Expectations
Agustín Carstens on BIS strategic priorities, innovation and central bank policy
The BIS general manager speaks about policy trade-offs at critical time, tackling NBFIs and the dearth of ‘green’ assets, tech collaboration, and why he favours Biden’s $3.5trn infrastructure bill
Central banks set monetary policy around eight times a year
African central banks reported setting monetary policy less frequently than peers
Majority of central banks do not take account of forecast errors
Surveys of inflationary expectations used widely, alongside macroeconomic and market indicators
Too great expectations from the ECB’s strategy review
The review process represents operational best practice, but will fail to unify the Governing Council
Is the ECB’s strategy review enough?
The reformed framework may allow greater stimulus to tackle weak inflation expectations, but the Governing Council is already divided on what to do next
Fed decisions barely noticed by households – BIS paper
Researchers find even major events have only a muted impact on household inflation expectations
An assessment of the ECB’s strategy review
A number of aspects of the new framework raise challenges for implementation and credibility, while the inclusion of climate change may politicise the institution, writes euro architect Otmar Issing
The evolution of the renminbi
Central Banking speaks to five policy-makers about their thoughts on the prominence of the renminbi within central bank reserves following its inclusion in the International Monetary Fund’s special drawing rights.
Communications Benchmarks 2021 report – executive summary
Insights into staffing and salaries, channels, social media, new technology and strategies
Bank of Russia increases policy rate 100bp
Central bank announces fourth rate hike of year amid rising inflation expectations
The ‘golden age’ of central banking has passed
Central banks face multi-faceted challenges and weakened autonomy amid highly polarised inflation expectations
Paper analyses eurozone consumers’ inflation expectations
Short-term views, trust and Covid-19 shaped medium-term expectations – Bank of Finland paper
Communications often involved at early stages of central bank policy
Most central banks say comms teams are involved in early planning stage of policy decisions
Fintech communication is most challenging for central banks
Central banks view fintech as greatest challenge, but rate monetary policy communication highly
Charles Goodhart on inflation targets, financial stability and the role of money
The LSE professor says inflation targets should have been 0%, the Fed’s move to AIT is a mistake, independence is under threat from inflation, big balance sheets support liquidity, AI can help supervisors and climate stress tests are unconvincing
A return of the inflation monster?
There are fears that a shift in intellectual approach towards running economies ‘hot’ could herald a return of the money-eating inflation era
Firms are ‘inattentive’ to inflation and monetary policy – NBER paper
Authors present new survey data indicating firms’ expectations are “anything but anchored”
The future of forward guidance
BNP Paribas Asset Management explores the current landscape around forward guidance, focusing on how central banks’ methods of communication are likely to evolve in the future. By Richard Barwell
Fed plays down US economic rebound
Powell says economy still “a long way from our goals” as FOMC holds policy steady
The evolving ‘strategy function’ in central banks
Some institutions participating in a survey of 27 central banks still struggle to fully harness an effective ‘strategy function’, according to the ECB’s Jean-Charles Sevet and Alejandro de la Cuesta
A rebuttal of Philip Turner’s criticism of the BIS ‘house view’
Robert Pringle critiques the key findings raised in Philip Turner’s occasional paper, ‘The new monetary policy revolution: advice and dissent’
Central bank of the year: The Federal Reserve System
Overwhelming Fed interventions in March 2020 forestalled a damaging global financial crisis, as policy overhaul prompts introspection in Europe and Japan
Bundesbank paper looks at German inflation expectations
Social media forms less realistic picture of current price levels than traditional news – researchers
Firms and consumers form expectations differently – Irish paper
Confidence leads eurozone firms to expect higher inflation, but consumers to expect lower, says research