Interest rates
Central banks should consider financial stability when setting monetary policy, finds BoJ paper
Discussion paper published by the Bank of Japan argues the risk-taking channel of monetary policy has ‘become more important’ as financial intermediation has moved to markets
Belarus central bank handed 12% inflation target
President of Belarus expects inflation to fall from 20% to 12%, while the central bank simultaneously reduces its policy rate by at least 500 basis points
Brazil hikes rate but will deploy further measures ‘sparingly’
Central Bank of Brazil increases key interest rate by 50bp to 11.75% and says it will use additional measures ‘sparingly’; economists expect tightening to stop early 2015
PBoC action ‘lays foundation’ for liberalisation
Central bank emphasises movement towards interest rate liberalisation, saying last week’s rate cut was designed to combine financial reform and monetary policy
PBoC cut fails to impress but more action on the cards
Economists say first cut in two years likely to have weak effect at best, but PBoC may have to take stronger action going forward as economy worsens
Bank of Canada weighs inflation target increase
Consideration should be given to an inflation target that is above 2%, deputy governor argues; says lower neutral interest rate could lead to ‘non-trivial’ increase in ZLB episodes
Bank Indonesia raises interest rates in ad hoc meeting after fuel price rise
In an unexpected meeting, the Bank of Indonesia decided to raise the interest rate to 7.75% to tackle inflation, after the government raised fuel prices by more than 30%
St. Louis Fed’s Bullard doubts zero lower bound
James Bullard says low inflation in the US may justify a ‘somewhat lower-than-normal’ policy rate, but not remaining at the zero lower bound
Plosser: central bankers should take ‘great care' in changing view on neutral interest rate
Distinguishing transitory from permanent changes in growth and real interest rates is a ‘tricky task', says Philadelphia Fed president and FOMC member
RBA’s Stevens highlights challenges as rates stay on hold
Monetary policy statement registers some concern over risks originating from Chinese housing, heightened volatility and a high Australian dollar, but rates kept steady
Bank of Russia hikes interest rates to stem ruble sell-off
Central bank raises key rate by 150bp to highest level since 2009 as currency reaches record low against dollar; spent $3bn propping up ruble on October 29
BoE’s Cunliffe says odd behaviour of labour supply demands caution
Deputy governor points to possible ‘shift in the psychology’ of workers who have come to accept low pay, which he says calls for the central bank to be cautious about raising rates too soon
Productivity gains in the banking industry affect interest rates, study finds
More productive banks set lower interest rates on loans and higher rates on deposits, increasing their market share, according to a study by the Bank of Spain
Sarb launches investigation into forex traders
Central bank joins growing list of regulators concerned by potential for misconduct among foreign exchange market practitioners
Rajan overruled external members’ call for rate cut in September
External members on RBI’s technical advisory committee see the case for easing, and the majority voted for a rate cut in September; deputy governor portfolios shaken up
Broadbent: Neutral real rates will stay low for ‘some time’
Bank of England deputy governor Ben Broadbent expects neutral real rates of interest to rise ‘eventually’, but expects them to remain low ‘for some time yet’
BoE minutes hint at dovish shift
Committee still split 7-2 in favour of holding rates, but language takes a more dovish tone with housing market and external environment providing cause for concern
RBA’s Lowe wants more market appetite for ‘real investments’
Deputy governor says key to returning growth and monetary policy to normality is persuading investors to create new assets rather than pumping up the prices of existing ones
Fed paper models impact of return to normal rates
Discussion paper studies the likely effect of returning interest rates to more normal levels; finds different combinations of tools would have different effects on financial intermediation
French paper examines impact of ECB policy changes on asset prices
Working paper considers how ‘policy shocks’ affected short-term interest rates, as well as the expected future path of short-term interest rates, between 2002 and 2013
BoE’s Weale posits method of overcoming uncertainty
MPC member says studying rates of change can help overcome uncertainty about spare capacity and the natural rate of interest when setting policy
Debelle surprised markets take central banks at their word
Reserve Bank of Australia assistant governor suggests markets are ‘underestimating’ the possibility that central banks will change course in response to ‘unexpected’ data
Bank of Korea turns focus to stability threats after rate cut
Bank of Korea cuts rates to historic low, but shift in language indicates growing concerns over financial stability
Fischer says Fed ‘better think about’ international spillovers
Fed vice-chair says international effects of monetary policy ‘spill back’ on to the US, and the central bank cannot make ‘sensible’ choices without taking them into account