Monetary Policy
High US inflation should not be ruled out
A prolonged health crisis raises the risk that supply-side factors, monetary expansion and rising personal savings could stoke hidden inflationary pressures
Solomon Islands central bank cuts reserve requirements
Reducing requirements will ensure ample liquidity is provided to banking sector, central bank says
Fed policy is too tight given FOMC projections – former Fed economist
“An outlook that bad for that long is a clear sign that policy is too tight,” Joseph Gagnon says
New York Fed to tighten repo operations
Fed sees “substantial improvements” in dollar funding markets
Researchers say hitting lower bound has little impact on expectations
Persistent deviation from inflation target can still undermine long-term expectations, authors say
Raising inflation targets may lower neutral rate – Boston Fed paper
A higher target might therefore be less effective than current research suggests, research says
A better way to buy private sector securities?
Central bank asset purchases can do more harm than good and are often conducted on a flimsy legal basis, writes HKU’s Bryane Michael
Fed promises to keep buying assets at current rate
Fed will hold accommodation in place for “however long it takes”, chair Jerome Powell says; FOMC releases first projections this year
Balance sheets could grow by 23% of GDP in largest advanced economies – BIS
Economists forecast balance sheets will remain large for the foreseeable future
Central bank museums grapple with lockdown
Money museums moved online to keep communicating during Covid-19 lockdown; some now plan to reopen for a limited number of visitors
CBDC could endanger maturity transformation – Philadelphia Fed paper
Opening central bank balance sheet to consumers could create “deposit monopolist”, research says
Bank of Uganda cuts rate and warns of lasting disruption
Central bank cuts rates and narrows target band, as impact of Covid-19 in Uganda continues to play out
Fed makes last-minute changes to ‘Main Street’ programme
Programme will be open “soon”, despite plans to launch in May
Football stadiums to airlines: BoE reveals commercial paper holdings
Central bank has taken on exposures to a wide range of businesses – including polluters
BoE paper: narratives can help overcome ‘radical uncertainty’
Speaking directly to the public can improve analysis and communication of policy, authors find
Lane warns eurozone faces ‘substantially negative’ price pressures
Tighter financial conditions and falling inflation called for expanded QE, says ECB chief economist
Central banking enters a new era
Central banks face a delicate balancing act to preserve their reputations as they evolve into ‘buyers of last resort’ and some of their actions appear functionally equivalent to ‘monetary financing’
ECB expected to sharply increase PEPP purchases
Central bank could start reinvesting PEPP securities and increase supranationals’ share
Canada scales back liquidity measures
Policy-makers keep rates unchanged; new governor Tiff Macklem plays observer role on first day
DNB paper says eurozone investment-saving curve flatter in recent years
Persistently low interest rates in eurozone appear to have weakened monetary policy – researchers
US needs aggressive fiscal policy and negative rates – St Louis Fed economist
Policy response must be powerful enough to overshoot previous growth trend for a period, researcher says
Bond purchases will not imperil independence – Brazilian governor
Roberto Campos Neto stresses temporary asset purchases face strict limits
What would yield curve control mean for Fed’s asset purchases?
Policy may imply shift in rationale from crisis to recovery, and potentially more volatility in purchases
RBA’s Lowe says fiscal policy must do more in the future
Governor says nations can no longer depend on monetary policy to keep inflation under control