the monthly inflation rate was 0.61%, up 0.09 percentage points from the same period in 2013
Inflation in the last twelve months stood at 6.98%.


- Class 05 - "Furniture, Household Equipment and Maintenance", with 1.41%, which was more varied, while
Class 01 - "Food and Non-Alcoholic Beverages", with 0.20 points, was the largest contributor for inflation in
the month;

- The LUIBOR Overnight stood at 3.31% per annum and maturities of 3 and 12 months at 7.33% and 9.56%
per year, respectively;

- Credit to the economy reached a volume of 3.295 million Kz million, representing an increase of 19.15%
over the last 12 months.

- In July, commercial banks gained currency in the amount of USD 3,765 million in the foreign exchange
market, of which USD 2,000 million to BNA, ie an increase of 9.3% from the previous month.

- From January to July 2014, the total sales volume of foreign currency in the foreign exchange market was
USD 19,858 million, compared to USD 12,158 million in the same period of 2013, representing an increase
of 63.33%;

- In the primary Foreign Exchange Market, the average exchange rate for reference appreciated by 0.51%
against the previous month, having located in Kwanza 97.08 per American dollar.

II. DECISIONS OF THE MONETARY POLICY COMMITTEE

Based on the analysis of the evolution of key macroeconomic indicators and their perspective of evolution,
the Monetary Policy Committee decided to keep:

- The Basic Interest Rate - Rate BNA - at 8.75% per annum;
- The Rate of Interest Standing Lending Facility Liquidity at 9.75% per annum;
- The Interest Rate of Permanent Liquidity Absorption Facility at 1.75% per annum.

The next meeting of the Monetary Policy Committee will take place on September 29, 2014.
Luanda, August 28, 2014.