Monetary Policy
BoE alert to second-round effects from low inflation, minutes show
BoE enters eighth year with rate at 0.5%; committee will continue to watch for second-round effects of inflation on wages
Norges Bank willing to consider move into negative territory
Central bank cuts rates to 0.5% and signals further action likely to follow; executive board concerned by side-effects of negative rates, but willing to use them if necessary
Fed officials lower expectations of rate increases
Fed officials forecast rate increase of 50bp this year, compared with 100bp in December; Yellen “wary” of recent increase in headline inflation
Bank capital matters for risk-taking channel of monetary policy, Norges Bank paper finds
Less capitalised Norwegian banks are more likely to extend credit to risky firms in response to a cut in the policy rate, author finds
Romanian government policies may put financial stability at risk, IMF and EC staff say
European Commission and IMF staff raise concerns over some measures, including draft laws on loans and debt clearance; IMF staff suggest the central bank adopts a “tightening bias”
BoJ spells out operational details for negative rates
Policy board will review exemptions from negative interest rate every three months; banks given new incentive to borrow from the central bank under its targeted programmes
Research sheds light on RBNZ concerns over inflation expectations
Article authored by, among others, John McDermott argues the risk of inflation expectations losing their anchor has increased; concerns were a ‘primary motive’ for last week’s rate cut
Rajan offers solution to global policy spillovers
RBI governor sketches rating system designed to hold central banks to account; frank discussion may be enough, he says, but tougher rules in the style of Bretton Woods are also an option
‘Compositional’ drag on wages set to fade, BoE article finds
Labour force composition has changed markedly in recent years, putting downward pressure on wages, but recent data implies the effect may soon dissipate, researchers say
TLTRO II may reflect renewed ECB focus on transmission, analysts say
The European Central Bank’s decision to operate a second targeted long-term refinancing operation would help provide banks with ‘stability’, according to Draghi
Inflation target and interest rates about right, UK survey suggest
Median expectations of inflation for 2016 were 1.8%; largest share of UK public says it is best for the economy if interest rates stay where they are
ECB launches ‘comprehensive package’ as inflation outlook worsens
Mario Draghi announces cuts in interest rates and an expansion to the ECB’s asset-purchase programme, as well as a second TLTRO package, larger than the original
Central Bank of Brazil calls for structural reforms
Inflation figures come down, but still nowhere near target range; central bank calls on government to ensure fiscal consolidation in longer-term
RBNZ tweaks forecasting models and cuts key rate
Reserve Bank of New Zealand cuts rates by 25bp to 2.25% in attempt to prevent inflation expectations from falling further; updates models in wake of optimistic forecasts
Paper finds evidence in favour of ‘exchange-rate-anchored inflation targeting’
A working paper published by the IMF finds ‘tight management’ of the exchange rate can help support inflation targeting in ‘less developed countries’