Interest rates
Bank of Israel moves to eight-meeting policy cycle
Cut in number of meetings reflects stability of economic indicators and will allow for more detailed analysis at each meeting, central bank says, though one member criticises loss of flexibility
Sarb governor fends off political criticism
Central bank would co-operate should inquiry into supervision powers be launched; monetary policy committee leaves rate on hold with the prospect of an end to the hiking cycle nearing
Fed holds but two more dissenters call for hike
Case for hike is building, says Janet Yellen, but economy has “a little longer to run”; two more FOMC members join Esther George in voting for hike
Central Bank of Kenya cuts rates despite new credit legislation
Commercial banks to amend lending rates again following a cut in interest rates; bank launches 50th birthday initiatives including new website
Savers must adjust their plans amid low rates – Poloz
Bank of Canada governor illustrates harsh reality for savers with rates so low, underlining the need for people to put aside more funds or work for longer than anticipated
Andrew Bailey warns of macro impact from pensions trouble
FCA chief says low interest rates and other factors shaping the pensions market are likely to have knock-on effects on the economy, though the area is not well understood
BIS paper examines impact of money market deregulation and integration
Integration of money markets and ability of banks to raise funds using variety of substitutable instruments has implications for monetary policy, paper says; deregulation results in larger open market operations
IMF official criticises interest rate caps in speech honouring Kenyan central bank
Interest rate ceilings can interfere with central bank independence and restrict credit access, IMF deputy managing director tells Kenyan officials
BoE signals further rate cut despite stronger-than-expected data
Package of measures announced in August led to “greater than anticipated boost” to UK asset prices; despite data somewhat stronger than expected a further rate cut is likely, minutes say
Boston Fed’s Rosengren highlights risk of overheating
US economy looks “resilient”, despite some mixed signals from the data, says regional Fed president; advocates process of gradual rate hikes as the risk of an overheating economy grows
PBoC faces the ‘most challenging work of all central banks’ – HKU’s Xiao
The People’s Bank of China needs to meet short-term goals of exchange rate and price stability to achieve longer-term structural and financial reform, says Hong Kong University professor Xiao Geng
Falling natural rates impacted by common global factors – Fed paper
Research by Kathryn Holston, Thomas Laubach and John Williams finds no sign of natural rate decline reversing; advanced economies jointly affected by global factors
ECB delays decision on policy redesign
Mario Draghi says committees will investigate “smooth implementation” of asset purchases, but offers no new policies today; highlights signs of greater willingness for government action
HKMA researchers dig into persistent covered interest parity deviation
Authors posit forex swap dealers filter out counterparty risk from money market rates when setting swap prices; risk adjustment continues even in non-stressed periods
Capping interest rates could affect credit, says Kenyan president
Kenyan President approves new banking law despite acknowledging future “difficulties”; government to monitor possible emergence of “unregulated” and “informal” lending mechanisms
Central Bank of Iceland changes course with 50bp cut
Reversal of tightening cycle reflects concern inflation is not rising as expected, in part because of the strength of the króna; growth still forecast to continue above trend
Bullard backs new approach to forecasting
Idea of economy converging to a single steady state has “likely outlived its usefulness”, St Louis Fed president says; instead reserve bank will now focus on regime-based forecasts
Low inflation and tighter credit gave room for cut, RBA minutes show
Inflation looks likely to remain low for some time, board members note, while tighter lending standards make adverse effects of a cut less likely
San Francisco Fed chief calls for policy target re-think
John Williams calls for central banks to consider raising their inflation targets or replacing them with nominal GDP targets; lower natural interest rates seem “poised to stay”, he argues
Chilean central bank changes guidance and keeps policy on hold
Central Bank of Chile removes reference to continued normalisation as inflation returns to target range; holds benchmark rate at 3.5%
Bank of Thailand's Veerathai on the Thai economy, governance and payment reform
Bank of Thailand's governor speaks to Christopher Jeffery about the resilience of the Thai economy, governance and payments infrastructure reforms, plus why he does not agree with the IMF
Money market interactions can explain behaviour of interest rate spreads, researchers argue
Paper analyses the interplay of unsecured and collateralised money markets; information obtained “can explain behaviour of interest rate spreads”, authors say
Rajan hopes new MPC will make next RBI policy statement
Reserve Bank of India keeps rates on hold in Rajan’s last decision before stepping down; he hopes the monetary policy committee will be up and running by next decision in October
BIS paper digs into complex spillovers from US rates
Authors find short-run US rates have little impact on long-term rates elsewhere, but transmission at longer maturities and via bond markets is high