Monetary policy
‘Challenging' year spurs diversification of Hong Kong's exchange fund
HKMA says it is accelerating its process of reserves diversification after it was hit by a "triple whammy" in all major asset classes in 2015
Trilemma, dilemma, and the PBoC's primer for the 'new normal'
Hui Feng argues the PBoC faces a dilemma not a trilemma – but the effort of balancing the two goals is painful all the same
New Turkish governor presides over cut at first meeting
Monetary easing remains the order of the day at the Turkish central bank, as MPC lowers ceiling of rate corridor in Murat Çetinkaya’s first week in office
Australian governor Stevens sees more viable options than helicopter money
Reserve Bank of Australia governor identifies a host of practical issues to helicopter money, and says there is more governments can be doing before then
Paper explores monetary policy and bank liability structure
Banque de France working paper analyses US banking data from 1994 to 2008; provides new empirical support for bank lending channel of monetary policy, author argues
Bank of England to react ‘more cautiously’ to data in light of EU referendum
Uncertainty over referendum to affect macroeconomic data over next few months; inflation rising but still well below BoE target
John Taylor offers way out of downward interest rate spiral
Stanford University professor says a return to more “rule-like” policy-making could help bring easing cycle to an end, with the Fed playing a key role
BoE assumes control of interest rate benchmark
Central bank to take responsibility for overnight benchmark, planning to broaden the transactions underpinning its calculation; WMBA to retain role in calculating and publishing figures
Viñals supports negative interest rates in current climate
Financial counsellor believes negative rates are helpful, but there are limits regarding how low they can go and how long they can stay there
Advanced economies could learn from EM counterparts in managing balance sheets, paper says
Composition of advanced economies' balance sheets is aligning in some respects to their EM counterparts, largely as a consequence of increasing size since the financial crisis, paper says
Mexican deputy calls for ‘proper consideration’ of peers
Mexican deputy stresses need for improved policy communication between advanced economies and emerging markets
Operational reform has not impacted longer term rates, BoE working paper says
Reserve averaging and reserve targets reduced volatility in overnight rate but had little impact on longer-term rates, research finds
BIS’s Shin argues bank capital underpins both monetary policy and financial stability
Research sheds light on tension between bank shareholders and wider society, as high levels of capital support lending and therefore affect the real economy as well as the financial sector
Riksbank paper finds BVAR models can outperform DSGE
Bayesian vector autoregressions often produce better forecasts than judgement-based or DSGE-based options, authors find – but DSGE is still more popular for policy-making
BoJ’s Funo calls for efforts to revive potential growth
Board member uses first speech to back continued expansionary policy, highlighting steps that could help raise Japan’s potential growth from current depressed levels
Angolan central bank hikes again amid soaring inflation
Inflation breaches 20% in February prompting central bank to raise interest rates to 14%; new governor continues tightening cycle in attempt to curb prices
Economists still scrambling to adapt models to lower bound
Many traditional economic models perform poorly now major economies are near the effective lower bound, but economists at the RES annual conference offer a range of solutions
RBNZ investigating possible leak
Central bank launches external investigation, after former RBNZ economist was told there would be an unexpected rate cut before the decision was made public
Currency networks shape global spillovers, BIS authors find
Authors make use of recently enhanced BIS data sets to map currency networks, studying how these affected the risk-taking channel of monetary policy during the ‘taper tantrum’
BoE alert to second-round effects from low inflation, minutes show
BoE enters eighth year with rate at 0.5%; committee will continue to watch for second-round effects of inflation on wages
Bank capital matters for risk-taking channel of monetary policy, Norges Bank paper finds
Less capitalised Norwegian banks are more likely to extend credit to risky firms in response to a cut in the policy rate, author finds
Inflation target and interest rates about right, UK survey suggest
Median expectations of inflation for 2016 were 1.8%; largest share of UK public says it is best for the economy if interest rates stay where they are
Central Bank of Brazil calls for structural reforms
Inflation figures come down, but still nowhere near target range; central bank calls on government to ensure fiscal consolidation in longer-term
IMF’s Viñals announces ‘long and testing to-do list’ for policy-makers
Viñals says the plan for ‘great normalisation’ is more urgent than ever; calls for policy action beyond monetary and financial measures