Interest rates
BoE’s Cunliffe says odd behaviour of labour supply demands caution
Deputy governor points to possible ‘shift in the psychology’ of workers who have come to accept low pay, which he says calls for the central bank to be cautious about raising rates too soon
Productivity gains in the banking industry affect interest rates, study finds
More productive banks set lower interest rates on loans and higher rates on deposits, increasing their market share, according to a study by the Bank of Spain
Sarb launches investigation into forex traders
Central bank joins growing list of regulators concerned by potential for misconduct among foreign exchange market practitioners
Rajan overruled external members’ call for rate cut in September
External members on RBI’s technical advisory committee see the case for easing, and the majority voted for a rate cut in September; deputy governor portfolios shaken up
Broadbent: Neutral real rates will stay low for ‘some time’
Bank of England deputy governor Ben Broadbent expects neutral real rates of interest to rise ‘eventually’, but expects them to remain low ‘for some time yet’
BoE minutes hint at dovish shift
Committee still split 7-2 in favour of holding rates, but language takes a more dovish tone with housing market and external environment providing cause for concern
RBA’s Lowe wants more market appetite for ‘real investments’
Deputy governor says key to returning growth and monetary policy to normality is persuading investors to create new assets rather than pumping up the prices of existing ones
Fed paper models impact of return to normal rates
Discussion paper studies the likely effect of returning interest rates to more normal levels; finds different combinations of tools would have different effects on financial intermediation
French paper examines impact of ECB policy changes on asset prices
Working paper considers how ‘policy shocks’ affected short-term interest rates, as well as the expected future path of short-term interest rates, between 2002 and 2013
BoE’s Weale posits method of overcoming uncertainty
MPC member says studying rates of change can help overcome uncertainty about spare capacity and the natural rate of interest when setting policy
Debelle surprised markets take central banks at their word
Reserve Bank of Australia assistant governor suggests markets are ‘underestimating’ the possibility that central banks will change course in response to ‘unexpected’ data
Bank of Korea turns focus to stability threats after rate cut
Bank of Korea cuts rates to historic low, but shift in language indicates growing concerns over financial stability
Fischer says Fed ‘better think about’ international spillovers
Fed vice-chair says international effects of monetary policy ‘spill back’ on to the US, and the central bank cannot make ‘sensible’ choices without taking them into account
BIS paper proposes defence against market panics
Proposal would see governments link level of borrowing to interest rates, breaking the vicious cycle of rising rates leading to increased default risk
Thailand’s central bank governor warns on risks of US rates normalisation
Prasarn Trairatvorakul warns that US interest rate normalisation could lead to ‘capital flow volatility’, considering it a ‘notable risk’
New York Fed’s Potter fleshes out normalisation plans
Vice-president responsible for open market operations gives details on how the Fed will use interest on excess reserves and reverse repos to raise its interest rate
Central bank independence key focus of Brazilian elections
With the central bank’s autonomy a hot topic in the build-up to this weekend’s presidential elections, specialists are divided on the benefits of greater independence
Argentina’s central bank governor quits after Presidential criticism
Juan Carlos Fábrega resigns after Argentina’s president accuses the central bank of giving ‘confidential information’ to banks
Boston Fed paper examines stock price sensitivity to monetary policy
Research presents evidence from the Enron scandal that stock prices of financially constrained companies become less responsive to monetary policy shocks if financial frictions are present
Central Bank of Morocco cuts rates for first time since March 2012
North African economy has seen growth slow and unemployment increase in 2014 as its main export markets in Europe continue to struggle
Canada deputy: Neutral rate of interest has dropped
Potential growth will be lower than before the crisis, warns Carolyn Wilkins, while neutral rate for Canada is 3-4%, down from pre-crisis level of 4.5-5.5%
Chile and Peru cut key rates by 25bp citing 'low dynamism'
Both central banks point to a lack of “dynamism” in their economies as they cut their key interest rates; Peruvian statement stresses the decision does not imply a sequence of rate cuts
ECB and BoE seek insights into yield curve behaviour
Frankfurt conference aims to improve understanding of the yield curve in the wake of the financial crisis, at a time when European and US yields are diverging
Cœuré explains motivation for negative deposit rates
European Central Bank executive board member says it is ‘not enough’ to lower the main refinancing rate in an environment of excess liquidity