Monetary Policy
Concerns raised over impact of Fed’s QE3
Federal Reserve to purchase $40 billion of mortgage-backed securities each month until US economy improves; doubts arise over effectiveness of the policy despite positive market response
Colombian governor warns of low-rate risks
José Darío Uribe says low interest rates pose medium-term risks to emerging markets; advises that unsustainable credit growth should be hedged
BoE quarterly bulletin presents latest research
Quarterly bulletin gives overview of economic developments and contains papers on stress-tests, factors behind low sovereign bond yields and uncertainty in inflation forecasts among other topics
Thai governor says Basel III needs improvement
Governor of the Bank of Thailand says Basel III is too tough on trade finance and simple derivatives transactions; discusses challenges facing the eurozone
UK MPC member discusses QE exit strategy
David Miles says BoE will increase interest rates before selling government bonds; strategy will provide margin for error when monetary policy is tightened
Finland’s Liikanen calls for equal transmission of monetary policy
Bank of Finland governor says monetary policy should transmit equally around Europe; access to funding should not be hampered by “unfounded risk premia”
IMF mission begins new talks with Serbia
Fact-finding mission focuses on macroeconomic outlook, fiscal situation and effects of changes to the central bank law; government reveals efforts to cut budget
New UK MPC member coy over policy stance
Ian McCafferty maintains a neutral perspective ahead of his first MPC vote; says it is difficult to be precise about effects of QE
Reserve Bank of Fiji governor promotes financial inclusion innovations
Barry Whiteside extolls benefits of co-operation between stakeholders in the bid for financial inclusion; encourages novel projects to reach the under-served
ECB’s Constâncio stresses need for banking union
ECB vice-president says banking union will help tackle increasing divide of markets along national borders; could guide intervention in market risk
BoE’s Dale says further easing carries ‘potential risks’
Spencer Dale recognises role monetary policy steps have played in stabilising UK economy, but warns further quantitative easing could come with drawbacks
Canadian governor refuses to lean on exchange rate
Mark Carney praised effect of high commodity prices on Canada’s economy despite currency appreciation; says he will not intervene in exchange rates
Irish deputy governor analyses monetary policy’s role in stability
Stefan Gerlach explores the dynamic between using monetary policy and macro-prudential policy to address financial stability; says the two can be used in tandem, with considerations
Swiss franc expected to retrace its fall as ECB news sinks in
The euro rallied against the Swiss franc for the first time in six months after yesterday’s announcement of new measures from the ECB, but FX strategists expect it to fall back towards 1.20
Fed paper dissects link between asset purchases and bond yields
San Francisco Fed working paper explores the relationship between the Fed’s asset purchases and international bond yields; says portfolio balance was a key link between the two
BoE keeps monetary policy steady
Bank of England holds interest rate and leaves QE programme at previous level; asset purchases expected to be complete in two months’ time
Central Bank of Iceland minutes show rate-hold hesitancy
Minutes of the monetary policy committee’s August meeting detail dispute over interest rate; members discuss impact of currency depreciation
Shirakawa calls for increase in Japan’s potential for growth
Bank of Japan governor says monetary easing has created accommodative financial conditions; calls for private sector to take advantage
Italian paper studies impact of euro break-up fears
Bank of Italy working paper investigates interest rate movements away from macroeconomic fundamentals; suggests euro break-up fears may be an influence
Kenya central bank slashes rates as others hold ahead of ECB decision
Positive developments in economy lead Kenyan central bank to make large rate cut as central banks in Australia, Canada, Israel, Thailand and Poland all keep rates on hold ahead of ECB decision
Public policy signals can be beneficial, says BIS paper
Bank for International Settlements study models effect of policy signals on prices and market outcomes; takes into account market response
Fed paper evaluates asset purchase programmes
A Federal Reserve working paper says the central bank’s asset purchase programmes have lowered Treasury yields; uses market expectations to help judge impact
Central Bank of Myanmar embraces radical overhaul
Central bank close to securing operational independence and staffing needed to manage monetary policy and foreign exchange; aggressive banking, payments and capital markets reform on its agenda
Moody’s changes EU credit rating outlook to negative
Credit rating agency says move reflects alterations to rating outlooks for core eurozone countries; all eyes on ECB for rate decision later this week