Inflation targeting
Negative rates working as planned, says Riksbank’s Cecilia Skingsley
Transmission of negative rates is working well and there is room to ease further, deputy governor says, despite the possibility of unwanted side effects; changing inflation target a ‘bad idea’
National Bank of Kazakhstan sets base rate for first time
Central bank sets new benchmark interest rate at 12% in first monetary policy meeting under inflation targeting framework
Case for higher inflation targets takes a knock at Jackson Hole
Thomas Jordan warns higher inflation ‘likely to be associated with considerable costs’ in longer run; academics see little benefit in the Federal Reserve targeting 4%
Inflation targeting should be improved, not replaced, RBA paper says
Rather than a ‘fundamental re-engineering’ of inflation targeting, central banks should adopt a flexible approach that pays some heed to output, authors argue
Sarb research updates forecasting model
Refinements to central bank’s semi-structural general equilibrium model aim to better reflect the South African economy over the inflation-targeting period
Nobel economist Sims on fiscal stimulus, Eurozone loss sharing and role of central banks
The Nobel laureate speaks with Christopher Jeffery about his scepticism regarding secular stagnation, the eurozone’s failings and the need for inflationary fiscal stimulus at the zero lower bound
Bank of Korea researchers dig into disaggregated data on inflation targeting
Adopting inflation targeting in Korea lowered the mean, volatility and persistence of inflation throughout the country, but a look at disaggregated data reveals more about transmission
RBI could see interest rate powers diluted by MPC proposals
Indian government publishes draft law that would establish an MPC dominated by external members; investment bank economist concerned by shortage of potential candidates
Weidmann does not see case for higher inflation targets
The Deutsche Bundesbank president points to welfare costs of higher inflation target, and argues in favour of structural reforms that boost productivity and deliver higher trend growth
BoJ paper finds short and long-term expectations are anchored differently
Inflation expectations respond differently to changes in policies and inflation depending on whether they are short- or long-term, researchers find
Fischer warns developing countries may not be ready for inflation targeting
Fed vice-chair tells audience of African central bankers no framework is ‘suitable for all countries for all times’ and cautions against adopting inflation targets before financial markets are ready
IMF paper offers advice on transition to inflation-targeting regimes
Guide to switching monetary policy regime recommends gradual approach to ‘buy time’ for central bank adaptation
NBER paper seeks better model of trend inflation
James Stock and Mark Watson use disaggregated data on sectoral inflation with time-varying weights, finding this can produce a more accurate model of inflation’s long-term trend
New Zealand paper calls for clearer financial stability aims
Researchers argue more guidance is needed on how and when macro-prudential policy will be used, pointing to the lack of hierarchy between distortions
Governor wants freer thinking at 65-year-old Bank of Korea
Juyeol Lee hints at coming shake-up, calling for openness to ‘creative ideas’ as central bank prepares to set new inflation target
Jeffrey Frankel argues for NGDP targeting by EMs
Monetary economist says targeting nominal GDP could allow emerging and developing countries to more credibly establish a nominal anchor
St. Louis Fed’s Bullard makes case for NGDP target
Working paper questions appropriate monetary policy response at zero lower bound and explores the mechanics of a ‘special upward adjustment’ in the price level on credit market
Riksbank deputy debates inflation target change
Cecilia Skingsley weighs up case for both lowering and increasing target; notes it would be easier to change target if several central banks did it at the same time
ECB’s Cœuré says higher inflation target not solution to zero lower bound
Benoît Cœuré says raising the inflation target or abolishing the currency is not the right way to make monetary policy more effective; structural reforms a better use of political capital
Evans: Fed must keep rates low to protect target symmetry
Chicago Fed president sees no serious costs with ‘modestly overshooting’ 2%, but is concerned about potential damage to inflation expectations of tightening too soon
Kazakhstan proposes sweeping changes to monetary policy framework
Central bank plans root-and-branch reform of its monetary policy with move to inflation targeting to be accompanied by revamped governance, communications, economic modelling and more
San Fran Fed research analyses link between inflation targeting and growth
In an economic letter, two researchers find developing economies tend not to experience the same short-term bump in growth rates as advanced economies after adopting a target
Nothing magical about targeting 2%, Bernanke says
Former Fed chair calls for further research on ‘alternative intermediate targets’ for monetary policy during IMF panel; will work with hedge fund Citadel as adviser on range of topics
Bank of Finland paper tests price-level based forward guidance
Seppo Honkapohja and Kaushik Mitra use ‘adaptive learning’ approach to show price-level targeting can outperform inflation targeting under some circumstances