Monetary Policy
RBA board agrees China has ‘scope to respond’ if outlook worsens
Minutes from February meeting reveal board is wary a ‘sharp slowing’ in economic activity could spill over to other economies in region, though Chinese authorities could respond
BoJ’s Nakaso sees analytical challenge in gauging reforms
Policy board member says the design of standard models may be one reason why it is hard to tell whether Japan needs demand- or supply-side reform
Fiscal dominance can invert transmission mechanism, Lahiri and Patel find
Authors show ‘statutory liquidity requirement’ and fiscal dominance can invert the effects of monetary policy or render it impotent; suggest ‘rebalancing’ India’s reform agenda
BoE sketches proposals for sharia-compliant facilities
Options for deposit facilities include wakalah or commodity murabahah, with the possibility of liquidity insurance to follow
Fischer raises concern over ‘stigma’ around Fed loans
Fed vice-chair Stanley Fischer warns new reporting requirements in the Dodd-Frank Act will “likely add to the challenge of reducing stigma” associated with borrowing from discount window
Riksbank cuts to new low, despite signs of overheating
Central bank pushes policy rate 15bp deeper into negative territory even as economy moves close to full capacity; board responding partly to policy easing abroad
Central Bank of Brazil faces ‘policy dilemmas’
Tombini facing tough challenge as inflation rises into double figures while the IMF predicts deeper recession; observers divided on what comes next
Yellen says Fed unsure about legal issues surrounding negative rates
Fed chair tells Congressional committee she sees no reason why the Fed could not cut below zero if need be, but legal issues have not been ‘fully investigated’
BoJ moves to ‘ease stress’ in JGB market
More generous limits applied to securities lending facility designed to alleviate strains in the market for government bonds, though liquidity indicators do not show clear signs of tightening
Monetary policy does not ‘persistently impact’ bank lending, paper finds
Working paper published by Central Bank of Cyprus examines the impact of interest rate changes on both lending and credit risk
NZ has ample space to respond to risks – IMF staff
An International Monetary Fund staff report says there is room to ease monetary policy further if need be, while authorities should prepare more prudential measures
Eurosystem reveals rules on national asset holdings
ECB publishes an agreement governing the size of ‘non-monetary policy holdings’ at national central banks in the eurozone; aggregate net financial assets totalled €490 billion at end-2015
Ukraine governor reveals move towards inflation targeting
Ukraine’s central bank is already setting policy with an eye on an inflation target while it awaits a formal mandate, its governor says; banking ‘cleanup’ is ‘near the finish line’
BoJ report spells out reasons for dissent on negative rate
Board members had wide range of concerns over cutting rate below zero, including communication challenges, risk of financial instability and danger of triggering a global race to the bottom
Riksbank pushes for FSA to gain stronger tools amid delays
Amortisation requirement looks set to enter force in June, but more powerful tools for Swedish FSA may be delayed; government says negotiations take time, and it fears triggering crisis
Draghi says ‘risk of side effects’ will not stand in ECB’s way
Mario Draghi says the European Central Bank will not be deterred by the ‘unintended consequences’ of its asset-purchase programme, ahead of a key March governing council decision
Carney says rate hold was ‘easy decision’ after 9-0 vote
‘Super’ Thursday becomes ‘subdued’ Thursday as BoE revises growth, inflation and unemployment forecasts down; policy on hold
IMF staff tell Turkey to fix imbalances
Fund mission says central bank must tighten policy to head off growing external imbalances and inflation; low oil price keeping a lid on problems but longer-term solutions needed
Kuroda insists there is ‘no limit’ to monetary easing
BoJ governor calls combination of QQE and negative interest rates the ‘most powerful' framework in 'history of modern central banking’ and argues there is space for more easing if need be
Distribution of liquidity can impact monetary policy transmission, paper finds
Research published by Norges Bank encourages central banks to pay attention to the distribution of liquidity in the interbank market, as well as its overall level
RBI says future action depends on government decisions
Rajan says further easing depends on government budget and the result of pay negotiations; efforts are continuing to improve transmission mechanism, which could push rates down
Fischer spells out uncertainty surrounding impact of global volatility
Fischer says ‘modest overshoot’ of the longer-run unemployment rate would be appropriate, ahead of this month’s jobs data; sees benefit in maintaining balance sheet ‘for a time’
Former BoE officials warn low rates are feeding imbalances
Marian Bell and John Gieve say the Bank of England should start hiking rates soon, as signs of supply-side problems, unsustainable debt, rising house prices and inflation grow more serious