Unconventional monetary policy
BoJ cuts inflation forecast at a time of falling JGB purchases
Bank of Japan reduces forecast to 1.4% as bond purchases appear to be declining
SNB able to cut rates further, Jordan says
Thomas Jordan says Switzerland’s central bank could lower its deposit rate further into negative territory or buy foreign currency if necessary; Jean Studer defends governing board size
Income inequality should be a concern for central banks – IMF panel
IMF panel debates impact of unconventional monetary policy on income inequality, concluding institutions should be more aware of policy effects on income disparities despite no specific mandate
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
Little EME volatility spillover from Fed/ECB balance sheets
Central bank policies had little impact on volatility in EMEs’ real markets – researchers
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
ECB bond-buying has had ‘significant’ impact on Bund market
The impact of PSPP purchases is substantially higher in stressed markets – Bundesbank paper
FOMC mulls ‘predictable’ balance sheet wind-down
One FOMC member says a “minimum pace” should be set for the reduction in mortgage-backed securities; committee will inform the public about its future plans for the balance sheet when the time comes
Czech National Bank abandons koruna floor
The central bank is likely to be happy with the market’s reaction, analyst says
Asset purchases could bring benefits in ‘normal’ times – paper
IMF working paper discusses whether asset purchases should be added to standard central bank toolkit; the policies seem more effective at combatting financial shocks than supply shocks
Fed’s Dudley discusses unwinding of balance sheet
Should reinvestment end “abruptly”, financial conditions would tighten, New York Fed president said; tapering “gradually and predictably” is the way to go, he adds
French paper examines impact of ECB’s PSPP on bond yields
Researchers use data from the French market to examine bond shocks
IMF research uncovers ‘puzzling’ effect of QE on the current account
Authors see QE having significant impact only when capital mobility is low; findings suggest “unexplained variation” between QE and capital mobility
Fed could shrink balance sheet to end “twist” on yield curve – Bullard
Allowing some bonds to run off the balance sheet could permit a more natural yield curve, St Louis Fed president says; San Francisco Fed’s Williams says a March rate hike expectation is “on the table”
Market ‘tightness’ affects QE success – Riksbank paper
Model accounting for the demand and supply of bonds allows authors to reveal new insights into the price and liquidity impact of asset purchases
BoJ acts to thwart pressure on yields
Central bank commitment to yield curve control faces first serious test; BoJ launches unlimited purchases to hold yield down
Regulations and QE impacting repo market – ECB’s Mersch
Executive board member says “confluence of factors” has boosted demand for collateral and impaired its supply, but the situation may improve
Yellen: Fed asset holdings provide automatic policy tightening
Downward pressure on long-run rates is expected to diminish, making the need to hike short-term rates less pressing, the Fed chair says
Yield curve control has long history – BoJ’s Amamiya
BoJ’s policy of controlling long-run rates is not as unconventional as many critics argue, executive director says
Carney hits back at critics of monetary policy’s distributional impact
Monetary easing has disproportionately benefited the poor, BoE governor says; loss of open markets “would be a tragedy, but is a possibility”
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
QE may be partly to blame for global market correlations – SNB’s Maechler
Andréa Maechler says quantitative easing may cause some bond and equity prices to move simultaneously, but there are likely other factors at play as well
BoJ economists seek best escape route from liquidity traps
Some policies are more effective than others, but a combination can generate stronger effects, researchers find
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