Monetary policy
BoE’s Vlieghe dismisses neo-Fisherian idea that low rates cause low inflation
MPC member says “small minority” of academics who suggest lower rates may cause low inflation do not present particularly compelling arguments
Central banks may be partly to blame for low real rates, says BIS’s Borio
Ever-bolder attempts to raise inflation could push down on real rates, generating little inflation but worsening the risk of instability, Claudio Borio says
Impact of interest rate cap still unclear – Kenyan governor
There is not enough data on interest caps to influence the MPC’s decision, says Njoroge; interest rates remain on hold at 10%
Banks have still not fixed ‘poisonous mix’ of problems – BIS’s Borio
Claudio Borio warns that in some respects, banks have still not solved the problems revealed by the 2008 crisis, which leaves them vulnerable
Mauritian governor explores low-growth puzzle
The government and the central bank need to work together in order to stimulate growth, Roi says, recognising each institution can only do so much
Stiglitz urges central banks to focus on credit, not interest rates
Emphasis on interest rates ignores more important question of whether credit is getting where it is needed, Nobel economist argues
Turkish central bank hikes as Trump election hits lira
Turkish lira has been targeted in emerging market currency sell-off; rate hike ignores the latest call for more cuts from Turkish president
Central Bank of Honduras legislation needs to be ‘fast tracked’, says IMF
Implementation of inflation targeting regime hinges on legislative change, IMF says in latest report; Honduran authorities to submit legislative reform on central bank mandate by March 2017
Demands on central banks have created critical juncture – El-Erian
Economist says burden placed on central banks has created economic and political instability across the globe, and something must soon give
BoE’s Cunliffe: central banks not causing low natural rates
Quantitative easing has not caused rates to fall, but is rather responding to a low natural rate, deputy says; the fall in sterling could require deviation of the policy rate from the natural rate
Bank of Italy publishes unconventional monetary policy papers
Papers and presentations cover models and data on unconventional programmes
Paper examines relationship between monetary policy and bank funding crises
Current regulatory tools are not sufficient to contain bank runs, Canadian working paper suggests, underscoring the importance of policy measures such as reserve requirements
Carney faces grilling from parliament in wake of tenure decision
Regardless of Brexit timetable, BoE governor will leave on June 30, 2019; he warns firms could trigger plans to leave London in late 2017 if Brexit deal proves unsatisfactory
US affected by spillovers as well as causing them – Fed’s Fischer
Foreign developments can be a “substantial headwind” to US monetary policy, vice-chair says; hints at continued momentum towards a December rate hike
Fed research proposes micro-founded approach to term structure modelling
Economists build structural New Keynesian model in contrast to the statistical approaches in much of the available literature, identifying key factors shaping term premiums
RBNZ delivers rate cut as exchange rate strength persists
Board reaffirmed move in light of Trump victory, but cut has been in the offing for some time as NZ dollar strength holds down inflation
National Asset-Liability Management Africa 2016 | Wellington Management | William J. Hannigan
William Hannigan on the challenges facing central banks investing in government bonds, and the current low-yield environment
RBA paper finds it is hard to pinpoint US productivity slowdowns
Break in productivity growth trend in US appears to have happened in early 1970s, although beliefs took three decades to fully adjust, authors find
BoE paper takes DSGE approach to deflation probabilities
Comparing simulations using a DSGE model estimated on different market-based measures of deflation probability helps to pick out causality, researchers say
Central Bank of Egypt devalues currency
Egyptian pound falls 32% as central bank moves to align official and black market rates; IMF mission chief welcomes additional exchange rate flexibility
Brazil’s inflation forecasts send mixed messages for monetary policy
‘Market’ forecast suggests there is a limit to monetary easing, central bank minutes show, though ‘reference’ scenario indicates room for more easing
Carney: I will stay ‘as long as I can’
Carney says the decision to stay or go will be “entirely personal”; Bank of England governor says central bank will not “slavishly rely” on QE
No change to monetary policy, UK finance minister says
Hammond clarifies comments made by PM, emphasising the government will not be altering BoE mandate; finance minister says it is the government that needs to offset monetary policy impacts
QE is not hurting pension funds, says Broadbent
‘Material constraints’ not seen yet, says BoE deputy governor, who believes problems are being driven by more fundamental causes