Monetary Policy
Riksbank board members clash over inflation forecasts
Minutes from December monetary policy meeting show disagreement over impact of 25-basis point rate cut on inflation
Fed’s Bullard blasts ‘fiscalisation’ of ECB
James Bullard defends central bank independence while criticising the European Central Bank for mixing monetary and fiscal policy in its outright monetary transactions
Fed could stop asset purchases ‘well before end of 2013’
FOMC members express concerns over costs of quantitative easing as the Fed’s balance sheet expands; most members see purchases ending within a year
BoJ research warns of unintended policy consequences from Libor
Working paper says reference rates such as Libor can provide valuable information to markets but may also skew central bank policy-making by adding noise to credit spreads
Fed research asserts ‘potency’ of quantitative easing
Working paper finds large-scale asset purchases by the Federal Reserve equivalent to a cut in the Federal funds rate of more than 3%; estimates are higher than previous studies
Bank of Russia increases inflation target for 2013
Guidelines for monetary policy in Russia over the next three years include revised inflation goal for 2013; inflation overshoots target band in 2012
Irish research measures domestic and imported inflation
Paper studies balance of internal and external factors behind sharp deflation during financial crisis; finds domestic economy is important determinant
BoJ boosts easing amid mounting political pressure
Policy board votes to increase asset purchases by ¥10 trillion ($119 billion); close proximity to election raises questions of political influence in decision
Riksbank cuts rates in face of slowdown
Executive board votes to cut benchmark interest rate by 25 basis points to 1% and revise down forward guidance on rates; some members say actions should have gone further
Pakistani minutes show weak economy but low inflation
State Bank of Pakistan minutes show low level of private-sector credit and declining foreign investment behind stagnant economy; inflation lower than expected
CB.com poll reveals concerns over inflationary impact of QE
Majority of participants believe extraordinary monetary policy measures will cause central banks to overshoot inflation targets
BoE’s Weale urges use of more nuanced economic models
Basing models on a single representative agent risks obscuring important results, says Bank of England’s Martin Weale; alternative is greater emphasis on behavioural economics
Central Bank of Curaçao and Sint Maarten could split
The two Caribbean islands are contemplating dividing their shared central bank; Sint Maarten minister of finance keen to avoid new currency
Philippines’ inflation target will drop in 2015
Goal will decrease from 4% to 3% in line with the government’s desire for ‘disinflation’ and higher economic growth
The Bretton Woods transcripts
Bretton Woods was one of the world’s most important financial conferences, but one that was little known about until now
Book notes: Masters of the Universe: Hayek, Friedman, and the Birth of Neoliberal Politics
At first glance the cover of this book implies that the overweening attachment of Thatcher and Reagan to free market economics lay at the root of the 2007–08 crisis. But it is not as simple as that
SNB will not abandon minimum exchange rate, Jordan says
Thomas Jordan reaffirms the Swiss National Bank’s commitment to a minimum of 1.2 Swiss francs to the euro; inflation expected to remain negative next year
Fed to extend QE by $45bn per month
Federal Reserve gives equity markets a lift by unveiling an additional $45 billion of quantitative easing; adopts numerical thresholds
RBA’s Stevens addresses growing importance of policy spillovers
Australia’s Glenn Stevens says policy-makers are becoming increasingly aware of the need to consider the wider impact of domestic decisions, although discussion is in its infancy
Finland paper sizes up Chinese reforms
Research published by the Bank of Finland examines financial liberalisation in China and what it means for the country’s monetary policy framework
Carney and BoE chief economist clash on inflation targeting
Bank of England governor-elect Mark Carney suggests inflation target could be sacrificed for nominal GDP goal; Spencer Dale questions whether this would be effective or viable
QE ‘relief’ no substitute for deleveraging, says HKMA’s Chan
HKMA chief executive warns asset price growth must be supported by structural developments
Belize paper evaluates value of currency peg
Research published by the Central Bank of Belize highlights export growth and steady domestic inflation aided by peg to the US dollar
Central Bank of West African States boosts growth estimates
Monetary policy committee praises member states’ investment in agriculture and infrastructure; holds benchmark interest rate