Monetary Policy
Paper takes novel approach to identifying monetary policy shocks
Researcher combines dynamic factor model with changes to financial instruments
Fresh exchange rate cap remains an option – CNB minutes
Minutes of extraordinary meeting say exchange rate commitment or other unconventional tools cannot be ruled out if deflation risks re-emerge
Book notes: Bankers, Bureaucrats and Central Bank Politics, by Christopher Adolph
An interesting, if slightly dated, analysis of those who made monetary policy decisions in advanced economies between 1950–2001, attempting to understand whether personal background influences decision-making
Bank of Jamaica outlines plans to become ‘modern’ central bank
Initiatives to implement inflation-targeting framework and liberalise forex rate already under way; IMF says strengthening autonomy will help
Balance sheet not an ‘active’ policy tool for normal times, says Fed’s George
Reductions in Fed’s balance sheet should be on “autopilot”, says George; establishing a “sound framework” will be important
Bank of Canada’s Vardy and Harrison on the move to ‘peacetime’ communications
Central bank has reshaped its communications approach post-crisis, embedding it into the policy process and encouraging markets to think for themselves
No ‘taper tantrum’ this time around – Fischer
Fed vice-chair says US central bank has learned from mistakes made in 2013; markets unlikely to face same disruptions as Fed unwinds balance sheet, says Fischer
Volatile housing market puts RBA under pressure
Variations in housing growth and prices ramp up risk to financial stability, RBA minutes show; regulator to consider further measures “if needed”
Brazil central bank steps up pace of rate cuts
Inflation outlook “favourable” with target likely to be achieved by 2018; government pursuing tough fiscal reform
Little EME volatility spillover from Fed/ECB balance sheets
Central bank policies had little impact on volatility in EMEs’ real markets – researchers
Lower rates link to higher exchange rate impact – BIS paper
Working paper finds monetary policy’s impact on the exchange rate has grown as rates have fallen
Monetary policy has inevitable fiscal effects – Willem Buiter
Former Bank of England official rails against fiscal theory of the price level in speech to RBI, but says monetary policy still cannot escape its fiscal dimension
New Zealand government reviews monetary policy process
Opposition pledges it will make major changes to central bank mandate if elected
Argentina’s central bank reverses course on interest rates
Central bank hikes rate on its 35-day Lebac bonds to 26.25% on the back of higher-than-expected inflation figures
Lebanese banking sector holding up, despite Syria crisis – central bank
The banking sector remains liquid and well capitalised despite a “strained” Lebanese economy, the central bank says; new compliance unit formed
Conservative monetary policy raises banking fragility – paper
Researchers apply a ‘central bank conservatism’ index to data from 73 countries
ECB bond-buying has had ‘significant’ impact on Bund market
The impact of PSPP purchases is substantially higher in stressed markets – Bundesbank paper
FOMC mulls ‘predictable’ balance sheet wind-down
One FOMC member says a “minimum pace” should be set for the reduction in mortgage-backed securities; committee will inform the public about its future plans for the balance sheet when the time comes
Czech National Bank abandons koruna floor
The central bank is likely to be happy with the market’s reaction, analyst says
Draghi and Praet say ECB will continue with QE
Praet says interest rates should remain low “past the horizon of our net asset purchases”
RBI makes fresh amendments to liquidity framework
Central bank continues reforms begun under Raghuram Rajan and asks government for new tools; markets still face “liquidity overhang” from demonetisation
BIS report: build liquidity co‑operation early to prepare for crisis
CGFS report urges central banks to build networks domestically and across borders to have liquidity ready for the next crisis
Sarb deputy says political uncertainty will affect policy normalisation
Mminele asks whether central banks will enforce notion of economic slack as forward guidance reaches limits; political uncertainty rocking the policy landscape
BoE’s Vlieghe: good policy is more than accurate forecasting
MPC member says doctors cannot forecast heart attacks, but are still pretty useful before and after the event