Interest rates
Botswana research weighs impact of various instruments on credit
While interest rates may be more effective at influencing credit than reserve requirements, more ‘direct’ macro-prudential measures could be even better, Botswana article finds
Reserve Bank of India ‘front-loads’ easing with 50bp cut
Rajan points to deterioration in global outlook and desire to boost investment; RBI will now focus on improving the transmission of cumulative 125bp reduction in key rate
Charlie Bean expects natural rate to change course
Former BoE deputy believes evidence points to a gradual rise in the natural rate of interest; suggests government is better placed than central bank to solve zero lower bound problem
Norway signals further easing as it cuts again
Norwegian central bank looks to cut rates further with inflation set to fall back to 2% over the forecast horizon
Belgian paper explores link between monetary policy and risk-taking
Model suggests central banks should stabilise the path of the real interest rate more when there is a ‘risk-taking channel’ of monetary policy, to help reduce ‘welfare detrimental fluctuations’
Poloz expects Canada to manage adjustment well
Bank of Canada governor says the floating exchange rate will help the country to adjust to the resource price shock, while reducing the disinflationary risks that come with it
Limited case for leaning against the wind, says IMF report
Staff conclude the short-term costs of using higher interest rates to address financial risks exceed the longer-term benefits in most cases, but stress door should ‘remain open’
Fed presidents talk up prospect of 2015 hike
Richmond, St Louis and San Francisco reserve bank presidents offer thoughts in wake of last week’s decision to hold rates; all suggest a hike in October or December will likely be appropriate
Haldane weighs solutions to ZLB constraint
Andrew Haldane considers benefits and costs of adopting higher inflation targets, accepting QE as a conventional policy tool and creating central bank-issued digital currencies
Fed holds off rate increase but outlook largely unchanged
The majority of Fed governors and presidents still expect a hike this year, but concerns over global outlook and domestic inflation prompt FOMC to hold fire for now
RBA board holds off judging impact of volatility on trading partners
The board assessed the troubles in China and market volatility to have ‘increased the downside risks’ to the global outlook at its meeting this month, minutes show
BIS research finds US policy spillovers ‘significant’
Article examines the spillovers from short-term, long-term and policy rates in the US on a host of emerging and advanced economies; impact is economically and statistically significant
RBNZ cuts OCR again in face of ‘softening’
Graeme Wheeler reiterates ‘some further easing in the OCR seems likely’ as he reveals the third consecutive rate cut; RBNZ notes importance of Chinese demand to commodity prices
Bank of England wary of China risks but UK outlook steady
The MPC’s view is not materially affected by recent volatility in the financial markets as it keeps policy on hold; domestically, an increase in wage growth is offset by higher productivity
Israel committee see risks to inflation outlook rising
Policy-makers at Bank of Israel discussed decline in short-term inflation expectations, a potential drop in growth and the strength of the shekel in August meeting
Maltese not ‘aggressive’ in restructuring assets in 2014
Financial Stability Report indicates core domestic banks re-balanced assets to boost returns but were not aggressive in their approach
Negative rates working as planned, says Riksbank’s Cecilia Skingsley
Transmission of negative rates is working well and there is room to ease further, deputy governor says, despite the possibility of unwanted side effects; changing inflation target a ‘bad idea’
US unemployment falls to 5.1% despite drop in jobs growth
Richmond Fed president describes it as a ‘right-down-the-middle-of-the-fairway’ unemployment report, as he spells out why the time is right to begin raising interest rates
Draghi stresses willingness to act as ECB cuts inflation forecasts
Governing council holds policy as ECB staff cut inflation forecasts over the forecast horizon; Mario Draghi stresses QE could run beyond September 2016 if necessary
National Bank of Kazakhstan sets base rate for first time
Central bank sets new benchmark interest rate at 12% in first monetary policy meeting under inflation targeting framework
BoJ’s Kiuchi warns 2% inflation unlikely ‘even in fiscal 2017’
Policy board member says Japanese inflation is unlikely to reach the central bank’s 2% target by the end of fiscal year 2017
Boston Fed president compares forthcoming rate hikes with past tightening cycles
Eric Rosengren finds this tightening cycle is likely to differ from those of 1994 and 2004, in that rates are set to rise more gradually and stop at a lower level
IMF urges central banks to retain easy monetary policy
Ahead of the G20 meeting in Turkey the IMF prepares a briefing on policy challenges; tells central banks to prevent real interest rates from ‘rising prematurely’
Australian SWF heads see returns dipping as central banks normalise policy
The chair of the Australian Government Future Fund says easy monetary policy ‘cannot be sustained indefinitely’ and returns are likely to drop in coming years