Monetary Policy
Asset purchases could bring benefits in ‘normal’ times – paper
IMF working paper discusses whether asset purchases should be added to standard central bank toolkit; the policies seem more effective at combatting financial shocks than supply shocks
Haldane: central banks could ‘gamify’ communications
The game Monopoly could be the next tool in central bank’s communication toolbox, Haldane says, warning complex language breeds distrust
Fed’s Dudley discusses unwinding of balance sheet
Should reinvestment end “abruptly”, financial conditions would tighten, New York Fed president said; tapering “gradually and predictably” is the way to go, he adds
Inflation worries prompt further action from Mexico
Mexico slows pace of rate hikes amid inflation worries and volatile exchange rate; monetary policy committee will closely watch US economy, latest announcement says
Bank of Israel revamps policy communications
New approach to communicating monetary policy decisions as committee moves to an eight-meeting cycle
End of ‘hiking cycle’ has been reached – Sarb’s Kganyago
South African Reserve Bank publishes improved inflation forecast as the MPC votes to leave interest rates at 7%; uncertainty around the exchange rate is still a concern
Fed presidents lay ground for extra rate hike
Evans, Rosengren and Williams all signal the possibility of a fourth rate hike in 2017 if economy runs hot
Bank of Ghana starts to unwind tight monetary policy
Central bank slashes interest rates to 23.5% in largest cut since 2010; inflation shows signs of improvement but certain risks still loom over prices
Bank of Russia cuts policy rate
Elvira Nabiullina says Russia on course to hit 4% inflation target by year end
Extended monetary easing in US has larger impact abroad – paper
IMF paper examines the impact of periods of prolonged monetary easing on risk-taking behaviour; leverage ratio and other measures of vulnerability increase
BoJ minutes highlight hopeful signs for Japanese economy
Members highlight “more solid” recovery supported by a pick-up in exports and production, although inflation is still sluggish
Time to shrink Fed’s $4.5 trillion balance sheet, say presidents
Cleveland Fed president is “comfortable” changing reinvestment programme this year; balance sheet plan should be published as soon as possible, says Kashkari
French paper examines impact of ECB’s PSPP on bond yields
Researchers use data from the French market to examine bond shocks
HK researchers ask how much markets affect RMB fixing
Researchers test China’s assertion the exchange rate is now determined more by markets, finding mixed evidence
Kashkari explains his sole FOMC dissent
Minneapolis chief reminds his colleagues the Fed treats 2% inflation as a target, not a ceiling; urges FOMC to publish plan for shrinking balance sheet
Turkey keeps tightening with secondary instruments
Hike in late liquidity facility gives room for further tightening, as the central bank responds to inflation hitting double figures
BoE’s Forbes dissents as inflation looms
MPC member votes for 25bp hike as inflation looks set to exceed target until “at least” 2020; other members sitting on the fence, for now
Fed delivers 25bp hike
Fed makes rate hike that many FOMC members have been hinting at for weeks; committee gives bullish signals on the outlook
Daily open market operations paying off – National Bank of Denmark
Introduction of daily open market operations has smoothed liquidity management, stabilising the money market reference rate
IMF research uncovers ‘puzzling’ effect of QE on the current account
Authors see QE having significant impact only when capital mobility is low; findings suggest “unexplained variation” between QE and capital mobility
‘Substantial’ accommodation must continue – Draghi
ECB president says underlying eurozone inflation remains “subdued”, despite rise in headline rate; he sounds the alarm over the possibility of a “competitive devaluation” by advanced economies
Tanzanian central bank slashes discount rate
Central bank cuts discount rate for the first time since 2013, from 16% to 12%; increase in NPLs has discouraged commercial banks from lending
Ending speculation on the Czech forex cap: quo vadis, CNB?
David Vavra suggests a method the Czech National Bank could use to free itself from the mounting pressure on its exchange rate peg, avoiding a “Swiss-style” exit
ECB announcements in QE era shifted inflation expectations, Austrian paper finds
Researchers use daily data on bond yields and inflation-linked swaps