Monetary Policy
Rajan suggests IMF as watchdog for unconventional policy
RBI governor says central banks should not discard international responsibilities in favour of domestic mandates; says IMF could police unconventional monetary policy
IMF researchers explore central bank security issuance
Working paper finds low-income countries may struggle to issue central bank securities on account of the administrative costs and infrastructure demands
Minutes show RBA could still ease further
Board members feel the decision to drop guidance that further easing ‘may be appropriate’ does not limit the ‘scope’ for them to cut rates further
CPI not ideal for comparing inflation rates, research finds
Economist at Sveriges Riksbank says CPI is a good measure of inflation but is ‘not well suited’ to making international comparisons of inflation rates
Euro tumbles as ECB accelerates asset purchases
Euro slides against the dollar as market reacts to ECB’s plan to ‘moderately front-load’ its asset purchases; Cœuré concerned by ‘rapidity’ of price reversal in sovereign bonds
ECB’s Cœuré says higher inflation target not solution to zero lower bound
Benoît Cœuré says raising the inflation target or abolishing the currency is not the right way to make monetary policy more effective; structural reforms a better use of political capital
Minneapolis Fed essay suggests new focus for FOMC comms
Sam Schulhofer-Wohl argues the FOMC should talk more about what it is trying to accomplish with its monetary policy; Minneapolis Fed staff rewrite January statement to illustrate point
Mexican deputy cautious of data-dependent Fed policy
Manuel Sánchez sees potential for smooth tightening if markets are able to price in rate changes, but remains alert to risk Fed is pushed into acting faster than planned
Evans: Fed must keep rates low to protect target symmetry
Chicago Fed president sees no serious costs with ‘modestly overshooting’ 2%, but is concerned about potential damage to inflation expectations of tightening too soon
In search of a better measure of inflation
Hedonic adjustments offer a way of tackling bias in the CPI, albeit at a cost, but new research suggests even these may be misrepresenting inflation – with broad implications for the economy
Kuroda reviews QQE two years on
Bank of Japan governor says policy is working as intended, and even though inflation has fallen to zero, prices should soon ‘accelerate toward’ the 2% target
Bank of Canada plans changes to operating framework
Changes would see Canadian central bank cut back on purchase of government bonds through primary market, while intervening less frequently in overnight market
Mario Draghi sees large toolkit as ‘standard’ in 2020
ECB president tells Olivier Blanchard the central bank will retain a broad set of monetary instruments in five years’ time; insists QE will not be tapered early
Kazakhstan proposes sweeping changes to monetary policy framework
Central bank plans root-and-branch reform of its monetary policy with move to inflation targeting to be accompanied by revamped governance, communications, economic modelling and more
RBNZ paper investigates changes to inflation expectations after oil price shocks
Research suggests changes in expectations following real oil price shocks have ‘little or nothing to do with actual inflation outcomes’
Iceland prepares to hike rates despite low inflation
Expectations of ‘very large’ pay increases combined with flat productivity and strong demand growth prompt MPC to signal a coming hike, despite inflation at 0% when house prices are stripped out
Cœuré and Dudley question case for policy co-ordination
ECB board member says central banks can ‘free themselves’ from influence of global financial cycle; NY Fed president says Fed should focus on promoting growth and stability in US
BoE unearths new evidence on UK productivity puzzle
Latest inflation report includes new research suggesting temporary ‘compositional’ factors may be dragging on productivity growth; inflation path revised up slightly and growth down
San Fran Fed president sees light at end of tunnel
John Williams says when short-term volatility is discounted, the US economy is nearing full employment, with an inflation trend running around 1.5%
Riksbank minutes reveal instability fears
Board members were unanimously in favour of further easing but ‘several’ voiced concerns about financial stability risks resulting from the expansionary policy
NY Fed’s McAndrews warns negative rates could drag inflation down
Director of research highlights some of the more radical unintended consequences that could stem from negative rates, including new forms of currency and inflation moving in unexpected directions
Alexandre Lamfalussy: 1929–2015
Those who knew him pay tribute to the former president of the European Monetary Institute and general manager of the Bank for International Settlements
Plosser lays out four principles of sound central banking
Former president publishes a reflective essay in Philadelphia Fed’s annual report for 2014; advocates clear objectives, systematic rules, open communication and stable independence
Chicago Fed research charts fall in natural rate of unemployment
Group of economists say an ageing population and rising education attainment could push the natural rate – currently at or below 5% – as low as 4.5% by 2020