Monetary policy
BoJ paper finds short and long-term expectations are anchored differently
Inflation expectations respond differently to changes in policies and inflation depending on whether they are short- or long-term, researchers find
Iceland’s Guðmundsson plans post-capital controls monetary redesign
‘Inflation targeting plus plus’ would help the small, open economy to pursue independent monetary policy, insulated from violent capital flows, the Icelandic governor tells Central Banking
IMF paper finds leaning against the wind can work, but it is not optimal
Researchers conclude monetary policy can be used to reduce systemic risks if other, more targeted policy options are unavailable, but macro-prudential policy produces better outcomes
BoE’s Weale outlines idea of one man, one hundred votes
Giving each MPC member 100 votes to cast would allow them to indicate much more nuanced positions and could make for better policy, Martin Weale says
BIS calls for new paradigm in economic policy
Annual report argues broken international monetary system and low productivity reflects failure to ‘come to grips’ with how financial and real economies interact, domestically and globally
IMF paper offers advice on transition to inflation-targeting regimes
Guide to switching monetary policy regime recommends gradual approach to ‘buy time’ for central bank adaptation
BoJ paper sees signs of structural shift in pricing behaviour
Study finds rising exchange rate pass-through is in large part the result of a change in firms’ pricing behaviour, although why behaviour has changed remains unclear
IMF paper: Indian monetary policy transmission is improving
Working paper examines credit channel of monetary policy in India, finding ‘significant, albeit slow’ transmission to the real economy and a gradual improvement over the past few years
Bank of Thailand cuts forecasts for growth and inflation
Monetary policy report says risks are ‘skewed to the downside’ as central bank lowers its forecasts; MPC was divided over further easing at April meeting
Norway moves policy tools in opposite directions
Norges Bank cuts rates to tackle economic slowdown but government imposes higher countercyclical capital buffer as financial stability indicators show signs of danger
Bank of Israel launches journalist briefings as part of transparency drive
Central bank begins quarterly briefings of journalists and adds new publications as part of ongoing efforts to improve communications; follows consultations with other central banks
RBA’s Kent says transmission mechanism seems to be weathering shocks
‘Headwinds’ are working against the Australian economy but the evidence implies the monetary transmission mechanism ‘is about as effective as usual’, assistant governor says
Virus outbreak prompts Bank of Korea rate cut
Deadly Mers virus a key factor behind central bank’s decision to ease policy as economic recovery shows signs of faltering
IMF paper urges central banks to adopt sharia-compliant facilities
Authors warn lack of sharia-compliant monetary policy tools is hampering efficient liquidity management among Islamic banks, but is an area that requires further research
BoJ paper outlines idea of ‘natural yield curve’
Curve defines level of natural rate of interest at all maturities; authors suggest it provides a ‘useful benchmark’ for the conduct of monetary policy
Jeffrey Frankel argues for NGDP targeting by EMs
Monetary economist says targeting nominal GDP could allow emerging and developing countries to more credibly establish a nominal anchor
Devising effective data strategies to help inform policy decisions
The publication of the Irving Fisher Committee’s report on good data practices offers the potential for powerful data sharing, but more work needs to be done at the tactical and practical levels
Assessing the value of financial stability reports
More than 90 central banks now produce financial stability reports. Emrah Uslu and Eyup Kahveci look at the various approaches they take as well as appraising their usefulness.
Central Bank of Iceland prepares for ‘substantial’ interest rate increases
Minutes show MPC grappling with uncertainty around pay increases but board members agree interest rates will soon have to move upwards sharply; one member dissented from rate hold
Riksbank risk survey flags concern over easing impact
Respondents warn of a slight deterioration in the outlook for financial stability after launch of further monetary easing, including higher levels of risk and lower liquidity
Pakistan completes shift to new policy rate
New target rate and tighter corridor aims to improve the transmission of monetary policy; central bank slashes rates as inflation continues to fall
BIS committees highlight broad monetary effects of regulation
Committees offer suggestions for mitigating the impact of new regulations on the conduct of monetary policy, but say the effects will largely be ‘limited and manageable’
Kuroda reviews QQE two years on
Bank of Japan governor says policy is working as intended, and even though inflation has fallen to zero, prices should soon ‘accelerate toward’ the 2% target
Kazakhstan proposes sweeping changes to monetary policy framework
Central bank plans root-and-branch reform of its monetary policy with move to inflation targeting to be accompanied by revamped governance, communications, economic modelling and more