Monetary Policy
John Taylor and William Dudley clash on Fed strategy
Stanford professor John Taylor questions Fed’s communications; New York Fed president William Dudley sets out case against following more rules-based policy
Heterogeneous beliefs may weaken effect of forward guidance, paper argues
Fixed-date and state-contingent guidance by the Federal Reserve led some market expectations to converge, but heterogeneous beliefs about inflation and consumption persisted
RBI economists attempt to pin down India’s natural rate
Researchers lend support to monetary policy by estimating natural interest rate; results imply the policy rate is now set more appropriately for tackling inflation
MAS eases policy in first move since January
Singapore's central bank cuts rate at which currency is allowed to strengthen amid Asia slowdown; keeps width and centre of policy band unchanged
RBNZ governor reiterates further easing ‘seems likely’
Graeme Wheeler says the central bank is ‘conscious’ of the impact low rates can have on housing demand; RBNZ has cut OCR by 75bp since June
Eurozone policy-makers and researchers puzzled by trends in long-term inflation expectations
Eurozone inflation more strongly influenced by inflation expectations, the ECB notes; two central bank working papers say data shows unexpected changes
BoE’s new MPC member grilled on financial assets
Treasury Committee questions Gertjan Vlieghe on real or perceived conflict of interest; Ian McCafferty justifies view on rate hike in reappointment hearing
Macro-prudential tools can influence inflation, Menon says
MAS managing director outlines interaction of prudential tools and monetary policy, saying Singapore deliberately used macro-prudential tools to help lower inflation
Fed’s Brainard counsels patience on interest rates
Governor Lael Brainard warns there could be ‘some distance to go’ before reaching full employment in the US, and questions the impact of further labour market improvements on inflation
Swedish economists add voices to criticism of leaning against the wind
Current and former Riksbank deputy governors Martin Flodén and Lars Svensson warn against the large rate hikes necessary to address financial stability concerns
Eurosystem’s asset purchase programme should increase growth by 1% annually, paper says
The Eurosystem’s asset purchase programme could increase growth and inflation by 1% annually for two years, a working paper from the Bank of Italy predicts
Poloz explores ‘risk management’ in policy framework
Bank of Canada governor says monetary policy cannot always be used to lean against the wind, but financial stability impact can be taken into account on occasion
Central bankers challenge Caruana on leaning against wind
IMF panel displays broad range of views on interest rates as a financial stability tool – but none of the central bankers are willing to go as far as the BIS general manager
Fed encouraged to act as FOMC members eye new data
Stanley Fischer reveals encouragement from emerging market officials to ‘just do it’ and raise rates; Dennis Lockhart singles out importance of consumer data in coming weeks
FOMC minutes spell out inflation concerns
Several members were concerned disinflationary pressure from low oil prices and a strong dollar could persist longer than anticipated and ‘delay or diminish’ the expected rise in inflation
Minneapolis Fed president open to cutting rates
Narayana Kocherlakota stresses room for improvement in US labour market, noting low inflation could give the Fed space to pursue more accommodative policy
Swap line availability not assured, warns Bill Allen
It is ‘not certain’ the Federal Reserve will be able to provide liquidity in the same manner in the future, Allen tells Central Banking
ECB watching oil and euro closely for inflation risks
Deflation has become less likely in the eurozone since the implementation of quantitative easing, but falling oil prices are pressing on inflation expectations, governing council says
BoE turns attention to risk-free rate as markets push out expectation of hike
MPC mulling the question of whether lower rate expectations will provide enough stimulus to overcome growing risks from emerging markets; rates stay on hold
Three eurozone central banks to trial reverse auctions of securities
The central banks of France, the Netherlands and Lithuania will hold reverse auctions of securities under the public sector purchase programme; trial will run for one month
Boston Fed conference lays bare uncertainty over macro-prudential policy
Central bankers raise concerns over theoretical and practical barriers to exercise of macro-prudential policy in the US and the appropriate role for monetary policy
SNB’s Zurbrügg says negative rates painful but necessary
Vice-chair concerned by financial stability impact of negative interest rates, but says they make sense from a monetary policy perspective; talks with industry have been ‘very heated’
Czech exchange commitment will ‘probably’ run beyond July 2016
Czech National Bank likely to use exchange rate as a monetary policy tool until July 2016 or later; formal extension and negative interest rates discussed but judged unnecessary
Weak jobs report sends dollar tumbling
Report shows nonfarm payrolls increased by just 142,000 in September, while July and August totals have been revised down; dollar drops by almost 1% against euro