Interest rates
Fed officials emphasise risks despite improving outlook
“Risk management” approach to policy needed despite improving outlook, say Evans and Kashkari; Bullard notes balance sheet adjustment also an option for tightening
IMF gives thumbs up to Indonesia’s new monetary operating framework
Interest rate corridor and switch to new policy rate has improved monetary policy transmission, early data shows, but further reforms could strengthen framework further
RBI highlights bad debts as it holds rates
Surprise hold as committee sees “very sticky” core prices and global effects; central bank may create a ‘bad bank’ to tackle NPA problem
Fed paper flags risk of low rates misallocating capital
Where firms rely heavily on intangible capital, lower rates could harm firms’ investment and contribute to secular stagnation, economists warn
Kazakhstan’s Akishev sets sights on lower inflation
Governor hails success with inflation targeting and says central bank now plans to push inflation even lower; NBK also working on new banking supervision framework
Kenya’s monetary policy framework under threat – IMF
New interest rate caps are “constraining” the central bank’s ability to conduct monetary policy while negatively affecting banks’ profitability, but action plan could see them eliminated
BoE signals extra slack as it revises growth outlook upwards
Mark Carney indicates the MPC is willing to keep rates on hold, although risks may emerge as details become clear about the UK’s EU departure; UK government publishes a white paper on Brexit
Only ‘gradual’ increases in interest rates on the cards at the Fed
FOMC members think only “gradual” adjustments to monetary policy are warranted; current pace will strengthen the labour market and see inflation rise
Central Bank of Kenya halts reference rate calculation
Rate made redundant by interest cap, Njoroge explains, as banks prepare for the new arrangement; central bank maintains interest rates at 10%
Tight policy keeping a lid on inflation – Central Bank of Iceland
“Steep” pay increases and rising house prices keep the central bank on alert; report warns the situation could easily change
Yellen: Fed asset holdings provide automatic policy tightening
Downward pressure on long-run rates is expected to diminish, making the need to hike short-term rates less pressing, the Fed chair says
Yellen: Fed expects rates to hit long-run level by end-2019
Fed chair warns there could be a “nasty surprise” down the road if policymakers wait too long to raise rates
Central Bank of Brazil discussed smaller hike at December meeting
Copom weighed a 50bps cut, but chose to “frontload” monetary easing, given anchored expectations and promising outlook for inflation
Brazil ups pace of easing as inflation drops
Size of cut surprises observers, though inflation proves more favourable than expected; rates still rising in real terms
Thai governor calls for rethink of monetary policy frameworks
New structure should systematically acknowledge the negative impact of monetary policy; Santiprabhob recognises macroprudential cannot take all the strain
Fed could raise rates faster than anticipated, minutes show
Prospect of undershooting the longer-run employment target has increased, the FOMC reports, but expansionary fiscal policies should improve growth prospects
Riksbank extends QE, despite dissent
Additional Skr30 billion of purchases takes Swedish QE programme to mid-2017; central bank cites continued risks to the outlook, but three members challenge decision
Chile notes health of domestic economy has declined
Latest financial stability report highlights the lack of profitability in the banking sector; institutions’ ability to cope with adverse external scenarios has “diminished”
FOMC signals hawkish outlook as it hikes
Dot plot shifts upward and projection implies members expect further hikes in 2017; Janet Yellen says fiscal stimulus “not obviously needed”
Netherlands paper exposes differing capital flows across EMU
Paper examines the mechanism behind divergence of north and south eurozone members, as capital flows caused external imbalances to move in opposite directions
Icelandic paper finds evidence of rising natural rate
Authors attempt the notoriously difficult process of estimating the natural rate, using various models; rate appears to be on the rise
ECB will stay in asset markets - Draghi
Asset purchases will continue, but at a lower monthly rate; ECB to accept cash as collateral in securities lending programme
BoE’s Salmon seeks to fix deadline for delayed Libor replacement
Chris Salmon sets three-month target to finalise transition plan and reach decision on design for risk-free rate
Central Bank of Brazil says ‘intensification’ in pace of monetary easing might be warranted
Some members of the committee said there could be room for a larger rate cut, minutes show; slowdown in inflation and implementation of government fiscal policies prompted 25bp cut