Monetary Policy
Paraguay’s Valdovinos: world has a lot to learn on macro-prudential tools
Paraguayan governor underscores importance of macro-prudential policy but says global economy still has a lot to learn; monetary policy is 'too blunt' to solve all problems
ECB governing council minutes stress need for good communication
Members of the ECB’s Governing Council agreed on the need for good communications but disagreed over the evidence of second-round effects in recent wage dynamics, minutes show
Peso depreciation casts shadow over Mexico rate decision
Central bank adamant it is not in a hiking cycle after 50bp rise; government taking steps to enforce measures on Pemex
FOMC members agree uncertainty over US prospects has ‘greatly increased’
Global uncertainty and financial market volatility increases downside risk for US economy, FOMC members say; committee members express different views over use of fan charts in projections
German constitutional court to rule on OMT ‘in a few months’
Germany’s constitutional court is reviewing the European Central Bank’s outright monetary transactions and their application under German law; decision expected 'in a few months'
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