Monetary Policy
Namibia hikes to ‘align’ rates in region
Bank of Namibia hikes by 25bp to 6.75%, following decision in South Africa in January after depreciation of rand hit inflation outlook
Fed’s Harker adopts more cautious tone on policy
Philadelphia Fed president says it may be more 'prudent’ to wait for stronger inflation data before hiking for a second time; sees inflation rising more gradually than before
Bullard challenges ‘backward-looking’ language in Fed statement on goals
James Bullard reveals he disagreed with an element of the Fed’s statement on longer-run goals, believing it failed to capture the importance of future expectations to inflation targeting
Soaring inflation sees Mozambique hike by 100bp
Inflation reaches 11.25% in January as a result of food-price shock; central bank hikes while government attempts to focus on other figures
High debt tends to reduce consumption growth – Norges Bank memo
Research tries to capture diversity of household balance sheets, finding consumption tends to grow more slowly among those with high debt levels
RBA board agrees China has ‘scope to respond’ if outlook worsens
Minutes from February meeting reveal board is wary a ‘sharp slowing’ in economic activity could spill over to other economies in region, though Chinese authorities could respond
BoJ’s Nakaso sees analytical challenge in gauging reforms
Policy board member says the design of standard models may be one reason why it is hard to tell whether Japan needs demand- or supply-side reform
Fiscal dominance can invert transmission mechanism, Lahiri and Patel find
Authors show ‘statutory liquidity requirement’ and fiscal dominance can invert the effects of monetary policy or render it impotent; suggest ‘rebalancing’ India’s reform agenda
BoE sketches proposals for sharia-compliant facilities
Options for deposit facilities include wakalah or commodity murabahah, with the possibility of liquidity insurance to follow
Fischer raises concern over ‘stigma’ around Fed loans
Fed vice-chair Stanley Fischer warns new reporting requirements in the Dodd-Frank Act will “likely add to the challenge of reducing stigma” associated with borrowing from discount window
Riksbank cuts to new low, despite signs of overheating
Central bank pushes policy rate 15bp deeper into negative territory even as economy moves close to full capacity; board responding partly to policy easing abroad
Central Bank of Brazil faces ‘policy dilemmas’
Tombini facing tough challenge as inflation rises into double figures while the IMF predicts deeper recession; observers divided on what comes next
Yellen says Fed unsure about legal issues surrounding negative rates
Fed chair tells Congressional committee she sees no reason why the Fed could not cut below zero if need be, but legal issues have not been ‘fully investigated’
BoJ moves to ‘ease stress’ in JGB market
More generous limits applied to securities lending facility designed to alleviate strains in the market for government bonds, though liquidity indicators do not show clear signs of tightening
Monetary policy does not ‘persistently impact’ bank lending, paper finds
Working paper published by Central Bank of Cyprus examines the impact of interest rate changes on both lending and credit risk
NZ has ample space to respond to risks – IMF staff
An International Monetary Fund staff report says there is room to ease monetary policy further if need be, while authorities should prepare more prudential measures
Eurosystem reveals rules on national asset holdings
ECB publishes an agreement governing the size of ‘non-monetary policy holdings’ at national central banks in the eurozone; aggregate net financial assets totalled €490 billion at end-2015
Ukraine governor reveals move towards inflation targeting
Ukraine’s central bank is already setting policy with an eye on an inflation target while it awaits a formal mandate, its governor says; banking ‘cleanup’ is ‘near the finish line’
BoJ report spells out reasons for dissent on negative rate
Board members had wide range of concerns over cutting rate below zero, including communication challenges, risk of financial instability and danger of triggering a global race to the bottom
Riksbank pushes for FSA to gain stronger tools amid delays
Amortisation requirement looks set to enter force in June, but more powerful tools for Swedish FSA may be delayed; government says negotiations take time, and it fears triggering crisis
Draghi says ‘risk of side effects’ will not stand in ECB’s way
Mario Draghi says the European Central Bank will not be deterred by the ‘unintended consequences’ of its asset-purchase programme, ahead of a key March governing council decision