Monetary Policy
BoE minutes help markets shape expectations, paper finds
Working paper published by ECB finds markets make use of minutes when forming short-term expectations, but relationship breaks down over longer horizons
BoE’s McCafferty says UK not yet in ‘true deflation’
External MPC member says ‘dangerous but rare’ deflation has not taken hold in the UK, although inflation expectations have shifted down slightly
Sarb deputy wary of weaker currency with inflation rising
Daniel Mminele warns any ‘significant weakening’ in the South African rand in response to a Federal Reserve rate hike could cause inflation outlook to deteriorate
Weidmann sees bond reversal as ‘a kind of re-normalisation’
Bundesbank president argues sell-off is a ‘correction of market overshooting’ in the wake of ECB asset purchases; insists volatility is ‘not exceptionally high’ at present
Draghi defends ECB participation in private events
ECB president tells EU ombudsman that Benoit Coeuré did not reveal market-sensitive information at event in London in May; attributes late publication of speech to ‘internal miscommunication’
Virus outbreak prompts Bank of Korea rate cut
Deadly Mers virus a key factor behind central bank’s decision to ease policy as economic recovery shows signs of faltering
Kiwi slides as RBNZ cuts OCR to boost demand
Reserve Bank of New Zealand cuts key rate to 3.25% and suggests further easing could follow; kiwi drops to lowest level against US dollar in almost five years in aftermath
Dutch paper says theory of forward guidance must catch up with practice
Economists from the Netherlands Bank argue so-called Odyssean communication ‘does not exist in practice’ as central banks want to avoid committing themselves to a particular set of actions
Cleveland Fed economists cautious over use of Taylor rule
Research emphasises the difficulty in measuring potential output and the natural rate of unemployment accurately and urges policy-makers to ‘take care’ when using the rule
Iceland raises rates by 50bp and warns more will follow
Central bank says it will take ‘appropriate countervailing measures’ if the increase in government revenues from failed bank asset tax is used to stimulate the economy
RBA’s Stevens says infrastructure project could help solve growth problems
Governor sees limits to monetary policy and urges government to fill the void by maintaining spending and launching a long-run infrastructure plan
BoJ’s Sato says QQE becoming harder to implement
Takehiro Sato warns easing programme risks undermining confidence in central bank policy by eroding fiscal discipline, making interest rates harder to control
Former PBoC chief explains why RMB evolution brings benefits to China and rest of the world
Dai Xianglong, former chairman of China’s National Social Security Fund (NSSF) and former president of IFF, backs the idea of the internationalisation of the renminbi and the benefits it could bring
Zhu Guangyao on China's 'new normal', investment and external pressures
Chinese vice-minister of finance, Zhu Guangyao, explains China's 'new normal', efforts to improve asset investments, fiscal policy challenges and the country's external operating environment
Coping with risks associated with financial liberalisation in China
Financial reforms in China pose the risk of increased volatility in interest rates, financial fragility and loss of output
Factor price reforms and their macroeconomic policy impact
The need for financial reforms to achieve sustainable growth is widely accepted. But the move towards interest rate liberalisation amid weak growth and low global rates remains a challenge
PBoC’s Zhou Xiaochuan on interest rate reform and renminbi internationalisation
People’s Bank of China governor Zhou Xiaochuan speaks about the pace and timing of interest rate reform and the internationalisation of the renminbi
Sponsored feature: Defining the ‘new normal’ in China
Setting ambitious targets and reaching them fast has been essential for more than three decades. But this growth-at-any-cost push is now being replaced with what China’s leaders call the ‘new normal’
Jacques de Larosière on the international monetary system and the euro
Christopher Jeffery speaks to former IMF managing director Jacques de Larosière about continuing efforts to restore the global financial system and where the future now lies for Europe
ECB paper examines financial exposure in eurozone
Working paper finds eurozone investors are ‘overexposed’ to securities issued within the region, more so in the case of ‘low-rating economies’
Dudley expects ‘some turbulence’ when Fed hikes rates
New York Fed president highlights importance of short-term rate path for financial asset prices – something he says will reflect changes in economic outlook and financial conditions
IMF deputy warns ‘leakages’ could undermine macro-prudential policy
Mitsuhiro Furusawa says macro-prudential tools could force financial activities into a less regulated sector or country, but adds little is known about benefits of ‘leaning against the wind’
IMF paper urges central banks to adopt sharia-compliant facilities
Authors warn lack of sharia-compliant monetary policy tools is hampering efficient liquidity management among Islamic banks, but is an area that requires further research
BoJ paper outlines idea of ‘natural yield curve’
Curve defines level of natural rate of interest at all maturities; authors suggest it provides a ‘useful benchmark’ for the conduct of monetary policy