Monetary Policy
Poloz sees risks to inflation outlook as ‘roughly balanced’ as Canada holds rates
Canadian governor highlights ‘building’ economic momentum after central bank holds its target for the overnight rate at 0.5%
Riksbank floats new collateral limits
Swedish central bank looks to limit the amount of covered bonds pledged as collateral for intraday credit; assessment suggests limited impact on banks
Bank of Uganda takes rate hikes to 600bp in five meetings
Bank of Uganda raises rates for fifth consecutive time by 100bp to 17% in a move to curb inflation; sees earlier moves taking effect
BoE needs to avoid getting ‘behind the curve’, says McCafferty
The monetary policy committee member warns against leaving the rate hike "too late", making it harder to raise it gradually to minimise disruption to households and businesses
Eurozone monetary policy works through credit channel, paper argues
Strong evidence eurozone monetary policy works through the credit channel rather than the interest rate channel, paper says; unconventional monetary policy strongest in crisis
No clear evidence for always using trend inflation in models, paper says
Adding positive steady-state inflation to new Keynesian DSGE models improves analysis of high-inflation periods but otherwise does not significantly alter results, paper argues
Eichengreen says central banks lack will not ability to tackle deflation
Central banks have the tools to deal with bad deflation if they are willing to act aggressively enough, economist argues; broadening asset purchases or helicopter money are both options
Further rate hikes likely as Chile raises 25bp
Central bank lifts rate to 3.25% in first move in four years; analysts suggest the move is an effort to rein in expectations
EU must ‘contain divergence’ between member states, says Polish central bank head
Marek Belka says reforms will not be supported unless European Union prevents economic divergence; speakers say quality of structural reform debate must improve
John Taylor and William Dudley clash on Fed strategy
Stanford professor John Taylor questions Fed’s communications; New York Fed president William Dudley sets out case against following more rules-based policy
Heterogeneous beliefs may weaken effect of forward guidance, paper argues
Fixed-date and state-contingent guidance by the Federal Reserve led some market expectations to converge, but heterogeneous beliefs about inflation and consumption persisted
RBI economists attempt to pin down India’s natural rate
Researchers lend support to monetary policy by estimating natural interest rate; results imply the policy rate is now set more appropriately for tackling inflation
MAS eases policy in first move since January
Singapore's central bank cuts rate at which currency is allowed to strengthen amid Asia slowdown; keeps width and centre of policy band unchanged
RBNZ governor reiterates further easing ‘seems likely’
Graeme Wheeler says the central bank is ‘conscious’ of the impact low rates can have on housing demand; RBNZ has cut OCR by 75bp since June
Eurozone policy-makers and researchers puzzled by trends in long-term inflation expectations
Eurozone inflation more strongly influenced by inflation expectations, the ECB notes; two central bank working papers say data shows unexpected changes
BoE’s new MPC member grilled on financial assets
Treasury Committee questions Gertjan Vlieghe on real or perceived conflict of interest; Ian McCafferty justifies view on rate hike in reappointment hearing
Macro-prudential tools can influence inflation, Menon says
MAS managing director outlines interaction of prudential tools and monetary policy, saying Singapore deliberately used macro-prudential tools to help lower inflation
Fed’s Brainard counsels patience on interest rates
Governor Lael Brainard warns there could be ‘some distance to go’ before reaching full employment in the US, and questions the impact of further labour market improvements on inflation
Swedish economists add voices to criticism of leaning against the wind
Current and former Riksbank deputy governors Martin Flodén and Lars Svensson warn against the large rate hikes necessary to address financial stability concerns
Eurosystem’s asset purchase programme should increase growth by 1% annually, paper says
The Eurosystem’s asset purchase programme could increase growth and inflation by 1% annually for two years, a working paper from the Bank of Italy predicts
Poloz explores ‘risk management’ in policy framework
Bank of Canada governor says monetary policy cannot always be used to lean against the wind, but financial stability impact can be taken into account on occasion
Central bankers challenge Caruana on leaning against wind
IMF panel displays broad range of views on interest rates as a financial stability tool – but none of the central bankers are willing to go as far as the BIS general manager
Fed encouraged to act as FOMC members eye new data
Stanley Fischer reveals encouragement from emerging market officials to ‘just do it’ and raise rates; Dennis Lockhart singles out importance of consumer data in coming weeks
FOMC minutes spell out inflation concerns
Several members were concerned disinflationary pressure from low oil prices and a strong dollar could persist longer than anticipated and ‘delay or diminish’ the expected rise in inflation