Monetary Policy
Chilean central bank spells out risks to outlook
Central bank expects inflation to return to 3% target by end of 2017 according to latest forecasts; details risks from home and abroad to macroeconomic outlook
Turkish inflation to drift toward target over next two years, report says
Turkey’s inflation rate will remain above the 5% target for much of the coming year, the latest quarterly report from the central bank says
Kuwait joins hikers club in wake of Fed rate rise
Kuwait look to strengthen currency after Fed rate rise; UAE and Saudi Arabia, which operate with dollar pegs, also move
LatAm response to Fed sees two hikes
Mexico and Chile both raise rates by 25bp in the wake of the Fed decision, with currencies remaining relatively stable in the aftermath
Bank of Japan tweaks QQE with maturity extension and new ETF purchases
BoJ will continue to buy 80 trillion yen worth of JGBs a year, but with slightly longer to run to maturity; announces new ETF programme to offset sales of old stocks
IMF paper says transmission is working but lopsided in the Dominican Republic
Researchers say the Dominican Republic has been successful in establishing a monetary transmission mechanism, but future work should focus on balancing pass-through to deposit and lending rates
HKMA hikes rates as Asia takes Fed decision in stride
Hong Kong raises rates for first time in over nine nears as regional markets remain calm; Norman Chan warns of capital outflows and ‘possible shocks' ahead
Restructuring Norwegian economy will take time, Norges Bank says
The Norwegian economy is suffering amid further falls in oil prices, and rebalancing will take time, but central bank policy is doing its best to support the transition, report says
Yellen warns not to 'overblow' liftoff as Federal Reserve raises rates
Federal Open Market Committee will keep close eye on ‘actual and expected progress’ toward 2% inflation, after embarking on first tightening cycle since 2006 with 25bp hike
Bank of Korea to adopt 2% target from 2016
Central bank scraps its target range in favour of a fixed point; inflation rises to 1% but board expects it to ‘continue at a low level’ in coming months
BIS paper finds close link between MBS and bond yields
Authors find ‘strong empirical evidence’ for feedback between mortgage-backed securities and bond yields, with the effects proving transient and ‘hump-shaped’
Pakistan central bank ‘implicitly’ introduced new policy framework ahead of time
State Bank of Pakistan reveals it ‘implicitly’ introduced a new framework for monetary policy before it was officially announced, to avoid ‘unnecessary volatility’ in money market
BoE paper explores monetary and macro-prudential policy interactions
Macroeconomic and financial frictions in an economy can require ‘intervention of opposite direction’ on the interest rate, which a second instrument can help mitigate, paper finds
BoE’s Shafik says wages key to rate hike
Deputy governor says economy has been difficult to read in recent years but stronger growth in wages would be a major factor in prompting her to vote for a rate hike
Energy and food price rises have ‘strong’ second-round effects in South Africa, paper says
A new model of South African food and energy price rises allows the quantification of their second-round impact on wider inflation measures, a working paper argues
Shocks to income have pushed Australian inequality higher, paper finds
Both income and consumption inequality have risen among Australian households due to the effect of short-term and long-term shocks to income, an RBA paper argues
Further macro-prudential policies ‘may be needed’ in UK, says IMF
Staff say existing measures have eased but not eliminated risks to household finances; encourage BoE to keep monetary policy unchanged until inflationary pressures are ‘clearer’
Nabiullina says ‘risk’ scenario for Russian economy more likely now
Governor Elvira Nabiullina fears oil prices may fall further and have an adverse affect on the economy, as the Bank of Russia leaves its policy rate unchanged
Economists point to key factors for BoE rate decision coming into ‘sharper relief’
Developments in labour market represent crucial signal for monetary policy move, but shocks from a Fed hike, commodities or further turbulence in emerging markets could all come into play
Sovereign money a ‘risky experiment’ says SNB’s Jordan
Thomas Jordan says sovereign money initiative looking to strip banks of ability to create money would ‘entail a radical overhaul of Switzerland’s financial system’; SNB holds rates
RBNZ cuts rates for fourth time this year
Central bank resumes easing policy and lowers OCR by 25bp to 2.5%; expects inflation to move towards target range in early 2016
Bank of Canada adds negative rates to toolkit
Central bank publishes new framework for monetary policy when interest rates are approaching zero, suggesting the overnight rate could be cut as low as -0.5%
Turkish economy is braced for impact of global policy normalisation, says Başçı
Erdem Başçı says measures taken to date have made Turkish economy more resilient to external shocks; expects inflation to trend down towards target next year after rough 2015
Forecasters expected ‘significant’ drop in bond yields in wake of Fed easing, paper finds
Staff report published by the Federal Reserve Bank of New York examines how professional forecasters revised their predictions in aftermath of Fed decisions