December 4, 2018 / 5:54 PM / 9 days ago

Emerging central banks notch up 7th straight month of rate hikes

LONDON (Reuters) - Interest rate rises by major emerging market central banks have outstripped rate cuts for a seventh straight month in November - the longest such run since the summer of 2011.

An Israeli flag flutters outside the Bank of Israel building in Jerusalem August 7, 2013.REUTERS/Ronen Zvulun

Policy makers across developing countries are facing the fallout from a strong dollar and have battled to contain inflation and shore up their currencies.

Interactive graphic: tmsnrt.rs/2PByURD

Below is a list of emerging market economies that have recently raised interest rates.

PAKISTAN - Pakistan’s central bank hiked key interest rates to 10 percent on Nov. 30 and sharply cut growth forecasts, warning the economy faces mounting headwinds from rising inflation and high current account and fiscal deficits. The bank has now hiked rates by more than 4 percentage points since January.

SOUTH KOREA - The central bank raised its policy interest rate on Nov. 30 for the first time in a year in a widely expected move aimed mainly at containing a boom in parts of the country’s property market.

ISRAEL - In a surprise move, the Bank of Israel increased short-term interest rates for the first time in more than seven years on Nov. 26, and indicated that its monetary tightening path will be slow and steady.

SOUTH AFRICA - The South African Reserve Bank hiked its benchmark lending rate for the first time in nearly three years on Nov. 22, saying the risk of higher inflation in the longer-term remained elevated and that it could not risk waiting until later to take action.

MEXICO - The Bank of Mexico lifted its benchmark interest rate on Nov. 15 on concerns over inflation, and said the incoming government’s policies risked fanning inflation in a strongly worded warning to President-elect Andres Manuel Lopez Obrador. The bank also said another rate hike was possible.

INDONESIA - The central bank surprised markets on Nov. 15 by hiking its interest rate for the sixth time this year, stepping up its battle to defend the beleaguered rupiah currency as policymakers struggle to reduce imports and lower a yawning current account deficit.

THE PHILIPPINES - The central bank raised its benchmark interest rates for the fifth straight time on Nov. 15, in a bid to tackle high inflation and bring it back to within its target range next year.

SRI LANKA - Policy makers unexpectedly hiked the key policy rates on Nov. 14, a move aimed at defending a faltering rupee currency as foreign capital outflows pick up amid an escalating political crisis.

CZECH REPUBLIC - The Czech National Bank delivered its fourth straight rate hike on Nov. 1 to keep ahead of inflation pressures stemming from the European Union’s tight labour market, and it signalled more tightening next year.

CHILE - With an eye on inflation and facing an uptick in domestic activity, central bank policymakers made a surprise decision to hike the benchmark interest rate on Oct. 18 to 2.75 percent, the first interest rate raise in Chile for nearly three years.

KAZAKHSTAN - The central bank delivered a surprise interest rate hike on Oct. 15, raising its benchmark to 9.25 percent. The oil-exporting nation’s central bank had held the rate in the two previous reviews after cutting it four times earlier this year, and said it could tighten further if inflationary risks grow.

UGANDA - Policymakers in Uganda raised the key lending rate by 100 basis points to 10 percent on Oct. 3, the first hike in three years, amid worries over rising inflationary pressures.

JORDAN - The central bank of Jordan raised the interest rate on its various monetary policy instruments by 25 basis points as of Oct. 1. bit.ly/2P5prP9

UZBEKISTAN - The central bank raised the key refinancing rate to 16 percent from 14 percent on Sept. 22, citing inflationary pressure and a weaker local currency.

RUSSIA - Russia raised its key rate for the first time since late 2014 on Sept. 14, nudging it up to 7.5 percent from 7.25 percent. The central bank said it was because changes in external conditions observed since its previous meeting had “significantly increased pro-inflationary risks”.

TURKEY - Turkey jacked up its benchmark rate by 625 basis points on Sept. 13 in a move that boosted the lira and may ease investor concern about President Tayyip Erdogan’s influence on monetary policy. The bank raised the benchmark to 24 percent, having now hiked rates by 11.25 percentage points since late April in an attempt to put a floor under the tumbling lira.

UKRAINE - Ukraine’s central bank, grappling with high inflation, raised its key policy rate by half a percentage point on Sept. 6. The hike to 18 percent coincided with the arrival of an International Monetary Fund mission, with time fast running out for Kiev to secure more money under a $17.5 billion assistance programme that expires in 2019 but has been frozen since last year.

ARGENTINA - The central bank raised its benchmark rate to 60 percent from 45 percent on Aug. 30 in an effort to stem a slide in the peso - the world’s worst-performing currency this year - and to curb inflation running at 31 percent. The central bank also launched a new currency band on Oct. 1 under a revised International Monetary Fund deal aimed at halting a more than 50 percent drop in the peso so far in 2018.

INDIA - The Reserve Bank of India raised interest rates for the second straight meeting on Aug. 1, lifting the repo rate to 6.5 percent, but retained its “neutral” stance as it aims to contain inflation while not choking growth.

DOMINICAN REPUBLIC - The central bank raised the benchmark interest rate by 25 basis points to 5.50 percent on July 26.

bit.ly/2MkXSEb

TRINIDAD AND TOBAGO - The central bank raised the repo rate by 25 basis points to 5.00 percent on June 29.

bit.ly/2OFsoFA

TUNISIA - The central bank raised its key interest rate to 6.75 percent from 5.75 percent on June 13, the second hike in three months, to tackle inflation that has reached the highest level since 1990.

MALAYSIA - The country became the first Southeast Asian economy in years to raise interest rates on Jan. 25, when Bank Negara Malaysia raised its main overnight policy rate by 25 basis points to 3.25 percent.

ROMANIA - The central bank has raised rates three times already this year, hiking rates by 25 basis points to 2.50 percent in its last move on May 7 in its battle to curb a sharp jump in inflation.

GEORGIA - The central bank lifted its key interest rate to 7.25 percent, from 7 percent, on Dec. 13, 2017, after its forecasts suggested inflation would overshoot the bank’s 4 percent target.

DOLLAR PEGS

After the U.S. Federal Reserve’s Sept. 26 decision to raise its target range for the federal funds interest rate by a quarter of a percentage point, the following countries also hiked their rates by 25 bps because their currencies are pegged to the U.S. dollar:

HONG KONG raised the base rate charged through its overnight discount window to 2.5 percent on Sept. 27.

SAUDI ARABIA raised its reverse repo rate to 2.25 percent on Sept. 26.

BAHRAIN raised its key policy interest rate to 2.50 percent on the one-week deposit facility, while the overnight deposit rate was raised to 2.25 percent.

UNITED ARAB EMIRATES raised its repo rate to 2.50 percent.

Reporting by Karin Strohecker, graphic by Ritvik Carvalho; Editing by Alison Williams and Peter Graff

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