Monetary Policy
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
Regional Fed presidents call for further rate rises
Richmond and Boston heads say the Fed should reach inflation target in 2017
Belarus cuts rates amid systemic risk fears
Central bank says measures will be taken to guard against foreign loan risk; recent IMF assessment says economy has high level of risk
Fed could raise rates faster than anticipated, minutes show
Prospect of undershooting the longer-run employment target has increased, the FOMC reports, but expansionary fiscal policies should improve growth prospects
New data sheds light on policy spillover channels – BIS paper
Expanded data published by the BIS show how US dollar, euro and yen affect cross-border lending flows
Lars Rohde on negative rates, pegs, productivity and resolution
The National Bank of Denmark governor speaks to Christopher Jeffery about the productivity paradox, defending currency pegs, unexpected limits for negative rates and addressing too-big-to-fail
Paper examines “puzzles” in monetary policy transmission
HKIMR paper highlights differences in monetary policy transmission between advanced and emerging markets; “puzzles” are more severe for emerging markets
Riksbank extends QE, despite dissent
Additional Skr30 billion of purchases takes Swedish QE programme to mid-2017; central bank cites continued risks to the outlook, but three members challenge decision
Yen weakness brings relief for Bank of Japan
Policy on hold, but central bank sees brighter outlook for 2017; yen close to lowest level this year, following Trump shock
Adopting inflation target can create higher inflation – paper
Bank of Korea working paper finds positive relationship between inflation target and inflation, implying some central banks may be tempted to move the goalposts
Czech Republic closer to euro adoption but still not ready – CNB
Economy is converging with Europe but costly accession to single supervisory mechanism means country is not ready to begin formal process, CNB says
SNB’s Jordan stresses commitment to exchange rate intervention
Central bank holds the policy rate, but the Swiss franc is still “significantly overvalued”, and the SNB will continue to intervene, chairman says
Inflation to reach 2% target in next six months, BoE says
MPC votes unanimously to leave rates unchanged at 0.25%; exchange rate appreciation suggests smaller overshoot of inflation target than previously forecast
FOMC signals hawkish outlook as it hikes
Dot plot shifts upward and projection implies members expect further hikes in 2017; Janet Yellen says fiscal stimulus “not obviously needed”
BIS: markets less beholden to central bank action
Political shocks appear to have jolted markets into a more healthy state, but it is not yet clear if this is the start of normalisation or a temporary phase
UK inflation expectations leap in fourth quarter
Brexit shock appears to have driven increase in inflation expectations; satisfaction with Bank of England remains high, but looks likely to fall as inflation rises
Riksbank’s Jansson rejects calls to scrap inflation target
Critics likely underestimate the benefits of the current monetary policy framework when calling for it to change, deputy governor says