Monetary Policy
Bank of England MPC sees first dissent since 2011
McCafferty and Weale vote to raise interest rates, minutes show, as conflicting labour market developments split committee's view on UK spare capacity
Riksbank's Ingves and Flodén warn over risks of persistent low interest rates
Interest rates may need to stay low - creating dangerous levels of household debt, Riksbank governor and deputy tell parliamentary committee
RBA does not see inflation pick-up as threat to target
Minutes from latest board meeting show RBA staff expect inflation to remain ‘consistent’ with target despite annual CPI inflation hitting 3% in June
Unconventional monetary policy has heightened medium-term risks to banks, IMF paper finds
No evidence that unconventional monetary policies has ‘helped' banks, according to paper; finds deterioration of medium-term bank credit risk in US, UK, and the eurozone
Chile cuts interest rates to lowest level since February 2011
Central bank may resort to additional cuts in the months ahead as growth disappoints; Number of Latam economies have performed below expectations so far this year
Bank of Mexico trims growth forecast for 2014
‘Sharp slowdown' early in the year suggests little inflation over ‘horizon in which monetary policy has effect'; structural reforms hailed as ‘indispensable step in right direction'
Firm-level characteristics affect monetary policy transmission, Czechs find
Working paper finds firm-specific characteristics like size, age, collateral and profit, affect the way in which monetary policy changes are reflected in the external financing decisions of firms
Bank of Korea cuts interest rate to lowest level since 2010
Decision prompted by ‘much worse' business sentiment than expected, governor says; analysts expect limited boost to GDP as economic slowdown is ‘structural in nature'
Lesotho holds policy as inflation grows in line with neighbour South Africa
Minimum target for international reserves kept at $610 million, which Lesotho's MPC says is consistent with price stability and currency parity with the rand
Stagnant wages amid falling unemployment creates headache for BoE
Bank of England halves wage growth forecast for 2014 as unemployment seen falling below 6%; Mark Carney notes ‘wide range of views' on MPC about degree of slack
Paper examines optimal monetary policy for wages and hours worked
Firms tend to pay too little for too many hours, economists argue in ECB-published paper; monetary policy should not target inflation too strictly, they say
National Bank of Ukraine warns of FX trade restrictions
Ukraine's central bank has been forced to intervene to smooth currency volatility, and warns ‘administrative measures' may follow; rules on reserves have been relaxed, however
Norway governor sees greater role for central bank in new 'Nibor' framework
Øystein Olsen sees greater powers for Norges Bank over the interbank rate framework, which has 'obvious weaknesses' and should be overhauled 'as soon as possible'
The challenges for central banks
Demands are being made for central banks to consider financial stability alongside price stability, as a key component of their monetary policy. But that is nothing new for central banks
The evolving role of the Eurosystem and its national central banks
Anne Le Lorier pinpoints the challenges Eurosystem central banks will have to address in the aftermath of the global financial crisis.
Book notes: Deliberating American Monetary Policy, by Cheryl Schonhardt-Bailey
Using recordings of meetings of not only the FOMC but also of the House Financial Services Committee and the Senate Banking Committee, the book tries to understand how monetary policy is decided
Emerging market governors favour Fed policy normalisation, says MAS’ Menon
MAS head Ravi Menon says most emerging market central banks want to see the Fed normalise policy, China is at an inflection point and Singapore could lose out from new OTC derivatives rules
Fed survey says 40% of US households still struggling to make ends meet
A third of respondents said they were ‘somewhat or much worse off' than before the financial crisis, while a fifth are spending more than they earn
Minneapolis Fed paper challenges New Keynesian ‘liquidity trap'
New model challenges dominant view of post-crisis monetary policy, claim Minneapolis Fed economists
Bank of Japan expects inflation to remain short of target for ‘some time'
BoJ policy board votes to continue expanding monetary base by ¥60-70 trillion annually; effects of recent decline in demand ‘expected to wane gradually'
Mexico’s Carstens hails Fed’s communication on tapering
Augustin Carstens says Fed has ‘gone out of its way’ to spell out timing and dangers of adjustment; calls on Europe and Japan to ‘depend less on monetary policy’
Agustín Carstens on Fed policy, shadow banking and Mexico's economic strengths
Agustín Carstens, governor of the Bank of Mexico, speaks about the work of the IMF, tackling shadow banking and how Mexico has kept a strong economic position in the midst of the financial crisis.
ECB hiring consultant to help design ABS programme
Mario Draghi says the preparations towards buying asset-backed securities are being made ‘with the expectation we will take action in this field’
Ireland working paper examines effect of ECB policy on interbank repo market
Research by economists from Central Bank of Ireland, New York Fed and Barclays Capital finds some substitution effect between official auctions and repo market activity