Monetary policy
Governors think unconventional tools may not stay – ECB survey
Advanced economies’ governors are more likely to favour keeping QE tools
BoE’s Saunders hints at willingness to raise rates
MPC member signals he sees the UK economy running somewhat hotter than the consensus view suggests
Paper takes novel approach to identifying monetary policy shocks
Researcher combines dynamic factor model with changes to financial instruments
BoJ board nominations add to dovish slant
Japan’s government has nominated two economists seen as likely to support further easing, in the place of two frequent dissenters
Fresh exchange rate cap remains an option – CNB minutes
Minutes of extraordinary meeting say exchange rate commitment or other unconventional tools cannot be ruled out if deflation risks re-emerge
Book notes: Bankers, Bureaucrats and Central Bank Politics, by Christopher Adolph
An interesting, if slightly dated, analysis of those who made monetary policy decisions in advanced economies between 1950–2001, attempting to understand whether personal background influences decision-making
Bank of Canada’s Vardy and Harrison on the move to ‘peacetime’ communications
Central bank has reshaped its communications approach post-crisis, embedding it into the policy process and encouraging markets to think for themselves
Fed paper seeks better forecasts from information inefficiencies
Paper finds it is difficult to build a better forecast on the basis of deviations from rationality in surveys, implying such inefficiencies are not “economically meaningful”
No ‘taper tantrum’ this time around – Fischer
Fed vice-chair says US central bank has learned from mistakes made in 2013; markets unlikely to face same disruptions as Fed unwinds balance sheet, says Fischer
Lower rates link to higher exchange rate impact – BIS paper
Working paper finds monetary policy’s impact on the exchange rate has grown as rates have fallen
Monetary policy has inevitable fiscal effects – Willem Buiter
Former Bank of England official rails against fiscal theory of the price level in speech to RBI, but says monetary policy still cannot escape its fiscal dimension
New Zealand government reviews monetary policy process
Opposition pledges it will make major changes to central bank mandate if elected
Argentina’s central bank reverses course on interest rates
Central bank hikes rate on its 35-day Lebac bonds to 26.25% on the back of higher-than-expected inflation figures
‘Our independence is under threat’ – Yellen
Fed chair cites two legislative bills that could significantly harm the central bank’s ability to make independent monetary policy decisions; US economy is being allowed to “coast”
Conservative monetary policy raises banking fragility – paper
Researchers apply a ‘central bank conservatism’ index to data from 73 countries
Czech National Bank abandons koruna floor
The central bank is likely to be happy with the market’s reaction, analyst says
RBI makes fresh amendments to liquidity framework
Central bank continues reforms begun under Raghuram Rajan and asks government for new tools; markets still face “liquidity overhang” from demonetisation
Sarb deputy says political uncertainty will affect policy normalisation
Mminele asks whether central banks will enforce notion of economic slack as forward guidance reaches limits; political uncertainty rocking the policy landscape
BoE’s Vlieghe: good policy is more than accurate forecasting
MPC member says doctors cannot forecast heart attacks, but are still pretty useful before and after the event
‘Ambitious’ capital markets union necessary – Constâncio
Better eurozone capital markets would smooth regional shocks, ECB vice-president says
Mexican deputy: EMs should broaden trade strategy in wake of uncertainty
He takes note of uncertain political environment and what impact it could have on trade for emerging markets; exploring trade of services could be one option
Fed’s Jeffrey Lacker quits over information leak
Richmond Fed president resigns after admitting he leaked information from the September 2012 FOMC meeting; Lacker failed to report indiscretion on three occasions
Uncertainty matters for forward guidance success – BoE paper
Authors show that introducing uncertainty generates significantly different macroeconomic effects, with implications for policymaking
Haldane: central banks could ‘gamify’ communications
The game Monopoly could be the next tool in central bank’s communication toolbox, Haldane says, warning complex language breeds distrust