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Aggressive loosening step came from the MNB today
HUNGARY - In Brief 22 Mar 2016
At today's scheduled monthly rate-setting meeting, the MNB cut the base rate by 15 bps to 1.2%, and in addition it reduced the O/N interest rate corridor to -0.05 to 1.45% from the previous 0.1-2.1%. Besides, it said as a conclusion of its quarterly inflation report that average CPI-inflation is ...

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The Housing Boom is Back
CHINA - Report 22 Mar 2016
Prime Minister Keqiang Li announced in an address to Congress on March 5th that the economic growth target would be 6.5%-7% for 2016 - the first time a GDP growth target was set for a particular time frame. Industrial output rose 5.4% y/y, a new low in the current cycle of decline. Fixed asset in...

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Not Much Progress
VENEZUELA - Report 22 Mar 2016
​Exchange Agreement 35 is far from solving the deep distortions caused by foreign exchange controls. Moving from three to two controlled exchange rates, with a fixed "protected" rate (Dipro) and a "complementary floating market” rate (Dicom), is a baby step in the right direction, and the authori...

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Week of March 22
BRAZIL POLITICS - Report 22 Mar 2016
This will be a short week due to the holidays (Thursday and Friday). The Impeachment Committee sets its work schedule. The government may announce economic measures, including the bill on state and municipal debt, and fiscal reform, with a spending ceiling. Measures related to the My House, My Li...

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Should Brazil Use its International Reserves?
BRAZIL ECONOMICS - Report 21 Mar 2016
Frequent pressures have been exerted in the sense of “use the reserves to stimulate renewed economic growth”. The Central Bank knows the history of the many foreign exchange crises experienced by the country, all of them produced by economic policy mistakes, and certainly has developed institutio...

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Admirable precision or convenient accounting?
DOMINICAN REPUBLIC - Report 21 Mar 2016
The Ministry of Finance just reported the fiscal balance figures for 2015. The results indicate that budget management was right on target: the deficit of the Central Government reached almost exactly the goal for the year, DOP 72.7 bn or 2.38% of GDP. The striking thing is that until October,...

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Countercyclical Measures?
BRAZIL ECONOMICS - Report 21 Mar 2016
In an extreme gesture, aiming to muffle the political crisis, Dilma Rousseff decided to appoint Lula to be her new chief of staff. It was an act of desperation with very low chances of succeeding. So far he has been barred from assuming the position by injunctions. Last week the great majority of...

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CBR kept key rate unchanged
RUSSIA ENERGY / FINANCE - In Brief 20 Mar 2016
As we have expected, CBR’s Board of Directors decided to stay on hold keeping key rate at 11% despite recent increase in oil prices and lower inflation. CBR head E. Nabiullina stated in her statement after the decision exactly the same reasons we’ve noted. First, increased budget financing has le...

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Weekly Tracker: March 20-26
TURKEY - Report 20 Mar 2016
EU and Turkey agreed on a temporary deal to swap Syrian refugees, which gives us little hope that the former takes Turkey seriously as a strategic partner. For AKP visa-free travel was the most important concession, which was conditionally granted, and might serve as a harbinger of a referendum o...

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Breakdown of the Impeachment Committee
BRAZIL POLITICS - Report 18 Mar 2016
On March 17, 65 members of the Special Committee that will analyze the impeachment of President Dilma Rousseff were elected, with a slight oppositionist leaning. Parties in the governing coalition elected 44 members to the committee, the opposition appointed 17, and four are independent. However,...

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An Interest Rate Hike amidst Low Economic Growth and High Macroeconomic Volatility
SOUTH AFRICA - Report 18 Mar 2016
The South African Reserve Bank’s (SARB) decision to increase the repurchase (repo) rate by 25 basis points at its March 2016 meeting, after having raised it by 50 basis points at its previous (and first) meeting of 2016, did not come as a surprise. Although the South African economy is still unde...

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Lula’s appointment fails to solve Dilma’s problems
BRAZIL POLITICS - Report 18 Mar 2016
On Thursday afternoon, Judge Sérgio Moro, responsible for the Lava-Jato Operation, removed the secrecy of telephone wiretaps targeting former President Lula. The conversations recorded by the Federal Police, which include dialogue with President Dilma Rousseff, have intensified the political cris...

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Moody's Visiting SA in the Middle of Political Dramas: Downgrade
SOUTH AFRICA - In Brief 18 Mar 2016
South Africa's sovereign credit rating is under review. The risk is a junk-status downgrade! Earlier this week, the Moody's team arrived in SA in the midst of a huge political drama engulfing the President and some of his corrupt dealings with the Gupta family business-a diversified business grou...

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Economics: Pemex Rescue Plans Fall Short
MEXICO - Report 17 Mar 2016
On February 8, President Enrique Peña appointed José Antonio González as the new General Director of Petróleos Mexicanos. Nine days later, the Ministry of Finance announced the company’s budget was being slashed by 100 billion pesos. The new CEO presented the company’s preliminary consolidated ...

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Politics: New Viceroys Key to 2018 Campaign
MEXICO - Report 17 Mar 2016
The importance of the gubernatorial elections to take place this June, a full two years before the next presidential contest, resides in the enormous power state governors have acquired over the past 15 years, and the considerable prerogatives they derive from the political, territorial and budge...