Monetary Policy Week in Review – Nov. 10, 2012: Uneven global growth in evidence; 2 c.banks cut, 8 banks on hold

    Last week in monetary policy 11 central banks decided on interest rates, with two banks cutting rates (Poland and Kenya), eight keeping rates unchanged and Serbia again raising its rate in its quest to beat back inflation.

    The asymmetrical pace of economic growth across the world was striking, with central banks in Asia and South America keeping rates on hold and looking forward to stronger growth, while Europe’s economy continues to decelerate and the outlook is weak.

    The Reserve Bank of Australiasaid recent data on the world economy was slightly more positive, the Bank of Korea saw exports stabilizing while consumption and investment was picking up, and the Central Reserve Bank of Peru said its economy was stable and growing at a rate that is close to its full potential.

     Bank Indonesia reported “buoyant domestic demand,” while Bank Negara Malaysia saw “sustained expansion in domestic activity.” 

    Meanwhile in Europe, the National Bank of Poland said it was now clear that the economy was slowing down considerably and it was increasingly worried about a “protracted economic slowdown.” 

    And the European Central Bank saw no signs of economic improvement the rest of this year and expects next year’s growth momentum to remain weak, with risks still on the downside.

    Even the Bank of Russia, which is eager to defend its inflation-fighting credentials, struck a more dovish tone, saying inflation expectations had now moderated and it was keeping an eye on the impact of its surprise rate hike in September.

    The Bank of England didn’t expand its asset purchase program, probably a reaction to an economic rebound in the third quarter, and possibly a sign that it is less pessimistic about growth prospects.

NEXT WEEK (WEEK 46) only five central banks are scheduled to review monetary policy, including Morocco, Sri Lanka, Iceland, Croatia and Latvia.