Inflation
Draghi reasserts ECB’s willingness to act
Mario Draghi says there cannot be any limit to how far the ECB is willing to deploy its instruments within its mandate, after easing package meets with lukewarm reaction on markets
Argentina’s president elect aims to dismantle complex capital controls
‘Macri-economics’ could consist of unwinding capital controls, boosting export competitiveness and unifying exchange rates, but it will be a challenge, observers say
ECB extends asset purchases to March 2017 or beyond and cuts deposit rate
European Central Bank will continue buying assets until at least March 2017 as part of latest easing package; Draghi describes deposit rate as ‘driver’ of policy as council cuts it to -0.3%
Yellen signals growing confidence ahead of Fed decision
Fed chair expects some key headwinds to inflation to diminish next year; continued improvements in labour market and stable expectations help ‘bolster’ her confidence in a return to target
BoJ deputy says underlying inflation has ‘steadily’ improved
Kikuo Iwata says CPI inflation, excluding energy and fresh food, has been making a positive contribution of around 1% recently; discusses latest projections
‘Gradual and low’ may be new normal for Fed, Brainard says
Lael Brainard says lower neutral interest rates and stubborn inflation make it likely the federal funds rate will need to be tightened ‘more gradually and to a lower level’ than in the past
South African review charts motivations behind resumption of tightening cycle
One of three chief considerations was the path of exchange rate and the risks it posed to inflation, which increased as the year went on
Colombia reinforces inflation target as it tightens policy
Central Bank of Colombia board expects to reach inflation target within two years; raises policy rate by 25bp to 5.5% as expectations increase
Egypt central bank ‘kept eyes on inflation’ as it devalued currency
Head of risk at Central Bank of Egypt says the institution considered wider impact of devaluations on the economy; staff welcomed new governor last week
Nigeria cuts rates to encourage growth in ‘bold’ decision
The central bank lowers the policy rate by 200bps as part of a package of measures aimed at supporting growth and easing credit conditions
High expectations could be holding Japanese inflation down, Shirai warns
Study of US and Japanese households reveals, somewhat counterintuitively, that high inflation expectations may be a factor behind lower actual inflation
Economists outline improved DSGE forecasting method
Bank of England working paper attempts to improve forecast performance by using a multi-step approach to estimating parameters, delivering what the authors say are ‘significant’ improvements
Sarb raises rate 25bp now to avoid bigger move later
Increasing risk of inflation spurs the South African Reserve Bank to raise its key rate by 25 basis points to 6.25%; two out of six MPC members preferred not to move
Market and survey-based measures of expectations provide useful information, ECB paper says
Survey-based and market-based measures of inflation expectations provide useful information on future eurozone price increases, a European Central Bank paper argues
BoE researchers model trend inflation with ambiguity
Researchers develop a model featuring positive trend inflation determined in part by the degree of ambiguity around central bank actions
Riksbank paper examines mixed forecast performance
Researchers find the central bank has tended to be overly optimistic on foreign economic performance, but makes similar errors to other institutions
No fireworks as Bank of England keeps rate options open
Rates remain on hold as BoE balances domestic strength with signs of weakness overseas; MPC hints a few forces could prompt an earlier hike than markets are predicting
Improved inflation outlook gives Icelandic central bank room for manoeuvre
Shallower path for near-term inflation allows central bank to make smaller rate hike than planned, but the longer-term picture still shows inflation overshooting the target
Inflation outcomes should not be sole criteria for judging performance, says RBNZ's McDermott
Assistant governor's comments come after policy reversal by RBNZ amid falling global commodity prices; staff article emphasises 'ex-ante' evaluation of monetary policy decisions
Zambia hikes by 300bp as inflation almost doubles
Bank of Zambia increases policy rate to 15.5% in an effort to keep inflation expectations anchored in single digits; annual inflation jumps to 14.3% in October as kwacha slides
Economists challenge foundations of monetary economics
‘Neo-Fisherian’ approaches use standard New-Keynesian models to show that cutting interest rates will produce lower, not higher, inflation – and the result is surprisingly difficult to overturn
BoJ holds QQE fire but pushes back inflation forecast
Bank of Japan leaves asset purchase programme unchanged despite downward revision of outlook; central bank now predicts inflation target will be reached in second half of fiscal 2016
Turkish central bank may act as inflation forecasts rise
Declining exchange rates and rising food prices have pushed inflation expectations upwards, monetary policy committee says; governor says he will raise interest rates if necessary
Riksbank unleashes further easing
Central bank hopes extended asset purchase programme and commitment to keep rates lower for even longer will help reinforce a gradual upward trend in growth and inflation