Monetary Policy
Price-level targeting: a new monetary approach
As criticism of inflation targeting grows, economists and central bankers are taking a closer look at price-level targeting as an alternative. Malan Rietveld reports
Forget inflation targeting
Central banks should let markets set interest rates and let prices fluctuate in the short to medium term, argues Brendan Brown
Bank of Korea – Monetary Policy Statement (February)
South Korean central bank’s February statement shows the worries of a Greek default played a part in its maintenance of a loose policy stance
RBA justifies surprise hold
Reserve Bank of Australia says decision to keep cash rate at 3.75% came on back of success of previous hikes
Bank plays down inflation threat
Above-target inflation likely to soon abate, Bank of England’s governor says in letter to chancellor of the exchequer
New rate-setters named in Poland
Poland’s president names three new members to the monetary policy council, newcomer says country has scant hope of meeting Maastricht criteria for euro adoption
Governors back greater role for monetary aggregates
Christian Noyer, Glenn Stevens and Duvurri Subbarao say more attention must be paid on monetary aggregates
Mooted Fed policy shift presents dangers
Changing its operating target to the interest on reserves tool could be the best available fix for the Federal Reserve as it implements its exit strategy. But it is a process that poses risks
RBIs Subbarao pillories inflation targeting
India’s governor says crisis has “diluted if not dissolved” inflation-targeting consensus; says fiscal dominance likely to remain
Hungary split on size of cut
Minutes of the Hungarian central bank’s January meeting reveal that three members wanted a larger cut than was ultimately implemented on the threat of disinflation
Spending and loose monetary policy cause inflation
CEPR looks for an explanation for UK inflation in the 1970s
Inflation targets must be raised: IMF’s Blanchard
IMF economists Olivier Blanchard, Giovanni Dell’Ariccia and Paulo Mauro call for central banks to revise their price growth targets if they want to avoid crippling deflation
China surprises with second reserve requirement hike
People’s Bank of China ups its reserve requirement ratio by 0.5 percentage points to drain excess liquidity from system
Fifty years of monetary policy
Reserve Bank of Australia’s Glenn Stevens and economists Adam Cagliarini and Christopher Kent document the birth of inflation targeting and look to the lessons from fifty years of policymaking
Monthly bulletin (February) – ECB
ECB’s second monthly bulletin of the year shows a shift away from broad money, both into longer-term assets and narrow money
Fed mulling switch to new policy rate
Federal Reserve’s Ben Bernanke says officials mooting the use of interest on reserves as benchmark target
Triple A rating “ours to lose”: King
Bank of England’s Mervyn King says downgrade unlikely given Britain’s strong track record and maturity of government bonds
Ex-Bank deputy wants shift in monetary policy remit
Former Bank of England deputy governor and Financial Services Authority chairman Howard Davies calls for central banks to broaden ambit of monetary policy; insists supervision best handled outside the central bank
Monthly report on covered bond purchases – ECB
ECB’s January report shows demand is stronger in primary than secondary markets
Ghana suited to inflation targeting: IMF paper
International Monetary Fund paper says the country does not suffer problems in credibility, which helps in the inflation targeting framework
Watch money growth like ECB does: Trichet
ECB president Jean-Claude Trichet says the central bank has always considered monetary aggregates in its policy decisions, and urges the rest of the world to do so
Inflation targeting the best available option: RBNZ’s Bollard
Reserve Bank of New Zealand governor Alan Bollard says although the method has not always ensured stability, it is better than the alternatives
Fed’s Kohn: don’t underestimate interest-rate risk
Federal Reserve’s Don Kohn says it is crucial interest-rate risk does not undermine the safety and soundness of the most important lenders
Kuwait makes surprise 50bp cut
Central Bank of Kuwait trims half a percentage point off key rate in the face of low inflationary pressures and to encourage lending to non-oil sectors