As Emerging Markets Groan, Here Is When Central Banks Will Meet

(Bloomberg) -- The Federal Reserve’s interest rate tightening path is posing a challenge for central bankers in developing countries as a soaring dollar and higher global yields trigger a sell-off of emerging market assets.

Policy makers have already started to act, with Argentina’s central bank raising interest rates three times, Russia putting the brakes on further monetary easing and Indonesia burning reserves to prop up its currency. Not all economies are as exposed as others, and some will be driven more by domestic conditions rather than the Fed.

Here’s a look at upcoming interest-rate decisions in key emerging markets:

May 10

• Philippines: A booming economy, inflation pressure and currency weakness this year put the Philippines next in line among emerging markets to raise interest rates.
• Malaysia: Bank Negara Malaysia is set to keep on hold at 3.25 percent, according to economists surveyed by Bloomberg. Some analysts predict it will follow up on a rate hike in January with another later this year amid booming economic growth.
• Serbia: The central bank may stage a surprise interest-rate cut for the third time in as many months, exploiting the strong dinar and weak price pressures to push the benchmark to a record low.
• Peru: A recent weakening of the Peruvian sol added to bets that the central bank will remain on hold for a second consecutive month after cutting the key rate to a seven-year low to boost the economy.

May 11

• Sri Lanka: Sri Lanka surprised in April by lowering interest rates, its first cut since April 2015. Growth last year was the slowest since 2001 at 3.1 percent, after the worst drought in 40 years was followed by the most severe flooding in over a decade.

May 16

• Thailand: The Bank of Thailand is expected to remain on hold at 1.5 percent amid still subdued inflation. Finance Minister Apisak Tantivorawong said in March that the rate shouldn’t be raised within a year as the economic recovery isn’t yet broad-based and inflation remains below the central bank’s 1-4 percent target band.
• Brazil: A recent currency sell-off is raising doubts about whether the central bank will deliver a final interest rate cut that policy makers have described as “appropriate,” although economic activity data continues to disappoint and inflation remains below the floor of the official target
• Zambia: The central bank surprised the market with a cut in February, which took the lending rate for a four-year low. A weakening kwacha and the need to stay attractive to foreign investment amid questions about Zambia’s real debt levels will make it difficult to lower rates further.
• Poland: The central bank is steadfast against tinkering with its record-low interest rate, with Governor Adam Glapinski saying repeatedly the benchmark could stay at 1.5 percent until 2020. Still, the zloty has traded near a seven month low this week, the economy and wages are booming, and inflation accelerated to within the central bank’s tolerance band in April.

May 17

• Indonesia: Bank Indonesia may need to raise rates amid a market rout that has sent the rupiah to a 28-month low. While the central bank has made clear it can raise rates to shield the currency, it also needs to support an underperforming economy.
• Mexico: The central bank is expected to hold the key rate at 7.5 percent as inflation slows towards target; but some economists have started betting the rate could be raised in September as the peso weakens on Nafta and elections uncertainty.
• Egypt: The central bank cut interest rates by 200 basis points in its two meetings this year citing the slowdown in inflation. In March, it hinted that its next move will largely depend on the timing and magnitude of fuel-subsidy cuts expected sometime this year. The regulator had raised rates by 700 bps following the 2016 decision to float the pound, causing the currency to lose about 50 percent of its value and propelling inflation to over 30 percent.

May 18

• Mauritius: The central bank gradually eased borrowing costs since 2015 as inflation slowed and prices even declined for a month. The rate is likely to stay at 3.5 percent for now because inflation rate, at 3.7 percent in April, is volatile.

May 21

• Ghana: The central bank has cut borrowing costs by 800 basis points since 2016 as inflation slowed from a record level of almost 20 percent. A stable cedi, price growth that’s still slowing and the need to boost private-sector credit leaves room for further easing.

May 22

• Hungary: The National Bank of Hungary is expected to keep interest rates unchanged as policy makers continue to rely on unconventional tools, including the sale of interest-rate swaps and mortgage-note purchases, to keep monetary conditions loose while inflation trails their 3 percent target.
• Nigeria: An interest-rate cut has been talked about for more than a year, but the right time just doesn’t come. While is inflation below the benchmark interest rate for the first time in two years and the economy needs a boost, expectations of faster price growth due to spending ahead of the elections and the approval of the budget could further delay easing.

May 24

• South Korea: The Bank of Korea is expected to keep its key interest rate on hold at 1.5 percent. It’s shrugging off much of the EM stress as foreign investors have increased holdings of its bonds this year as tensions with North Korea appear to wind down.
• South Africa: The rand’s 4 percent drop against the dollar since February has all but wiped out chances of another cut by the South African Reserve Bank this year, even with inflation at a seven-year low.
• Ukraine: the National Bank of Ukraine has described monetary conditions as “sufficiently tight” to bring inflation, which was at 13 percent in March, back down to target. It halted rate hikes at its last meeting after half a year of increases to the current level of 17 percent.

--With assistance from Michael Winfrey Rene Vollgraaff Andrew Langley Craig Stirling and Ahmed Feteha

To contact the reporters on this story: Mario Sergio Lima in Brasilia Newsroom at mlima11@bloomberg.net, Enda Curran in Hong Kong at ecurran8@bloomberg.net.

To contact the editors responsible for this story: Malcolm Scott at mscott23@bloomberg.net, Vivianne Rodrigues at vrodrigues3@bloomberg.net, Walter Brandimarte, Zoe Schneeweiss

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