February 1, 2019 / 5:26 PM / 15 days ago

GRAPHIC-Emerging central banks' tightening cycle grinds to a halt

LONDON, Feb 1 (Reuters) - There are signs that the tightening cycle among emerging market central banks could be coming to an end and may be about to reverse as the dollar rally and rise in global borrowing costs has run out of steam.

Net interest rate hikes across a group of 37 developing economies showed just one raise in January, compared with a peak of nine hikes in November.

Interest rate rises by major emerging market central banks have outstripped or matched cuts for nine straight months — the longest such run since the summer of 2011 — as policymakers battled the fallout from a strong dollar, rising inflation and softer currencies.

For an interactive version if this graphic please click here tmsnrt.rs/2CVjktl

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

CHILE - Chilean central bank policymakers decided unanimously to raise the benchmark interest to 3.00 percent on Jan. 3 amid a gradual rise in inflation and a strengthening economy.

MEXICO - The Bank of Mexico hiked its benchmark interest rate by 25 basis points on Dec. 20, warning of uncertainty caused in part by the new leftist government’s economic policies as well as the risk of higher inflation.

THAILAND - Thailand’s policymakers raised the key rate by 25 basis points to 1.75 percent on Dec. 19, its first tightening since 2011, while also lowering the forecasts for economic growth and exports.

RUSSIA - Russia’s central bank hiked its main interest rate by 25 basis points to 7.75 percent on Dec. 14 to keep a lid on rising inflation and offset pressure on an already weak rouble.

PAKISTAN - Pakistan’s central bank raised key interest rates to 10 percent on Nov. 30 and sharply cut growth forecasts, warning of headwinds from rising inflation and high current account and fiscal deficits. The bank has hiked rates by more than 4 percentage points since January 2018.

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.

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.

DOLLAR PEGS

After the U.S. Federal Reserve’s Dec. 19 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 by 25 basis points to 2.75 percent on Dec. 19.

SAUDI ARABIA raised its reverse repo rate to 2.50 percent on Dec 19.

BAHRAIN said it raised its one-week deposit facility to 2.75 percent from 2.50 percent on Dec. 19.

UNITED ARAB EMIRATES raised the interest rates on certificates of deposit in line with the increase in U.S. dollar rates on Dec. 19.

Reporting by Karin Strohecker, graphic by Ritvik Carvalho; Editing by Catherine Evans

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