Monetary Policy
BoJ’s Nakaso: inflation on upward path this year
Pressure on wages, rising commodity prices and a turnaround in expectations will drive up prices, deputy says; rejects calls for rate hike
Fed officials emphasise risks despite improving outlook
“Risk management” approach to policy needed despite improving outlook, say Evans and Kashkari; Bullard notes balance sheet adjustment also an option for tightening
IMF gives thumbs up to Indonesia’s new monetary operating framework
Interest rate corridor and switch to new policy rate has improved monetary policy transmission, early data shows, but further reforms could strengthen framework further
RBI highlights bad debts as it holds rates
Surprise hold as committee sees “very sticky” core prices and global effects; central bank may create a ‘bad bank’ to tackle NPA problem
BIS paper tracks US and eurozone QE spillovers
Shadow rates approach helps authors show US QE spilled across borders more strongly, though impact differed between countries
Angola disregards IMF advice on exchange rate overhaul
Angolan authorities disagree with IMF over suggested exchange rate framework changes but agree to a banking sector clean-up
Kazakhstan’s Akishev sets sights on lower inflation
Governor hails success with inflation targeting and says central bank now plans to push inflation even lower; NBK also working on new banking supervision framework
BoJ acts to thwart pressure on yields
Central bank commitment to yield curve control faces first serious test; BoJ launches unlimited purchases to hold yield down
Kenya’s monetary policy framework under threat – IMF
New interest rate caps are “constraining” the central bank’s ability to conduct monetary policy while negatively affecting banks’ profitability, but action plan could see them eliminated
Norges Bank defends policy framework amid government review
The government is assessing the central bank’s governance and monetary policy; Norges Bank says it needs a “long and flexible horizon” to be able to properly conduct its policy framework
BoE signals extra slack as it revises growth outlook upwards
Mark Carney indicates the MPC is willing to keep rates on hold, although risks may emerge as details become clear about the UK’s EU departure; UK government publishes a white paper on Brexit
Only ‘gradual’ increases in interest rates on the cards at the Fed
FOMC members think only “gradual” adjustments to monetary policy are warranted; current pace will strengthen the labour market and see inflation rise
Unconventional policy has improved ‘pass-through’, says ECB
“Simple pass-through models” are ill-equipped for analysis, paper argues
BoJ ups growth forecast after Trump shock
Improvements in overseas economies and yen weakness prompt central bank to revise up its growth forecast, though inflation is largely unchanged; policy remains on hold
Central Bank of Kenya halts reference rate calculation
Rate made redundant by interest cap, Njoroge explains, as banks prepare for the new arrangement; central bank maintains interest rates at 10%
Ukraine governor says bank has met first inflation target
Gontareva says Ukraine should hit tighter target for 2017
Regulations and QE impacting repo market – ECB’s Mersch
Executive board member says “confluence of factors” has boosted demand for collateral and impaired its supply, but the situation may improve
Tight policy keeping a lid on inflation – Central Bank of Iceland
“Steep” pay increases and rising house prices keep the central bank on alert; report warns the situation could easily change
China hikes interbank lending rates
PBoC “very worried” by banks’ credit expansion, expert says; raises medium-term lending facility rate by 10 basis points
Turkey keeps policy rate on hold, despite weakening lira
MPC trying to keep a “balance” between government pressure and market demand, analyst says
Cross-border claims shifting in favour of non-banks
BIS international banking statistics show claims on banks fell in third quarter of 2016 but claims on non-banks continued to grow
Protectionist ‘threats’ from US could harm emerging markets – Kganyago
International concerns high on Sarb’s list at latest MPC discussion; uncertainty surrounding US economic policy leads to revision of headline inflation forecast
Book notes: The International Monetary Fund: Distinguishing Reality from Rhetoric, by Graham Bird and Dane Rowlands
The book brings valuable rigour to bear in assessing the work of the IMF, but suffers from a reliance on ageing data in many places, says Jacek Klich
Yellen: Fed asset holdings provide automatic policy tightening
Downward pressure on long-run rates is expected to diminish, making the need to hike short-term rates less pressing, the Fed chair says