Monetary policy
Mexico to ‘persevere’ in strengthening macroeconomic framework, bank deputy says
Deputy governor says effect of further normalisation in US policy ‘unclear’; Mexico to continue strengthening financial system
Korean paper explores ‘divergent’ spillovers to EMs
Macro-prudential policies key to protecting emerging markets from spillovers, research says; normalisation in the US could lead to ‘renewed tensions’
BoJ board reveals miscommunication fears
New ‘summary of opinions’ reveals some on board concerned about giving impression stimulus is at its limit, while some see dangers to taking further action
Room for monetary policy stimulus has ‘narrowed’ in many EMs, World Bank report warns
Little room left to use monetary or fiscal stimulus in event of growth shock in some countries, report says, pointing to role for structural reform
BIS paper explores policy trade-offs in Asia-Pacific
Asia-Pacific central banks that have used macro-prudential policy to control credit growth may have faced a short-term trade-off between financial and price objectives, paper notes
Real impact of credit booms demands policy rethink, say BIS economists
Financial booms and busts feed through to the real economy via labour reallocations, harming productivity growth; results call for wide-ranging rethink of models and policy, authors say
PBoC injects liquidity following market rout
Central bank intervenes with $20bn reverse repo operation as markets slump, restoring a semblance of calm
Norges Bank paper seeks to improve modelling of money
Researchers aim to capture the role of money as both a medium of exchange and a liquid asset, with the resulting equilibrium underscoring the need for a liquidity coverage ratio
Chilean central bank spells out risks to outlook
Central bank expects inflation to return to 3% target by end of 2017 according to latest forecasts; details risks from home and abroad to macroeconomic outlook
Kuwait joins hikers club in wake of Fed rate rise
Kuwait look to strengthen currency after Fed rate rise; UAE and Saudi Arabia, which operate with dollar pegs, also move
IMF paper says transmission is working but lopsided in the Dominican Republic
Researchers say the Dominican Republic has been successful in establishing a monetary transmission mechanism, but future work should focus on balancing pass-through to deposit and lending rates
Economists point to key factors for BoE rate decision coming into ‘sharper relief’
Developments in labour market represent crucial signal for monetary policy move, but shocks from a Fed hike, commodities or further turbulence in emerging markets could all come into play
Turkish economy is braced for impact of global policy normalisation, says Başçı
Erdem Başçı says measures taken to date have made Turkish economy more resilient to external shocks; expects inflation to trend down towards target next year after rough 2015
Dynamics and volatility of capital flows a concern, says Mexican deputy
Manuel Ramos-Francia says EM policy-makers are concerned not only with the size of capital outflows, but also the dynamics of those flows, at conference hosted by Bank of Mexico
BIS: Artificial calm in markets cannot last
Quarterly review presents latest evidence of fault lines running through financial markets; Claudio Borio says tension between market behaviour and underlying conditions must be resolved eventually
Consensus key for moving forward in Greece, says central bank
Bank of Greece stresses need for ‘unobstructed’ implementation of creditor agreement, as it publishes latest interim report on monetary policy
BoJ’s Kiuchi wants to reduce flow of QQE
Board member says reduced flow of asset purchases would help relieve ‘excessive pressure’ on the Japanese government bond market and make monetary policy more ‘sustainable and stable’
Riksbank deputy open to scrapping CPI as target variable
Quirks of Swedish CPI make it awkward for use as the monetary policy target variable, Per Jansson says; bringing back tolerance band also a possibility
South African review charts motivations behind resumption of tightening cycle
One of three chief considerations was the path of exchange rate and the risks it posed to inflation, which increased as the year went on
Historical data supports fiscal theory of the price level, Bundesbank paper argues
Data from the US, Germany and Italy give policy-makers useful data on the long-term influence of fiscal policy on inflation, a Bundesbank discussion paper argues
Colombia reinforces inflation target as it tightens policy
Central Bank of Colombia board expects to reach inflation target within two years; raises policy rate by 25bp to 5.5% as expectations increase
Nigeria cuts rates to encourage growth in ‘bold’ decision
The central bank lowers the policy rate by 200bps as part of a package of measures aimed at supporting growth and easing credit conditions
BoE advised to publish record of joint MPC/FPC meetings
Treasury Committee advises Bank of England to publish material from joint meetings of the MPC and FPC
BIS paper presents interbank money market model
Researchers produce ‘search-based’ model designed to reflect interbank markets in the presence of a central bank corridor system, allowing them to compute the effective interest rate