Monetary Policy
The puzzle of monetary policy
The centrepiece of macroeconomic management, inflation targeting by central banks, remains virtually unchallenged despite the crisis of the past five years. This needs to change, argues John Gieve
Where the BIS falls short
Robert Pringle compares the analysis and policy recommendations offered by the BIS in its latest annual report with those in his new book, The Money Trap
The beginning of the end for renminbi internationalisation?
The People’s Bank of China has surprised market watchers by taking critical steps to liberalise the renminbi and interest rate policy in the country
Keeping sight of the real inflation target
The appropriate construction of CPI indexes is vital to maintain public confidence in inflation targets. Jill Leyland points out issues in current index construction
Can Japan afford to grow?
Japan has managed to maintain living standards during its two ‘lost decades’, but its efforts to do so now represent obstacles to achieving sustainable growth. By Ryo Watabe.
Central Bank of Chile paper tests inflation forecast models
Working paper compares inflation forecast accuracy of new autoregressive model and “traditional” univariate models; finds improvement in short run but mixed results over longer horizon
BoJ’s Shirakawa calls for 'drastic deregulation' to promote growth
Masaaki Shirakawa sets out possibilities for encouraging increased investment to promote growth and inflation expectations; firms reluctant to borrow despite monetary easing
Former MPC member blasts “unduly powerful” future BoE governor
Ex-MPC member Kate Barker says new macro-prudential policy-maker should not be independent of government; shake-up of banking regulation system in the UK will leave governor too powerful
RBI minutes show disagreement over policy direction
Minutes of the Reserve Bank of India’s July meeting reveal divergent views on monetary policy; however members agree government is best placed to address weak growth and high inflation
BoE weighs distributional effects of QE
Paper assesses impact of quantitative easing on overall economy and examines distributional effects; finds main benefits for holders of assets and well-funded pension schemes
Macedonia seeks to influence expectations
National Bank of the Republic of Macedonia unveils new research programme; hopes to improve communication to better manage expectations
Bank of Namibia cuts rates due to uncertain economic outlook
Central bank reduces benchmark rate by 50 basis points; says cut necessary to support economy despite inflationary pressure and “rapid” growth in consumer credit
South African paper assesses micro data and policy responses
Sarb working paper explores pricing conduct at a micro-data-set level and how this affects monetary policy; finds results diverge from Bayesian estimation techniques
ECB paper finds new commodity transmission link for inflation
European Central Bank working paper explores relationship between demand shocks and inflation; reveals commodity prices indirectly magnify the effects
Some CPI indexes inappropriate for inflation targeting, says Leyland
Royal Statistical Society vice-president Jill Leyland assesses difficulties in constructing accurate inflation indexes; says consumer price indexes will “never be far from controversy”
Robert Pringle’s Viewpoint: Restoring trust in finance
The financial crisis and numerous scandals have shattered confidence in banks and financial markets. What can central bankers do to restore trust in the financial system?
Central Bank of Chile holds rates as currency appreciates
Benchmark interest rate left at 5% amid international uncertainty and appreciating peso; first time currency’s gain has been highlighted since dollar-buying programme
Bank of Canada estimates measurement bias in CPI
Article assesses degree of bias in the consumer prices index; suggests more frequent updating of goods basket would allow for more accurate measurement
IMF paper studies monetary impact of household production
Working paper designs model that adds a household sector to the economy, which competes with firms in the service sector; finds this amplifies the transmission of monetary shocks
CNB paper shows power of inflation targeting
Czech National Bank working paper shows inflation targeting can lead central banks to offset government spending shocks; can also have disciplinary effect on fiscal policy
Central Bank of Colombia minutes reveal divide over interest rates
Minutes from the central bank board’s July meeting gives details of reasons for members’ difference of opinion over interest rate decision; board committed to maximising employment
BoE minutes show MPC left out rate cut discussion
Possibility of cutting benchmark interest rate was not discussed at latest MPC meeting; policy-makers decided to keep rate and quantitative easing steady
BoJ minutes reveal cautious positivity about global risks
Minutes of Bank of Japan’s July monetary policy meeting shows some optimism over global risks; members vote unanimously to hold rates and adjust asset purchases
Central Bank of Tunisia report explores impact of revolution
Annual report for 2011 reveals a sharp drop in production and exports post-revolution; economic growth fell to -1.8%, says central bank