Interest rates
RBA’s Lowe sees altered transmission mechanism behind low inflation
Inflation remaining stubbornly low despite record levels of monetary stimulus seems to be down to changes in the monetary transmission mechanism, deputy governor says
Ongoing reports of recovery add little to FOMC debate
Latest Beige Book shows economic activity expanding at a steady pace, while Esther George and Charles Evans take different sides in the FOMC’s inflation debate
Fed officials debate research on equilibrium real rates
Research presented at US Monetary Policy Forum says uncertainty around equilibrium rate means the Fed should delay tightening policy; Loretta Mester and William Dudley discuss findings
RBI gets formal inflation target
Reserve Bank of India tasked with getting inflation below 6% by January and handed a 4% target to chase from then; governor retains sole responsibility for setting monetary policy
Richmond Fed article questions use of dove and hawk to describe policy-makers
Article in Richmond Fed’s economic magazine argues the terms simplify the disagreements on the FOMC; says the idea of a split between two camps is ‘likely to persist’
Czech paper finds mixed evidence of spillovers from ECB unconventional policies
Impact of spillovers depends on whether the policy is conventional or unconventional, and has a larger impact on inflation than on growth, working paper finds
State Bank of Pakistan mulls new target rate
New proposals aim to establish a new ‘target rate’ within the existing interest rate corridor; advisory committee on monetary policy will decide whether to adopt them next month
Riksbank board uncertain about negative rate limits
Minutes from executive board meeting that led to negative rates and quantitative easing reveal uncertainty about where floor for repo rate might be
Poloz calls for ‘reinvention’ of central banking
Bank of Canada researching changes to its inflation targeting regime; Poloz asks how best how to incorporate financial stability into framework and avoid ZLB episodes
Forbes asks if BoE’s ‘Midas touch’ has been tarnished
MPC member says low interest rates carry various risks, including falling productivity and rising inequality, but argues the evidence is mixed and such factors are outside the BoE’s mandate
Yellen sheds light on lift-off communication
Fed chair discusses how the Federal Reserve will communicate its thought process on policy normalisation; rejects FOMC reform and Audit the Fed bill in congressional hearing
Israel and Turkey cut rates, hinting at further easing
Bank of Israel eases with one eye on the appreciating shekel; Turkey stands by its ‘cautious’ stance on interest rate cuts with 25bp reduction
Italian paper: Reforms could lead to earlier exit from ZLB
Working paper examines the impact of competition-friendly reforms in the service sector across the eurozone, finding it could help boost inflation providing investment responds
IMF eyes stronger transmission mechanism in Paraguay
Latest staff report advises the Paraguayan authorities to promote a ‘well-functioning’ interbank market and create stronger incentives for ‘de-dollarisation’ in the economy
Fed officials grapple with lift-off details
Minutes from January FOMC meeting reveal extensive discussion about the tools at the Fed’s disposal when it wants to raise rates; idea of higher cap for overnight RRPs explored
Turkish MPC could face lawsuit
If convicted central bankers could face jail term over refusal to cut rates, but spokesman says central bank law protects policy-makers from prosecution relating to conduct of their duties
ECB publishes first minutes
European Central Bank releases an ‘account’ of the discussion at the governing council meeting in January, which saw it launch quantitative easing in the eurozone
BoE’s MPC members diverge on interest rate outlook
Only common ground between committee members is rates likely to rise ‘over the next three years’, as some see the potential for further easing while others want rate hike soon, minutes show
Justin Lin on China, economic growth and the international monetary system
Former World Bank chief economist on why a multiple currency system could increase monetary instability, China should be wary of full capital reform and infrastructure investment will boost growth
Belarus eyes policy overhaul
National Bank of the Republic of Belarus says it will exercise ‘tight control’ over the money supply in an effort to shackle inflation; questions over where this leaves exchange rate peg
New York Fed unveils new way to calculate funds rate
Central bank plans to base the rate on a new dataset that captures a broader range of market activity; move likely to happen in about a year’s time
Rajan says RBI is seeking ways to encourage foreign investment
RBI tightens rules for foreign investors but Rajan says central bank is looking into ways of encouraging desirable FDI flows; rates remain on hold
Constâncio: ECB ‘encouraged’ by reaction to QE
ECB vice-president points to rise in price of equities and bonds and drop in the exchange rate, but warns against reading too much into financial and real variables
IMF calls for reform at Madagascar central bank
Staff report says central bank needs greater independence and stronger oversight mechanisms; new audit committee on the way and government agrees to recapitalise institution