United States
US Phillips Curve “not broken” – IMF paper
Working paper finds economic behaviour since the crisis reflects different sources of disturbances, and not a change in the dynamics of the Phillips curve
Fed’s Tarullo looking for more evidence on inflation
Daniel Tarullo wants to see more convincing evidence that inflation is returning to target before tightening monetary policy; headline and core PCE inflation are still below target
Rate delay could deprive Fed of tools in future, warns Mester
Cleveland Fed president says there is a “non-negligible chance” unconventional tools will be deemed as “ultimately ineffective” by the public if the Fed is too slow to normalise policy
Two banks fail Fed’s annual stress tests
Most bank holding companies pass the Comprehensive Capital Analysis and Review, but Deutsche Bank Trust Corporation and Santander Holdings USA pulled up for “substantial weaknesses”
IMF paper examines factors affecting US wage growth
US labour market changing “more fundamentally” than before, author finds; wage growth expected to accelerate in near term
Fed’s Powell sees potential for ‘new headwinds’ in Brexit
Governor says global risks to US outlook have increased in the wake of the UK’s vote to leave the EU
Effective lower bound has ‘tail risk’ influence on monetary policy, ECB paper argues
The ‘tail risk’ induced by the possibility of rates reaching their effective lower bound can cause serious undershooting of inflation targets, an ECB working paper argues
News impacts stock prices through more than transient sentiment, paper finds
Working paper uses textual processing to examine more than 900,000 news stories; negative stories have a longer and more delayed reaction, authors find
Yellen says July hike ‘not impossible’ as Fed holds
Fed keeps policy unchanged as widely anticipated; expected path of interest rate hikes becomes more gradual while the long-run level is revised down again
Oil price falls may have negative effects on global economy, ECB warns
Falling oil prices may negatively affect global GDP growth and could threaten financial stability across emerging markets, ECB bulletin says; demand not supply now main pressure on prices
Low rates driving up housing share of income – RBA paper
Share of aggregate US income from capital is on the rise, and housing accounts for a large portion; low nominal rates explain strong demand for housing, economist argues
Yellen upbeat but concerned by weak jobs data
Janet Yellen expects continued progress to Fed’s objectives; says latest labour market report is “concerning” but warns against reading too much into it
US jobs report puts Fed hike expectations on ice
Small increase in non-farm payrolls leads market to all but write off prospect of a rate hike later this month; Lael Brainard and Eric Rosengren keen to see more data
Financial crises raise transmission of US spillovers to Latin America – paper
Central Bank of Colombia paper shows Brazil is a “net transmitter” of volatility; transmission of spillovers increases in times of political and financial uncertainty
Kohn encourages Chinese efforts on financial stability
Don Kohn, an external member of the Bank of England's FPC, welcomes Chinese work on a framework for macro-prudential regulation, and offers his insight on counterparts in the UK and US
Researchers propose new measure for US fixed-income market liquidity
Authors say it is the first index to apply financial stress indicator methodologies to both US government and corporate debt securities
June hike an option but Fed officials split on prospect
Minutes from FOMC meeting in April show “most” participants happy to hike next month if incoming data continues to improve, but some suspect gains may not come fast enough
Colombian paper sees role for international co-ordination of housing policy
This may be needed where national policies have “important” cross-border effects; discusses macro-prudential policy and capital controls
Central bankers may talk too much, economist warns
The public's limited attention span might distort the intended message, publication warns; central bankers might consider talking less and delivering a more succinct message when they do
Mester favours ‘error band’ around FOMC projections
Cleveland Fed president Loretta Mester would like to some kind of “error band” introduced around FOMC projections, to reflect the uncertainty the committee is grappling with
Traditional banks played leading role in creating US credit boom, paper finds
Traditional banks played a larger role than ‘shadow’ banks in originating US loans in the lead-up to the financial crisis, paper published by Deutsche Bundesbank says
Building a fast, flexible and free DSGE model
A team at the New York Fed is part way through translating its DSGE model into Julia, a fast, open-source mathematical programming language
Meltzer criticises Burns and Bernanke over Fed independence
Allan Meltzer criticises the former Fed chairs for giving independence away; wants to incorporate a rule into policy-making, while Peter Conti-Brown favours governance reforms
Fed board gets financial stability division
The office of financial policy and research, established in 2010 to co-ordinate work across the board, is reclassified as a financial stability division; Fed cites “growth in responsibilities and staffing”