Monetary policy
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
What else can central banks do?
Geneva Report’s plea for central banks to use more negative rates, additional QE and helicopter drops appears misguided
Fed might stimulate labour market with ‘high pressure’ economy
Fed president floats idea of dealing with weak labour markets by “high-pressure” economy; Boston Fed’s Rosengren points to key ‘puzzles’ in data on US economy
Neutral policy stance needed for ‘extended’ period – MAS
Singapore’s central bank says inflation is trending in the right direction, but notes economic growth is unlikely to pick up over the next year
No timelines for easing monetary policy – Brazilian governor
Goldfajn comments on monetary policy arrangement in Brazil at the first IMF annual meeting appearance; decisions will be data-dependent, he says
Olsen says Norges Bank must tread carefully as it nears the zero lower bound
Governor says effects of monetary policy may become less certain; review of monetary policy framework about to begin
Further policy easing will be required – RBNZ assistant governor
Another rate cut on the cards despite improved inflation outlook, says McDermott, emphasising need for accommodative monetary policy to push inflation to middle of target range
BoE paper tackles ‘sectoral co-movement puzzle’
Adding labour market frictions and habit formation helps to solve the problem of models implying a monetary contraction produces little response in output
Review proposes reforms to Riksbank research
External team recommends restructuring department, increasing its involvement with policy and boosting output – though it says Riksbank research is already “successful”
BoE’s new MPC member suggests tweaks to policy approach
Michael Saunders says models that assume pre-crisis level for equilibrium unemployment may be misleading; new FPC member grilled on other commitments in the US
Greater role for capital markets would not necessarily harm policy transmission – ECB’s Praet
A ‘range of common factors’ is affecting both banks and non-banks, ECB chief economist says
UK PM says she will deliver ‘change’ to monetary policy
Theresa May criticises monetary policy for punishing savers and those without assets, promising to deliver change
BoE’s Saunders expects higher post-Brexit growth than central forecast
Bank of England’s newest committee member says the labour market is likely to prove more sluggish than the consensus suggests, but growth will be more positive