Forward guidance
Verbs matter in forward guidance – Italian paper
Researchers look at verbs used in ECB statements from 2002 to 2015
Asset purchase programme is key to central bank credibility – ECB paper
Researchers analyse market reactions to unconventional monetary policy decisions
Wheeler hits out at commercial bank for unforgiving commentary
RBNZ governor says commentary threatens its integrity, damaging the central bank and financial markets; former RBNZ official says Wheeler overreacting
Governors think unconventional tools may not stay – ECB survey
Advanced economies’ governors are more likely to favour keeping QE tools
No ‘taper tantrum’ this time around – Fischer
Fed vice-chair says US central bank has learned from mistakes made in 2013; markets unlikely to face same disruptions as Fed unwinds balance sheet, says Fischer
Uncertainty matters for forward guidance success – BoE paper
Authors show that introducing uncertainty generates significantly different macroeconomic effects, with implications for policymaking
BoJ economists seek best escape route from liquidity traps
Some policies are more effective than others, but a combination can generate stronger effects, researchers find
Carney faces grilling from parliament in wake of tenure decision
Regardless of Brexit timetable, BoE governor will leave on June 30, 2019; he warns firms could trigger plans to leave London in late 2017 if Brexit deal proves unsatisfactory
BoE seen as ‘boxed in’ ahead of MPC vote
Forward guidance from MPC members has laid the ground work for a rate cut or other form of easing; even if the effect of a cut is minimal, a hold decision would be worse, says former committee member
Menon pledges tougher measures on AML controls in Singapore
Ravi Menon says central bank will conduct more intrusive probes of higher-risk institutions and take stronger actions where practices fall short; monetary policy likely on hold for 2016
BoJ paper models impact of guidance on expectations
Announcing forward guidance before reaching the effective lower bound can help to “positively influence” inflation and output growth, the author finds
Kansas Fed researchers bridge gap between forward guidance data and theory
Working paper identifies empirical effects of guidance at the zero lower bound, before finding a standard model of price rigidity largely replicates the results
Bank of Canada adds negative rates to toolkit
Central bank publishes new framework for monetary policy when interest rates are approaching zero, suggesting the overnight rate could be cut as low as -0.5%
Threshold-based forward guidance can work at the zero lower bound, BoE paper says
Private sector industries have to understand how threshold-based forward guidance will be used in order for it to be effective, BoE working paper notes
Heterogeneous beliefs may weaken effect of forward guidance, paper argues
Fixed-date and state-contingent guidance by the Federal Reserve led some market expectations to converge, but heterogeneous beliefs about inflation and consumption persisted
Dutch paper says theory of forward guidance must catch up with practice
Economists from the Netherlands Bank argue so-called Odyssean communication ‘does not exist in practice’ as central banks want to avoid committing themselves to a particular set of actions
Poloz: volatility not a reflection of central bank credibility
Canadian governor – greater volatility is a ‘natural reaction’ to central banks gearing up to normalise monetary policy; highlights cost of using forward guidance
Cleveland Fed’s Mester sees guidance as 'comms device'
Loretta Mester believes the Fed should stop using forward guidance as a policy tool when economic conditions have normalised and stick to setting out its reaction function
FOMC forward guidance adds to 'market confusion', say leading US economists
The Fed lacks 'clearly formulated' normalisation strategy, paper to be published by Central Banking argues; calls for adherence to 'disciplined inflation targeting rule'
Eichengreen says central banks should worry more about deflation than 'profits and losses'
The Berkeley professor on what last week's SNB move says about big central banks 'wrong-footing' markets and the Fed's problematic response to financial crisis
FOMC member says ‘very low' inflation provides ‘ample justification' for patience on rate hike
Eric Rosengren highlights ‘unusual set of conditions' as Fed looks to normalise policy stance; says low inflation globally may prompt an atypically gradual normalisation process
Fed signals rate hike despite drop in inflation
Minutes suggest Fed will tighten policy despite expecting inflation to remain below target for 'some time'; rate hike unlikely for 'at least the next couple of meetings'
Bank of Israel researchers propose exchange rate-based forward guidance
Researchers say forward guidance has a mixed track record, especially in small open economies, but linking guidance to external factors would help improve credibility
Cleveland Fed president sees forward guidance evolving in normal times
Loretta Mester suggests it will focus less on when policy will be changed and ‘more on the rationale for policy decisions’; sees FOMC summary of economic projections playing ‘central role’