Interest Rates September 2007

The Bank of England increased its bank rate in May 0.25 percent to 5.5 percent. The increase was the first since January, and minutes of the monetary policy committee (MPC) meeting show the MPC nearly raised rates 50 basis points. The move is the fourth 0.25-percent increase since November 2006.

The People’s Bank of China increased its one-year yuan lending rate 0.18 percent to 6.57 percent in late May (see “China loosens yuan restrictions.”) The Bank of Indonesia lowered its reference rate 25 basis points in May to 8.75 percent. The decrease is the 10th in 11 months and the 11th overall since the reference rate stood at 12.75 percent in January 2006.

The Bank of Thailand dropped its one-day repurchase rate in May 0.5 percent to 3.5 percent, continuing its tightening cycle. The decrease is the fourth in 2007, although rates are still well above the 1.25 percent level of December 2003. The Bank of Mexico increased its 28-day Cetes rate 0.1 percent in May to 7.1 percent. The rate has remained between 7 and 7.1 percent since June 2006, when a series of declines brought the rate down from 9.7 percent in May 2005.

The National Bank of Slovakia lowered its two-week limit repo rate in late April 0.25 percent to 4.25 percent. The move was the second 25- basis-point drop in as many months, and it follows four rate increases in 2006.

The Reserve Bank of New Zealand increased its cash rate in late April 0.25 percent to 7.75 percent. New Zealand had not adjusted interest rates since raising them to 7.25 percent in December 2005, but the April increase marked the second consecutive month of a tightening bias.