The ECB is now calling the shots worldwide

Manufacturing is heading down in Asia and heading up in the Eurozone. The US and UK remain positive.

Europe is China’s largest export market. It looks like the weak Euro is having the logical effect on China and surrounding Asia. One may surmise that the euro-effect will prevent anyone in the world from raising interest rates until inflation fears emerge.



-CHINA: PMI was 48.9 in April (preliminary; they may decide to change it later)

–SOUTH KOREA: PMI was 48.8 in April from 49.2 in March.

–INDONESIA: PMI was 46.7 vs. 46.4 in March.

-JAPAN: PMI was 49.9 in April

–INDIA: PMI was 51.3 vs. 52.1 in March.

–EUROZONE: Flash PMI was 52.0 vs. 51.9 for mid-April flash reading and vs. 52.2 end-March.

–GERMANY: PMI was 52.1 vs. 51.9 for mid-April flash reading and vs. 52.8 end-March.

–FRANCE: PMI 48.0 vs. 48.4 for mid-April flash reading and vs. 48.8 end-March.

–ITALY: PMI 53.8 vs. 53.5 expected and 53.3 in March.

–SPAIN: PMI 54.2 vs. 54.3 in March.

-UNITED STATES: PMI 54.1 in April.

-UNITED KINGDOM: PMI 51.9 in April

Serbia becomes the 24th central bank to cut rates so far this year

From: www.centralbanknews.info

Serbia cuts rate 50 bps after IMF deal, lower risk premium

Posted: 12 Mar 2015 06:37 AM PDT

Serbia's central bank cut its key policy rate by 50 basis points to 7.50 percent, a move expected by many economists, and said further changes would continue to depend on international risks, along with changes in commodity prices, and how they impact inflation.

It is the first rate cut this year by the Bank of Serbia (NBS), which cut its rate by 150 basis points in 2014.

The central bank said last month's 1.2 billion euro stand-by agreement with the International Monetary Fund (IMF) along with consistent government budget cuts and structural reforms had helped raise the interest of investors in Serbia, resulting in a fall in the country's risk premium.

Together with inflationary expectations around the NBS' target, this had "opened up the room for monetary policy to contribute to long-term sustainable recovery of the domestic economy," NBS said.

Serbia's inflation rate rose to 0.8 percent in February from a historical low of 0.1 percent in January, mainly due to the comparison with an increase in value-added-tax, and the NBS expects inflation to return to its target range in the second half of 2015 due to its policy measures and the waning impact of low growth in administered prices and low commodity prices.

The NBS targets inflation at a midpoint of 4.5 percent in a range from 2.5 percent to 5.5 percent.

Serbia's Gross Domestic Product contracted by 1.8 percent in the fourth quarter of 2014 compared with the same 2013 quarter, the fourth consecutive quarter the economy has shrunk, but the central bank has said the economy is recovering and the impact of floods in May 2014 is wearing off.

South Korea becomes the 23rd central bank to cut rates so far this year

NYT:

"SOUTH KOREA: The Korean central bank cut its base rate by 0.25 percentage point to 1.75%.

"Falling manufacturing, electronics and car exports amid aggressive competition from Taiwanese, Chinese and Japanese rivals prompted the South Korean central bank to join a plethora of Asian banks in trimming interest rates. South Korean rates are now at record lows. (AM)"

I wonder if the Fed is still planning to raise rates?

Poland's Central Bank 22nd this year to cut rates

If the Fed raises rates this year, it (along with Brazil) may stand alone.  Meanwhile, the strong dollar is damaging US manufacturing and agriculture.

Wednesday, March 4, 2015

Poland cuts rate 50 bps as deflation deepens

    Poland's central bank cut its monetary policy reference rate by 50 basis points to 1.50 percent, a move that was largely expected following last month's guidance by the National Bank of Poland (NBP) that it did not rule out further rate cuts if deflation continued.
    The NBP's previous rate cut of 50 basis points was in October 2014 but since then the fall in consumer prices has deepened. Since the NBP embarked on a monetary easing cycle in November 2012, it has cut the benchmark rate by 325 points.
    Polish consumer price inflation fell to minus 1.3 percent in January from 1.0 percent in December, the seventh consecutive month of deflation.
    Inflation has now been below the NBP's target of 2.5 percent for 26 months and below the lower bound of its 1.5-3.5 percent tolerance range since February 2013.
    The NBP will later today issue a statement about its decision and is also due to update its inflation and growth forecasts.
    In addition to cutting the reference rate, the NBP also cut the deposit rate by 50 basis points to 0.50 percent, the lombard rate to 2.50 percent and the rediscount rate to 1.75 percent.
    This year's strength in Poland's zloty currency against the euro has been worrying Polish policy makers with Marek Belka, NBP governor, signaling that the central bank was keeping an eye on zloty and was likely to act if there was further appreciation.
    The zloty was quoted at 4.17 today, up 4.6 percent against the euro this year though slightly weaker than last week's close around 4.15 to the euro.

    Poland's Gross Domestic Product expanded by 0.7 percent in the fourth quarter from the third quarter for annual growth of 3.10 percent, down from 3.3 percent in the third quarter.
    On Tuesday Poland's Deputy Prime Minister Janusz Piechocinski told Reuters that the central bank should cut rates by more than 25 basis points, saying the country was in no risk of excessive credit growth and that there was "huge space here for such bold action."

    www.CentralBankNews.info

Thank God for Kyoto!

What would greenhouse gas production been without it.  (from yesterday's Financial Times)

India becomes the 21st central bank to cut rates this year.

Everyone is out of step with the Fed.  The strong dollar problem is intensifying.

From Reuters:

UPDATE 5-India's RBI surprises again with post-budget rate cut


Wed Mar 4, 2015 6:32am EST

* RBI cuts repo rate 25 basis points to 7.5 pct

* Second cut this year, embarked on easing cycle in January

* Both made outside of regular policy reviews, surprising markets

* Rajan says economic growth recovering steadily (Adds quotes from Rajan's teleconference)

By Rafael Nam and Neha Dasgupta

MUMBAI, March 4 (Reuters) - India's central bank unexpectedly lowered its policy rate for the second time this year on Wednesday, backing a government that is pushing to revive economic growth as inflation cools.

Although markets had broadly expected the Reserve Bank of India to reduce rates again after a cut in January, few had expected a move just days after the government unveiled a budget that took a slower path to lowering the fiscal deficit.

After cutting the policy repo rate by 25 basis points to 7.50 percent, RBI Governor Raghuram Rajan issued a statement citing his reasons for making the move a month before a scheduled policy review.

"Given low capacity utilisation and still-weak indicators of production and credit off-take, it is appropriate for the Reserve Bank to be pre-emptive in its policy action," he said.

The RBI embarked on an easing cycle on Jan. 15 with a quarter percentage point reduction that had also caught market off guard by taking place outside of a scheduled review.



The benefits have still to pass through to borrowers, however, as commercial banks have been hesitant about lowering their lending rate

China becomes the 20th central bank to cut rates so far in 2015

So do we still believe that the US Federal Reserve will raise rates this year?