Central Banks Watch: South Africa, Singapore, South Korea, Egypt and Chile To Set Policy, Yellen and Draghi to Speak

Monetary policy announcement by South Korea, Singapore, South Africa, Egypt and Chile will be the most important central bank events in the upcoming week followed by the speeches of the Federal Reserve chair Janet Yellen, European Central Bank president Mario Draghi, and several senior Fed officials.

While most central banks are likely to keep the policy unchanged, the situation is unpredicatable in Chile which is likely to further ease the main rate. If the Yellen appreciates the latest jobs data as further strengthening of the US jobs market, it would be highly dollar-positive.

Singapore

The Monetary Authority of Singapore (MAS), which sets its policy twice a year will announce the second of this year. The MAS controls inflation in the country by managing the trading band of Singapore dollar.

In its policy announcment in April, MAS maintained its policy of a modest and gradual appreciation of the SGD-NEER policy band. The October review is taking place on Monday in the background of easing inflation, slowing GDP growth and the currency trading near a multi-month low.

South Korea

South Korea will announce rates on Wednesday it self. At its 12 September meeting left the base rate unchanged at 2.25% saying the policymakers are evaluating the impact the 25 basis points (bp) rate cut in August and government's fiscal policies.

Inflation is easing, trade balance is dwindling and the latest manufacturing PMI has shown a number below the 50 mark, indicting the growth challenges for South Korea. Whether this will translate to a further cut the rate is what the market is waiting to see.

South Africa

South Africa had raised its main interest rate by 25bp to 5.75% in the July review citing building inflation pressures in the economy. When it meets on Wednesday, the central bank is seeing the rate price rise holding below the May-June peak of 6.6%.

South African inflation had been on the rise for about five months since December last year during which period it had risen to 6.6% from 5.3%. In July it fell to 6.3% but has edged back up to 6.4% in August.

Egypt

After keeping the main rate steady at 8.25% for about eight months, Egypt raised it sharply to 9.25% in August and left there at the September review. This month's review is on Thursday.

The African country said last month that it was seeing lesser risks of imported inflation while expecting the development activities for the Suez canal to support domestic growth.

Chile

The central bank of Chile has been on an easing cycle since late 2011 and has cut the main lending rate to 3.25% by the September review from near 5%. This month's review will be on Friday.

Chile is facing slowing domestic growth and is less optimistic on the external front with global recovery hasn't gathered pace to support the exports of mineral-rich Latin American country.

According to the 10 October IMF report for the western hemisphere, economic conditions dimmed markedly in Chile where investment and durable consumption led the slowdown.

Speakers, Publications

The Federal Reserve's chair Janet Yellen will speak on Friday and her words will be keenly watched in the backdrop further signs of strengthening labour market in the US. Any appreciation by her of the recovery of the jobs scenario would be highly dollar-positive.

ECB president Draghi will address the media on Wednesday. The continued policy divergence in the common currency zone and latest US indications and other data are likely to reflect in his remarks.

Heads of five regional Federal Reserve Banks are scheduled to speak in the next week: Charles Evans (Federal Reserve Bank of Chicago) on Monday, followed by Charles I Plosser (Philadelphia), Dennis Lockhart (Atlanta), Narayana Kocherlakota (Minneapolis), and James Bullard (St Louis) on Thursday.

The Reserve Bank of Australia assistant governor Guy Debelle is also due to speak, at a function on Monday.

The Fed's Beige Book and Bank of Japan's outlook report are the two major central bank publications due out next week.