Download MONPOL Feb 2 2017 ENG

C ENTRALE B ANK
VAN
A RUBA
Monetary Policy (February 2017)
Press Release1
During its meeting of February 2, 2017, the Monetary Policy Committee (MPC)2 of the Centrale Bank
van Aruba (CBA) decided to keep the reserve requirement at 11.0 percent and to uphold the advance
rate at 1.0 percent, after reviewing the most recent economic and monetary data. The following
information and analysis were considered in reaching this decision.
International reserves
The international reserves (including revaluation differences of gold and foreign exchange holdings)
and official reserves remained at adequate levels at the end of December 2016. Both registered
increases of, respectively, Afl. 281.5 million (+17.5 percent) and Afl. 193.3 million (+13.1 percent),
compared to December 2015. Consequently, the international reserves reached Afl. 1,952.2 million at
end-December 2016.
Credit developments
Overall credit within the commercial banking system noted an increase (+2.5 percent) at the end of
December 2016 versus December 2015. Business loans and housing mortgages rose by 1.2 percent
and 4.6 percent, respectively, while consumer credit declined by 4.8 percent.
Inflation
In December 2016, a decrease was registered in both the end of period (−0.3 percent) and the 12month average price level (−0.9 percent). The latter was particularly due to lower gasoline prices and
a reduction in the electricity tariffs in January 2016. The 12-month core inflation edged up by 0.5
percent, mainly reflecting increases in the housing component of the Consumer Price Index.
Tourism
During 2016, tourism indicators showed signals of weakness, as declines were noted in visitor nights
(−4.3 percent), tourism receipts recorded at commercial banks (−3.2 percent), and stay-over visitors
(−10.0 percent), compared to 2015. One exception to these negative developments was the upturn
recorded in cruise visitors (+8.1 percent).
1
The English text prevails.
The MPC was instituted in May 2010 to periodically evaluate and determine the monetary policy of the CBA. In addition, the MPC aims at
improving the transparency of the monetary policy.
2
J.E. Irausquin Boulevard 8 P.O. Box 18 Oranjestad Aruba Tel. nr.: (297) 525-2100 Fax nr.: (297) 525-2101
E-mail: [email protected] Website: www.cbaruba.org
Money supply
In December 2016, money supply registered an increase of Afl. 93.0 million to Afl. 4,166.4 million
compared to the previous month, resulting from an expansion in the net domestic assets (+Afl. 102.4
million), partly offset by a decline in the net foreign assets (−Afl. 9.4 million). While the increase in
the domestic component of the money supply stemmed from both the domestic credit (+Afl. 98.1
million) and non-credit related balance sheet items (+Afl. 4.3 million), the decline in the net foreign
assets of the banking sector was due to net sales of foreign exchange of Afl. 213.7 million to the
public. These were mainly associated with mostly related to net payments for goods, portfolio
investment, other services, and other investment, which were largely counter-balanced by net
purchases of foreign exchange of Afl. 204.3 million from the public, mainly associated with tourism,
capital transactions, and net transfers from foreign accounts.
Financial markets
In December 2016, an increase was registered in the weighted average interest rate on new deposits
(+0.4 percentage point to 2.0 percent), whereas a decline was recorded in the weighted average
interest rate on new loans (−1.0 percentage point to 6.9 percent), when compared to the previous
month. Consequently, the weighted average interest rate margin fell by 1.5 percentage points to 4.8
percent.
Advance rate
The determinants of the CBA’s advance rate stayed stable. The margin between the CBA’s advance
rate and the Federal Funds rate stood at 0.46 percentage point in December 2016. Consequently,
there was no need to change the CBA’s advance rate.
Centrale Bank van Aruba
March 1, 2017