Inflation
RBA cuts to 1.75% as data disappoints
Glenn Stevens points to “unexpectedly low” inflation data as the Reserve Bank of Australia cuts its key rate by 25bp; Australian dollar slides following decision
Nonlinear models struggle to outperform VARs, Azerbaijani paper finds
Central bank’s first working paper finds various different nonlinear forecasting models perform poorly against autoregressive and VAR models, and even random walks
Wheeler says further easing may be needed as RBNZ holds
Wheeler says interest rate cuts could be needed, though the RBNZ kept its key rate at 2.25% today; mixed picture with dairy export prices improving but currency still high
BoJ holds policy despite weakening expectations
Yen climbs as policy board keeps interest rates and asset purchases at existing levels; growth and inflation forecasts cut while there is “considerable uncertainty” around the outlook
Fed holds and drops reference to global risks
Federal Open Market Committee holds federal funds rate as widely expected; suggests growth in economic activity has slowed but concerns about global developments have eased
Turkey vulnerable to sudden stop, IMF warns
Central bank action on rates, operating framework and reserves would help shore up the country’s weak external position and tame inflation, fund says
Riksbank extends QE as inflation remains ‘fitful’
Central bank not yet comfortable inflation will return reliably to target, though it is forecasting CPI to be close to target in two years’ time
New Turkish governor presides over cut at first meeting
Monetary easing remains the order of the day at the Turkish central bank, as MPC lowers ceiling of rate corridor in Murat Çetinkaya’s first week in office
Research digs into disagreement about inflation expectations
Paper published by Reserve Bank of Australia examines how the disagreement within stakeholder groups about inflation expectations has evolved
Bank of England to react ‘more cautiously’ to data in light of EU referendum
Uncertainty over referendum to affect macroeconomic data over next few months; inflation rising but still well below BoE target
Canada holds rate but raises growth forecast in light of fiscal boost
Stephen Poloz highlights “more favourable policy mix” in press conference; central bank notes emergence of “positive forces” in decision
BoJ paper attempts to ditch Friedman rule with new model
Paper outlines model where mild inflation is welfare-optimising, in contrast to Milton Friedman’s rule implying mild deflation, which underpins many monetary models
Perceived long-term eurozone deflation risk unaffected by oil – paper
Between 2010 and 2012, perceived short-term deflation risk was “significantly” affected by oil prices, while medium-term risk was only affected between 2013 and 2015, research suggests
Skingsley sees turning point for Riksbank policy
Immediate threat is fading, enabling the central bank to focus more on longer-term risks, deputy governor says
Norges Bank researchers grapple with nonlinear exchange rate pass-through
Exchange rate pass-through in Norway is unusually high, which the authors suggest could be due to the size of recent currency movements – but pinning down the effect empirically proves difficult
Angolan central bank hikes again amid soaring inflation
Inflation breaches 20% in February prompting central bank to raise interest rates to 14%; new governor continues tightening cycle in attempt to curb prices
Central banks struggle to manage price expectations
Large central banks have responded aggressively to falling levels of inflation and inflation expectations, but with divided and limited success. What can policy-makers do to restore confidence?
Turkish central bank narrows rate corridor with cut
Central bank begins process of narrowing rate corridor in last meeting of Erdem Başçı’s term, though it keeps the policy rate on hold
Monetary policy takes time to influence inflation, Tombini tells senate
Brazil governor says central bank will not “shy away” from acting to lower inflation; target of 4.5% to be reached by the end of 2017
Sweden’s Riksbank has mixed forecasting performance, report finds
Riksbank “relatively good” at projecting growth and unemployment, but less so when it comes to the policy rate; this is “notable” and not “particularly satisfactory”, report notes
IMF staff praise Colombian policy mix as central bank hikes by another 25bp
Co-ordinated policy action is supporting “orderly adjustment” in Colombia’s economy, IMF staff say, including good pass-through of rate hikes; central bank continues to tighten
Inflation expectations well-anchored, Richmond Fed president says
Lacker tells audience at Banque de France he believes expectations are anchored, despite drop in inflation compensation; Villeroy de Galhau notes drop in market-based measures in eurozone
Sarb hikes rate despite split decision on MPC
Monetary policy committee decides to raise key rate by 25bp after an initial 3:3 split; concerns over inflation remain for some members
Norges Bank willing to consider move into negative territory
Central bank cuts rates to 0.5% and signals further action likely to follow; executive board concerned by side-effects of negative rates, but willing to use them if necessary