Monetary Policy
Riksbank deputy debates inflation target change
Cecilia Skingsley weighs up case for both lowering and increasing target; notes it would be easier to change target if several central banks did it at the same time
Mario Draghi urges reform to ‘unleash’ eurozone potential
ECB president highlights importance of the credibility and type of structural reforms, as well as their interaction with other policies; Stanley Fischer points to ‘missing fiscal framework’
BoE’s Weale warns MPC may have underestimated oil price impact
A failure to grasp the full importance of ‘tail events’ may have caused the monetary policy committee to underestimate the strength and duration of the oil shock’s impact on inflation, Weale says
Balance sheet policies may not be enough to lift expectations, Dutch research finds
Working paper analyses the impact of credit and quantitative easing policies on inflation expectations, finding central banks may need to do more to lift them
ECB research finds Greenspan's Fed responded aggressively to uncertainty
Working paper finds the Federal Reserve under Alan Greenspan took stronger action as economic uncertainty rose. In fact, risk seems to have been more significant than ‘conventional’ variables
Noyer says ECB ‘ready to go further’
Banque de France governor says monetary policy is doing its job and requires time to take effect, but more easing is available if necessary
BIS committees highlight broad monetary effects of regulation
Committees offer suggestions for mitigating the impact of new regulations on the conduct of monetary policy, but say the effects will largely be ‘limited and manageable’
Poloz sees full capacity and 2% inflation in 18 months
Bank of Canada governor describes the destination the Canadian economy is moving towards, as well as the roadmap for getting there
Historic BoE minutes shed light on troublesome money supply targets
Court minutes from the era of money supply targeting highlight the central bank’s struggle to control inflation amid unclear indicators and an occasionally fractious relationship with government
Rajan suggests IMF as watchdog for unconventional policy
RBI governor says central banks should not discard international responsibilities in favour of domestic mandates; says IMF could police unconventional monetary policy
IMF researchers explore central bank security issuance
Working paper finds low-income countries may struggle to issue central bank securities on account of the administrative costs and infrastructure demands
Minutes show RBA could still ease further
Board members feel the decision to drop guidance that further easing ‘may be appropriate’ does not limit the ‘scope’ for them to cut rates further
CPI not ideal for comparing inflation rates, research finds
Economist at Sveriges Riksbank says CPI is a good measure of inflation but is ‘not well suited’ to making international comparisons of inflation rates
Euro tumbles as ECB accelerates asset purchases
Euro slides against the dollar as market reacts to ECB’s plan to ‘moderately front-load’ its asset purchases; Cœuré concerned by ‘rapidity’ of price reversal in sovereign bonds
ECB’s Cœuré says higher inflation target not solution to zero lower bound
Benoît Cœuré says raising the inflation target or abolishing the currency is not the right way to make monetary policy more effective; structural reforms a better use of political capital
Minneapolis Fed essay suggests new focus for FOMC comms
Sam Schulhofer-Wohl argues the FOMC should talk more about what it is trying to accomplish with its monetary policy; Minneapolis Fed staff rewrite January statement to illustrate point
Mexican deputy cautious of data-dependent Fed policy
Manuel Sánchez sees potential for smooth tightening if markets are able to price in rate changes, but remains alert to risk Fed is pushed into acting faster than planned
Evans: Fed must keep rates low to protect target symmetry
Chicago Fed president sees no serious costs with ‘modestly overshooting’ 2%, but is concerned about potential damage to inflation expectations of tightening too soon
In search of a better measure of inflation
Hedonic adjustments offer a way of tackling bias in the CPI, albeit at a cost, but new research suggests even these may be misrepresenting inflation – with broad implications for the economy
Kuroda reviews QQE two years on
Bank of Japan governor says policy is working as intended, and even though inflation has fallen to zero, prices should soon ‘accelerate toward’ the 2% target
Bank of Canada plans changes to operating framework
Changes would see Canadian central bank cut back on purchase of government bonds through primary market, while intervening less frequently in overnight market
Mario Draghi sees large toolkit as ‘standard’ in 2020
ECB president tells Olivier Blanchard the central bank will retain a broad set of monetary instruments in five years’ time; insists QE will not be tapered early
Kazakhstan proposes sweeping changes to monetary policy framework
Central bank plans root-and-branch reform of its monetary policy with move to inflation targeting to be accompanied by revamped governance, communications, economic modelling and more
RBNZ paper investigates changes to inflation expectations after oil price shocks
Research suggests changes in expectations following real oil price shocks have ‘little or nothing to do with actual inflation outcomes’