Central Banks
Argument for raising rates has ‘strengthened’, says FOMC
Federal Reserve to keep rates on hold “for the time being”; Rosengren switches camp again despite warning that keeping rates on hold could be detrimental to recovery
Central Bank of Egypt devalues currency
Egyptian pound falls 32% as central bank moves to align official and black market rates; IMF mission chief welcomes additional exchange rate flexibility
Bank of England MPC backtracks on planned rate cut
Latest inflation report forecasts larger overshoot of 2% target; there are “limits” to the extent to which above-target inflation can be tolerated, committee says
Irish central bank levies record fine for AML and CFT breaches
Failures occurred over “extended period of time”, central bank says; case highlights need for controls over outsourcing of AML/CFT functions, says enforcement chief
More research needed on exchange rate pass-through, ECB article says
Research on effects of different shocks on inflation “still in an incipient phase”
People: Furse leaves BoE FPC; Bank Negara appoints sharia advisors
Furse leaves BoE for new role at HSBC; shariah advisory council appointed for new term at Bank Negara Malaysia; and more
Central clearing boosts welfare but margin matters – RBA paper
Study shows how central counterparties boost welfare by insuring against counterparty credit risk, but gains are sensitive to the level of margin
Netherlands paper looks at market reaction to Fed forecasts
Implied forecasts of inflation affect market expectations, paper finds
East Africa inches closer to monetary union
Progress report indicates some reform but many remaining issues; IMF officials flag problem areas and offer advice on shape of financial stability authorities
Riksbank paper shows importance of modelling bank costs
Models should not assume financial intermediation is free, authors say, showing banks can reduce aggregate welfare in some cases
EBA recommends changing basis of resolution finance
“Crucial” that new measure reflect ability to call on funds in case of resolution crisis, EBA says; new measure should be based on total liabilities
Oil price rises and US GDP growth have ‘complex relationship’ – paper
Paper studies interaction of oil price and economic growth in US from 1875 to 2016
Malaysia has work to do to improve renminbi hub status – assistant governor
Adnan Zaylani Mohamad Zahid says deepening Malaysian renminbi markets is a priority, and the central bank has plans to offer support
Carney to be grilled on exit timing
MPs plan to question Mark Carney on how, for a second time, he has managed to circumvent UK law designed to fix the length of a Bank of England governor’s term
Serbia lowers inflation target for next two years
Inflation has been “close to or below” lower bound of official target rate for over two years; tightening follows decades of major inflation
Egypt PM signals move to unify exchange rates
Sherif Ismail tells parliament central bank will soon unify black-market and official rates; IMF moving closer to agreement on funding
BoJ pushes back forecast of 2% inflation
Central bank admits it will take longer than previously expected to hit 2%, as it keeps monetary policy on hold
Payments changing fast but cash still in demand – Riksbank survey
Telephone survey finds cash use declining and mobile payments on the rise, though demand for paper money not likely to disappear any time soon
Carney will remain at BoE until 2019
BoE governor chooses to extend term at central bank an additional year amid intense speculation as to his future, though he stops short of a full eight years
Brexit may not lead to ‘new dominant location’ for European finance – Irish governor
Regulatory considerations should not drive firms’ location decisions, Lane argues
Carney’s decision is bigger than one man’s career
Politicians in the UK have already harmed perceptions of the Bank of England’s independence through a sustained attack on its governor, Mark Carney. His decision to stay or go will have wide ramifications
Obstacles may worsen for Russian and Turkish financial reformers, Italian paper says
Reforms in both countries left key problems unaddressed, researchers say
Ugandan governor emphasises banking system is sound
Tumusiime-Mutebile steps in to calm investors, dismissing negative reports following the acquisition of Crane Bank; banking system is “stable, sound and profitable”, he says