Monetary Policy
Bank of Japan paper shows popping bubbles may require volatile inflation
Research finds inflation can remain stable while asset price bubbles develop, implying optimal monetary policy should tighten to reduce the bubble at the cost of below-target inflation
Stockton’s Bank of England review offers forecasting lessons for central banks
The Stockton review of the Monetary Policy Committee at the Bank of England offers valuable lessons for central bankers and economists around the world.
Deutsche Bundesbank’s losing struggle in European integration battle
The Deutsche Bundesbank was once the cornerstone of European monetary stability but has become little more than a bargaining chip for politicians negotiating European integration.
Booknotes: Making the European Monetary Union
A history of the Committee of Central Bank Governors for the period 1964 to 1993, for which the author, Harold James, had access to the archives
Central banks need to be wary of ‘new’ monetary policy trends
Policy-makers are reappraising the role of independent central banks pursuing inflation targets. Bernd Braasch1 encourages them to use sound evidence to inform their judgements
State Bank of Vietnam needs a single mandate not independence
Lessons from South Korea, Japan and the US indicate a single mandate would benefit the State Bank of Vietnam more than an IMF call for legal independence.
Cleveland paper trumpets value of median CPI in forecasting
Research says median CPI – a ‘trimmed’ measure of inflation – can improve the accuracy of forecasts involving a range of macroeconomic variables
Bernanke commits to continuing asset purchases
Fed chairman says benefits of ongoing monetary policy stimulus are clear; urges US government to delay bulk of impending spending cuts
BoE’s Fisher sees longer horizon for asset purchases
MPC member Paul Fisher says Bank of England should consider switching to a more gradual pace of asset purchases over a longer period of time
Central bank independence: more myth than reality?
Crisis responses are placing a heavy burden on many central banks. But there is no evidence showing that legally independent central banks have a better track record in monetary policy
BoE’s Tucker urges careful consideration of negative interest rates
Paul Tucker encourages MPC discussion of alternative accommodative measures; expects existing QE to gain more traction as eurozone recovers
Atlanta Fed president sees dangers in chasing vague labour market target
Dennis Lockhart says policy-makers should balance considerations of longer-term costs when targeting 'substantial improvement' in labour market outlook
Fed’s Powell and Rosengren hit back at ‘fiscal crunch’ research paper
Research suggests Fed is constrained by precarious US finances, but Fed governor and president offer alternative conclusions
South Africa governor outlines ‘upside' inflation risks
Sarb governor expects inflation to breach target range but immediately return; explains decision to hold rates
BoE MPC member makes case for more stimulus
David Miles presents model that suggests monetary policy is probably still too tight in the UK; says more QE would be one way to address this, but other easing strategies could also work
NY Fed plans test run of small-firm open market operations
Fed prepares pilot programme to allow five smaller firms to act as counterparties in open market operations for a year, with the possibility of making the scheme permanent thereafter
FOMC members 'undecided' over further asset purchases
Federal Open Market Committee displays more uncertainty over when to halt asset purchase programme; wary of buying more securities but scared of ending purchases too soon
New Zealand Reserve Bank 'prepared to intervene' in FX markets - governor
Graeme Wheeler says currency is over-valued, and investors should know that the Kiwi is 'not a one-way bet'
UK statistics office explains QE impact on national debt
ONS attempts to clarify accounting practices used in transferring cash reserves from Bank of England’s quantitative easing programme to the Treasury
BoE minutes signal ‘shift in remit' to support economic growth
Minutes reveal governor Mervyn King sided with expanding QE, leading analysts to speculate that inflation is no longer a target
Eurozone ‘funding for lending scheme' gains favour
ABN Amro says a eurozone FLS would be ‘the most practical way of dealing with the credit constraints of SMEs'; Sony Kapoor says ECB would be ‘irresponsible' to ignore it
BoJ board divided ahead of new governor appointment
Minutes detail arguments made by two policy board members who opposed move to 2% target, and why they were overruled; Shinzo Abe hints Bank of Japan could lose independence if target is not hit
Bundesbank’s Dombret warns low interest rates are not 'suitable therapy'
Executive board member Andreas Dombret says exit from low interest rate environment must take place at ‘right time’; expounds damage it causes to savers
Bank of Finland paper urges QE use outside crises
Analysis based on DSGE model finds asset purchases are a useful monetary policy tool in all states of the economy, but should be co-ordinated with conventional interest rate policy