Monetary Policy
Tight policy keeping a lid on inflation – Central Bank of Iceland
“Steep” pay increases and rising house prices keep the central bank on alert; report warns the situation could easily change
China hikes interbank lending rates
PBoC “very worried” by banks’ credit expansion, expert says; raises medium-term lending facility rate by 10 basis points
Turkey keeps policy rate on hold, despite weakening lira
MPC trying to keep a “balance” between government pressure and market demand, analyst says
Cross-border claims shifting in favour of non-banks
BIS international banking statistics show claims on banks fell in third quarter of 2016 but claims on non-banks continued to grow
Protectionist ‘threats’ from US could harm emerging markets – Kganyago
International concerns high on Sarb’s list at latest MPC discussion; uncertainty surrounding US economic policy leads to revision of headline inflation forecast
Book notes: The International Monetary Fund: Distinguishing Reality from Rhetoric, by Graham Bird and Dane Rowlands
The book brings valuable rigour to bear in assessing the work of the IMF, but suffers from a reliance on ageing data in many places, says Jacek Klich
Yellen: Fed asset holdings provide automatic policy tightening
Downward pressure on long-run rates is expected to diminish, making the need to hike short-term rates less pressing, the Fed chair says
Draghi says ‘substantial’ accommodation still necessary for eurozone
ECB sets out new criteria for asset purchases; Draghi says headline inflation rises are driven by energy prices
Bank of Canada re-modelling export links to US – Poloz
Previous approach may have over-estimated importance of US when modelling exports, governor says; uncertainties over US fiscal policy makes forecasting challenging
Yellen: Fed expects rates to hit long-run level by end-2019
Fed chair warns there could be a “nasty surprise” down the road if policymakers wait too long to raise rates
Money targeting key to Egypt reform programme
Central bank to maintain flexible exchange rates and keep a close rein on the money supply as IMF pledges $12 billion support
Davos panellists highlight risks posed by strong dollar
At the World Economic Forum, experts underline the risks of a strengthening dollar on not only US monetary policy, but also on emerging markets’ economies
Central Bank of Brazil discussed smaller hike at December meeting
Copom weighed a 50bps cut, but chose to “frontload” monetary easing, given anchored expectations and promising outlook for inflation
Carney: 250,000 jobs lost by 2018 if BoE had not acted after Brexit vote
BoE governor defends 2016 action by underlining policy trade-off, but warns consumers are "looking through" Brexit-related uncertainties
ECB paper proposes new fiscal-monetary policy mix for eurozone
Researchers suggest non-defaultable Eurobonds issued by new fund
ECB minutes show dissent over asset purchases
Some council members expressed “scepticism” over asset purchases; two programme extension options were discussed
Riksbank dissenters raise range of concerns
Three officials objected to the Riksbank’s decision to expand its asset purchases at the meeting on December 20, for a variety of reasons, minutes show
US may not experience fiscal stimulus – Atlanta Fed president
Dennis Lockhart says the US economy has reached a “transitional” juncture; says declines in key growth factors are holding the economy back
ECB’s QE works best for strong banking systems – paper
Researchers track effects of ECB unconventional policy on eurozone countries
Brazil ups pace of easing as inflation drops
Size of cut surprises observers, though inflation proves more favourable than expected; rates still rising in real terms
Yield curve control has long history – BoJ’s Amamiya
BoJ’s policy of controlling long-run rates is not as unconventional as many critics argue, executive director says
Dollarisation is making monetary policy ineffective, Cambodian central bank says
Central bank actively promoting the use of riel instead of US dollar; reduced riel transaction costs among measures implemented
Turkish central bank acts to support lira as inflation jumps
Central bank launches fresh measures to counter “unhealthy price formations”; inflation surprise in December adds to pressure for monetary policy action
Thai governor calls for rethink of monetary policy frameworks
New structure should systematically acknowledge the negative impact of monetary policy; Santiprabhob recognises macroprudential cannot take all the strain