Monetary Policy
Eurozone not at zero lower bound, Praet says
ECB chief economist Peter Praet has said the eurozone is not at its zero lower bound; remarks may not contradict earlier guidance by ECB president Draghi
Fed QE drives portfolio rebalancing towards foreign assets, Brazil paper finds
Research analyses ‘comprehensive’ dataset for Brazilian capital flows and a smaller one for other EM economies
Currency networks shape global spillovers, BIS authors find
Authors make use of recently enhanced BIS data sets to map currency networks, studying how these affected the risk-taking channel of monetary policy during the ‘taper tantrum’
Deputy governor warns of perils in changing Sweden’s inflation target
Sweden would only be able to raise its inflation rate successfully if other major economies around the world did also, deputy governor Ohlsson says – competiveness would disappear
Sarb hikes rate despite split decision on MPC
Monetary policy committee decides to raise key rate by 25bp after an initial 3:3 split; concerns over inflation remain for some members
BoE alert to second-round effects from low inflation, minutes show
BoE enters eighth year with rate at 0.5%; committee will continue to watch for second-round effects of inflation on wages
Norges Bank willing to consider move into negative territory
Central bank cuts rates to 0.5% and signals further action likely to follow; executive board concerned by side-effects of negative rates, but willing to use them if necessary
Fed officials lower expectations of rate increases
Fed officials forecast rate increase of 50bp this year, compared with 100bp in December; Yellen “wary” of recent increase in headline inflation
Bank capital matters for risk-taking channel of monetary policy, Norges Bank paper finds
Less capitalised Norwegian banks are more likely to extend credit to risky firms in response to a cut in the policy rate, author finds
Romanian government policies may put financial stability at risk, IMF and EC staff say
European Commission and IMF staff raise concerns over some measures, including draft laws on loans and debt clearance; IMF staff suggest the central bank adopts a “tightening bias”
BoJ spells out operational details for negative rates
Policy board will review exemptions from negative interest rate every three months; banks given new incentive to borrow from the central bank under its targeted programmes
Research sheds light on RBNZ concerns over inflation expectations
Article authored by, among others, John McDermott argues the risk of inflation expectations losing their anchor has increased; concerns were a ‘primary motive’ for last week’s rate cut
Rajan offers solution to global policy spillovers
RBI governor sketches rating system designed to hold central banks to account; frank discussion may be enough, he says, but tougher rules in the style of Bretton Woods are also an option
‘Compositional’ drag on wages set to fade, BoE article finds
Labour force composition has changed markedly in recent years, putting downward pressure on wages, but recent data implies the effect may soon dissipate, researchers say