Monetary Policy
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
Icelandic leaders clash on possible peg
Prime minister challenges finance minister’s assertion that the krona needs to be pegged; government launches review of exchange rate policy
Uncertainty matters for forward guidance success – BoE paper
Authors show that introducing uncertainty generates significantly different macroeconomic effects, with implications for policymaking
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