Monetary Policy
Atlanta Fed president ‘not prepared to rule out’ further rate rise this year
Despite “troubling” headline GDP growth figures, “final real sales” figures point to US economy maintaining momentum and heading for third-quarter growth, Dennis Lockhart says
Low inflation and tighter credit gave room for cut, RBA minutes show
Inflation looks likely to remain low for some time, board members note, while tighter lending standards make adverse effects of a cut less likely
San Francisco Fed chief calls for policy target re-think
John Williams calls for central banks to consider raising their inflation targets or replacing them with nominal GDP targets; lower natural interest rates seem “poised to stay”, he argues
Unconventional monetary policy does not rob the poor, Italian researchers argue
Studying the effects of the ECB’s quantitative easing programme on the wealth and incomes of 8,000 Italian households shows that the policies benefit the poorest, Bank of Italy paper argues
Danish research examines how central banks can impact market liquidity
Price of liquidity tends to change on days when central bank is operating in markets, with aggregate liquidity and payments activity also important, PhD thesis finds
Chinese authorities should introduce inflation target – IMF staff
Report by IMF staff sets out ‘key elements’ of transition to more market-based monetary framework; encourages explicit inflation goal and new intermediate target for policy
Chilean central bank changes guidance and keeps policy on hold
Central Bank of Chile removes reference to continued normalisation as inflation returns to target range; holds benchmark rate at 3.5%
RBNZ cuts rates and expects inflation to weaken further in short term
New Zealand central bank expresses concern over falling inflation in economy generally and rapidly rising prices in housing sector
Riksbank paper looks to medieval Europe for ZLB solution
Idea of a “Gesell tax” on holdings of cash could help central bankers overcome the zero lower bound – an idea already tested by kings in medieval Europe
BoE bond purchases run into difficulties
Central bank fails to meet quota of long-dated government bond purchases despite offering a high price, pointing to an unusual failure of its bond-buying mechanism
Reserve Bank of Australia governor backs 2–3% target in final address
Reserve Bank of Australia governor supports inflation-targeting regime in last public address; moving the target could open the door to further changes down the line, warns Stevens
US unconventional monetary policy most effective in financial crisis, paper argues
Conventional and unconventional monetary policies in the United States work through distinct channels, with different levels of effectiveness in crisis conditions, researchers argue
Monetary expansion: Is the sky the limit?
Unconventional monetary policies in advanced countries have resulted in benefits and costs for the global economy and financial markets. Manuel Sánchez assesses if the benefits are worth the risks.
BoJ board split ahead of ‘comprehensive assessment’
Opinions from last meeting show members divided on how to hit 2% by fiscal 2017, and if it is even possible; “comprehensive assessment” may include measures to support squeezed banks
BIS paper digs into complex spillovers from US rates
Authors find short-run US rates have little impact on long-term rates elsewhere, but transmission at longer maturities and via bond markets is high
Rise of services in advanced economies weakens transmission of monetary policy, paper argues
The transmission of monetary policy in advanced economies is weakened by the greater prominence of services, a Bank of Spain working paper argues; researchers use data from US
Colombian central bank should examine transmission in greater detail – paper
Colombian banks with higher levels of solvency “less sensitive” to changes in policy rate authors say; central bank should go into “greater detail” when examining policy transmission
Brexit a factor in BoJ’s decision to ease – deputy governor
Uncertainties from abroad, notably the UK’s vote to leave the EU, are weighing on the Japanese economy, and were a factor behind “enhanced” easing in July, Kikuo Iwata says
BoE launches broad Brexit response
Central bank wields all its main tools and some new ones as the effects of Brexit begin to appear; aims to support transmission mechanism amid extraordinary measures
BoJ board members see hope in wages and oil prices – June minutes
Policy board members point to third year of wage rises and higher oil prices as hopeful indications of a turnaround in prices, though expectations are weak and consumer sentiment worsening
RBNZ stands by decision to end embargoed lock-ups
RBNZ commissions review into different options for providing key releases to journalists ahead of time; decides costs outweigh benefits, and reaffirms decision to scrap the practice
Chilean minutes show widespread support for holding policy
Board unanimously votes to hold rates; one member sees tightening cycle ending, while another says lowering rates is “beyond reason”
BoE seen as ‘boxed in’ ahead of MPC vote
Forward guidance from MPC members has laid the ground work for a rate cut or other form of easing; even if the effect of a cut is minimal, a hold decision would be worse, says former committee member
Larger changes in policy statements lead to more volatility – paper
Research considers how much similarity in central bank statements on monetary policy matters for their reception