Monetary policy
‘We will do what we must’ to hit target, says Draghi
ECB governor hints at further easing at next month’s monetary policy meeting
Mass walkout at RBI disrupts clearing and settlement
The majority of the RBI’s 17,000 staff took ‘mass casual leave’ today, interrupting some RBI operations, though normalcy was ‘largely’ restored after negotiations
Sarb raises rate 25bp now to avoid bigger move later
Increasing risk of inflation spurs the South African Reserve Bank to raise its key rate by 25 basis points to 6.25%; two out of six MPC members preferred not to move
Canadian paper sees costs to leaning against the wind
Research estimates difference in policy rates between ‘lean’ and ‘clean’ central banks, while identifying costs in terms of inflation and output deviations
BoE researchers model trend inflation with ambiguity
Researchers develop a model featuring positive trend inflation determined in part by the degree of ambiguity around central bank actions
BIS’s Borio challenges monetary orthodoxies
Claudio Borio questions current concepts of equilibrium, monetary neutrality and deflation, calling for a rethink of monetary policy frameworks – and potentially mandate changes
BIS paper models non-linear eurozone crisis impact
Researchers attempt to capture endogenous amplification mechanisms in causing widened lending spreads during eurozone crises
Identifying the effects of structural shocks exposes problems with real-time data, researchers say
Using a model that identifies the effects of structural shocks, the paper finds ‘substantial and systematic’ differences between ways real-time and final data respond to monetary shocks
Rajan picked as BIS board vice-chair as he calls for global ‘rules of the game’
RBI governor chosen to take over position Masaaki Shirakawa vacated in 2013; delivers lecture in Frankfurt calling for global ‘rules of the game’
No fireworks as Bank of England keeps rate options open
Rates remain on hold as BoE balances domestic strength with signs of weakness overseas; MPC hints a few forces could prompt an earlier hike than markets are predicting
BoE Court recommends forecasting rethink
Review of forecasting sheds light on strengths and weaknesses of central bank’s approach; recommends more systematic performance evaluation and new modelling techniques
Rising mortgage rates do not demand policy response, says RBA’s Stevens
Recent increases in mortgage rates have reversed some of the central bank’s easing, but there is no need to lean against the movement at present, governor says
Improved inflation outlook gives Icelandic central bank room for manoeuvre
Shallower path for near-term inflation allows central bank to make smaller rate hike than planned, but the longer-term picture still shows inflation overshooting the target
Research assesses South Africa’s vulnerability to Fed hike
Countries with large ratios of external financing needs to foreign exchange could be more vulnerable to Fed rate hikes, working paper finds
Economists challenge foundations of monetary economics
‘Neo-Fisherian’ approaches use standard New-Keynesian models to show that cutting interest rates will produce lower, not higher, inflation – and the result is surprisingly difficult to overturn
Riksbank unleashes further easing
Central bank hopes extended asset purchase programme and commitment to keep rates lower for even longer will help reinforce a gradual upward trend in growth and inflation
Adaptive learning models offer route out of liquidity traps, paper argues
An adaptive learning-based macro model shows monetary easing policies can end a liquidity trap under certain conditions; empirical studies of easing differ widely on its effects
Long-term low interest rates risk financial instability, Geneva report argues
Long-run accommodative monetary policy could raise risks to financial instability, Charles Bean and other economists argue; issuance of leveraged loans in US corporate market on the rise
Bank of Uganda takes rate hikes to 600bp in five meetings
Bank of Uganda raises rates for fifth consecutive time by 100bp to 17% in a move to curb inflation; sees earlier moves taking effect
BoE needs to avoid getting ‘behind the curve’, says McCafferty
The monetary policy committee member warns against leaving the rate hike "too late", making it harder to raise it gradually to minimise disruption to households and businesses
Eichengreen says central banks lack will not ability to tackle deflation
Central banks have the tools to deal with bad deflation if they are willing to act aggressively enough, economist argues; broadening asset purchases or helicopter money are both options
Further rate hikes likely as Chile raises 25bp
Central bank lifts rate to 3.25% in first move in four years; analysts suggest the move is an effort to rein in expectations
BoE’s new MPC member grilled on financial assets
Treasury Committee questions Gertjan Vlieghe on real or perceived conflict of interest; Ian McCafferty justifies view on rate hike in reappointment hearing
IMF sees divergent risks in new outlook
IMF revises growth outlook for this year and next, while noting transformation in risks; Maurice Obstfeld discussed emerging market policy in anticipation of Fed hike