Monetary Policy
IMF paper sees Indian food prices shaping inflation dynamics
Working paper suggests food inflation will continue to outpace non-food inflation in the coming years, while potentially contributing 1.25 percentage points annually to headline figure
Cleveland Fed president ‘fully supported’ rate hike
Loretta Mester expresses support for FOMC’s decision in December, but notes greater importance of policy path than date of lift-off for macroeconomic performance
PBoC injects liquidity following market rout
Central bank intervenes with $20bn reverse repo operation as markets slump, restoring a semblance of calm
Norges Bank paper seeks to improve modelling of money
Researchers aim to capture the role of money as both a medium of exchange and a liquid asset, with the resulting equilibrium underscoring the need for a liquidity coverage ratio
Emerging markets more vulnerable than developed economies to policy reversals, paper finds
Working paper published by the IMF considers impact of unconventional monetary policy in major economies on global liquidity and monetary conditions
Riksbank prepared to ‘instantly intervene’ in krona
Executive board hands governor and first deputy the power to determine interventions to hold down the value of the krona, at unscheduled monetary policy meeting
Rate rises may be appropriate when asset prices are high, Fischer says
The Fed's vice-chair says raising interest rates may be appropriate if asset prices reach ‘excessively high’ levels across the economy; he weighs the options for tackling ZLB constraint
Czech Republic chooses not to set target date for euro adoption
Government decision follows central bank and ministry of finance advice; authorities cite need for greater real economic convergence as a ‘main barrier’ to adoption
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