Monetary Policy
Canadian paper sees costs to leaning against the wind
Research estimates difference in policy rates between ‘lean’ and ‘clean’ central banks, while identifying costs in terms of inflation and output deviations
BoE researchers model trend inflation with ambiguity
Researchers develop a model featuring positive trend inflation determined in part by the degree of ambiguity around central bank actions
Russian corporate banking recovers despite sanctions and oil price fall, governor says
Bank of Russia ready to expand for large-scale foreign exchange operations if oil price falls
Dudley leads Fed speeches as December meeting looms
William Dudley says conditions necessary for rate hike ‘could soon be satisfied’ but notes concerns about inflation outlook; Evans, Fischer and Lacker also speak on US outlook
BIS paper models non-linear eurozone crisis impact
Researchers attempt to capture endogenous amplification mechanisms in causing widened lending spreads during eurozone crises
Identifying the effects of structural shocks exposes problems with real-time data, researchers say
Using a model that identifies the effects of structural shocks, the paper finds ‘substantial and systematic’ differences between ways real-time and final data respond to monetary shocks
Challenging crosscurrents from divergent monetary policy
Divergent monetary policies around the world and challenges linked to China’s economic rebalancing present central bankers with some opportunities as well as numerous threats
More sharia-compliant instruments would aid liquidity management, IMF paper argues
Working paper focused on Gulf states notes a lack of instruments has forced Islamic banks to hold a lot of cash, while making it harder for central banks to conduct monetary operations
Low rates from QE poses risks to some pension and insurance firms in eurozone, Visco warns
Pension funds and insurance companies in some eurozone countries may need to adjust their practices to limit the risks arising from asset purchases, Italian governor says
Rajan picked as BIS board vice-chair as he calls for global ‘rules of the game’
RBI governor chosen to take over position Masaaki Shirakawa vacated in 2013; delivers lecture in Frankfurt calling for global ‘rules of the game’
Sarb’s Mminele fears a ‘lengthening drought’ in emerging market capital flows
Sarb deputy warns emerging market nations must maintain “utmost vigilance” as they are buffeted by the effects of divergent monetary policies and fears about the state of the Chinese economy
Riksbank paper examines mixed forecast performance
Researchers find the central bank has tended to be overly optimistic on foreign economic performance, but makes similar errors to other institutions
No fireworks as Bank of England keeps rate options open
Rates remain on hold as BoE balances domestic strength with signs of weakness overseas; MPC hints a few forces could prompt an earlier hike than markets are predicting
BoE Court recommends forecasting rethink
Review of forecasting sheds light on strengths and weaknesses of central bank’s approach; recommends more systematic performance evaluation and new modelling techniques
Albania cuts rates as renovations to HQ completed
The Bank of Albania cut its policy rate to a record low of 1.75%; chair of Single Resolution Board visits as non-performing loans fall to approximately 20% of total in banking sector
Asset purchases having ‘sizeable’ impact on prices in eurozone, ECB paper finds
Working paper says ostensibly puzzling result can be explained by low levels of ‘market distress’ weakening some transmission channels but bolstering others
Fischer defends Fed independence
Attempts to make the FOMC adopt a policy rule and 'audit’ its decisions would restrict the Fed’s independence without generating much benefit, Stanley Fischer argues
Rising mortgage rates do not demand policy response, says RBA’s Stevens
Recent increases in mortgage rates have reversed some of the central bank’s easing, but there is no need to lean against the movement at present, governor says
Improved inflation outlook gives Icelandic central bank room for manoeuvre
Shallower path for near-term inflation allows central bank to make smaller rate hike than planned, but the longer-term picture still shows inflation overshooting the target
Hungarian central bank mulls lower capital requirements for SME-friendly banks
Central bank looks to incentivise lending to small businesses; risk-absorbing swaps and 'preferential' deposit facility could be supplemented by lower requirements
Inflation outcomes should not be sole criteria for judging performance, says RBNZ's McDermott
Assistant governor's comments come after policy reversal by RBNZ amid falling global commodity prices; staff article emphasises 'ex-ante' evaluation of monetary policy decisions
Zambia hikes by 300bp as inflation almost doubles
Bank of Zambia increases policy rate to 15.5% in an effort to keep inflation expectations anchored in single digits; annual inflation jumps to 14.3% in October as kwacha slides
PBoC monetary policy reform could be 'trial and error', economists warn
The Chinese central bank wrapped up a two-decade long interest rate liberalisation process last month – now the hard job begins