Monetary Policy
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
Federal Reserve publishes its first fan chart
Fed unveils new communication method as Janet Yellen makes clearest statement yet that a March hike is on the table
Politics now driving markets more than central banks – BIS review
“Precipitous decline” in correlations implies markets no longer in thrall to central bank policy; US dollar credit still on the rise despite MMF reform; tensions in Chinese markets
Finnish paper analyses Chinese central bank’s ‘window guidance’
PBoC may have to move away from using lending quotas, researchers argue
CBRT under pressure as inflation breaches 10%
Consumer prices rising at their fastest rate since 2012, leaving the central bank in a difficult position
Pace of Brazil's monetary easing could increase, minutes show
Copom says evolution of economic performance and the level of the structural interest rate will dictate pace of easing cycle; fiscal policy could reduce structural interest rate
Iran needs to overhaul monetary operating framework – IMF
Absence of policy rate and emergency lending facilities is creating instability, fund warns; central bank council “dominated” by representatives from other government agencies
RBNZ’s Wheeler: policy now has ‘neutral bias’
Risks to future rate movements “equally weighted”, governor says, though plenty of domestic and global risks could knock the outlook off course
FOMC’s Brainard: Fed may need to raise rates in near future
“Drag” on US economy from foreign and domestic factors decreasing, FOMC member says; Brainard also calls for shrinking Fed’s balance sheet as rates rise
Interest rate effects weaker at low levels – Borio and Gambacorta
Supply of loans becomes less responsive to policy rate movements when interest rates are already very low, likely due to impact on bank profits, authors say
Fed could shrink balance sheet to end “twist” on yield curve – Bullard
Allowing some bonds to run off the balance sheet could permit a more natural yield curve, St Louis Fed president says; San Francisco Fed’s Williams says a March rate hike expectation is “on the table”
Kazakhstan’s long path to inflation targeting
After a slow start, the National Bank of Kazakhstan’s implementation of inflation forecast targeting is beginning to mature. By Warren Coats
Fed needs quarterly monetary policy report, Bullard says
St Louis president argues for better Fed communication when it comes to monetary policy decisions; a quarterly report would align the US with international best practice
Bank of Italy paper looks at impact of monetary policy shocks
The impacts of eurozone and US shocks have diverged since the onset of the financial crisis, the working paper says
Shafik calls for candidness on uncertainty in her final speech
Outgoing Bank of England deputy says central banks must do more than just increase transparency if they are to restore trust
Fed could raise rates ‘fairly soon’ – minutes
Minutes show committee members will be watching labour and inflation data very closely; raising rates would offer “flexibility” in responding to economic changes
Basel III LCR affects RBI monetary operations – paper
Liquidity coverage ratio affects the central bank’s operational target via its impact on the unsecured overnight money market
PBoC’s hike signals policy management shift
The decision by China’s central bank to raise a suite of interest rates around Chinese New Year marks a shift towards market-based tightening, argues Hui Feng
Plummeting inflation prompts Bank of Zambia action
Central bank cuts policy rate by 150bp, in addition to a cut to the overnight lending rate and reserve ratio; inflation falls from over 18% to 7% in a matter of months
Uncertainty about momentum in the labour market – RBA minutes
“Mixed” picture in Australian labour market shows unemployment increasing alongside full-time employment; spare capacity likely to persist “for some time”
Fed’s Mester says public should not hold policymakers to ‘unrealistic account’
Monetary policy cannot and should not be used to spur productivity growth, says FOMC member; unwinding of Fed’s mortgage portfolio may help guard it against calls to enter the realm of fiscal policy
IMF praises BCEAO’s latest policy actions
Latest round of measures will result in stronger banking sector, mission chief says; rejuvenation of interbank market will help monetary policy effectiveness
Bank of Uganda cuts rate as inflation outlook improves
The near-term inflation outlook worsens, but latest forecasts shows recovery within the target band; the IMF’s Lagarde praises the central bank for its “prudent” approach