Central banks

FT video: Core blimey!

June 2, 2011 12:16 pm by Financial Times

Lorenzo Bini Smaghi argues today in the Financial Times that policy makers should look beyond core inflation, because that measure misses something important: food and energy prices. Lex’s John Authers and Edward Hadas discuss whether the core inflation concept has had its day and whether central bankers should go even further and look at asset prices.

Posted in Central banks | Permalink

UK supply capacity – an amazing chart

May 11, 2011 8:01 pm by Chris Giles

In doing the usual due diligence on the Bank of England’s pictorial forecasts – blowing up the images on screen, getting out a ruler, measuring the YoY growth rates, estimating the skew that represents a risk-adjusted forecast and shoving all the results into a pre-prepared spreasdsheet – you can produced this horrible chart of successive Bank of England growth forecasts.

All it really shows, in the grand scheme of things, is that the Bank’s growth forecasts were pretty good before the crisis and spectacularly awful more recently.

If you strip out a lot of irrelevant information, you get the following, which I think is pretty amazing.

Continue reading: “UK supply capacity – an amazing chart”

Tags: consolidation, GDP, growth, UK
Posted in Bank of England, Central banks, OBR | Permalink

Macroprudential policy in action

April 20, 2011 4:54 pm by Chris Giles

Within central banks everyone these days is in love with macroprudential policy. Since macroprudential is synonymous with something good – akin to education and justice – central bankers will term whatever action they are taking as macroprudential.

Emerging markets reckon capital controls and managed currencies are macroprudential policy. I can imagine trade barriers could likewise be described as such. And in advanced economies, any restrictions on banks – good or bad – achieve less scrutiny if they are described as macroprudential policies.

Continue reading: “Macroprudential policy in action”

Posted in Bank of England, Central banks | Permalink

Spring meetings: Emerging economy monetary policy

April 12, 2011 6:39 pm by Chris Giles

Here in Washington, rather low-key International Monetary Fund/World Bank spring meetings are getting underway. The Group of 20 is likely to have another squabble and then paper over the cracks with lots of effort spent in talking about measuring trade imbalances rather than doing anything about them. But the April 2011 Fund World Economic Outlook is rather good. I will bring you some of the more interesting themes here to supplement the news we published yesterday. First out of the traps is the Fund’s real concern about overheating in emerging economies.

The IMF points out that most emerging markets have exceeded the level of output from the pre-crisis peak and have rising levels of headline and core inflation, “suggesting that inflation pressure is broadening”.

“The issue is whether they [emerging economies] are experiencing the kind of credit boom that inevitably ends with a bust. Evidence is not reassuring in this regard”.

Continue reading: “Spring meetings: Emerging economy monetary policy”

Tags: emerging markets, Global
Posted in Central banks | Permalink

Economics headlines

February 22, 2011 4:51 pm by Daniel Pimlott

Eurozone price rises sound alarms at ECB – FT

Libya turmoil crushes risk appetite – FT

UK public finances in rare surplus – FT

Workers call the tune in China – FT

Europe’s reforms may come at high price – Axel Weber, FT

Brazil may be heading for a subprime crisis – FT

Ireland weighs risks of ‘burning the bondholders’ – FT

Urbanisation in Libya – Economix, NYT

Geithner’s gamble – Simon Johnson, Project Syndicate

Tags: credit crunch, Fiscal, Macro-economics
Posted in Central banks | Permalink

2011: Rolling back the risks?

December 23, 2010 4:23 pm by Emma Saunders

“The strongly increased risks of central banks may act as a constraint on the room for manoeuvre in future monetary policy.” That is the worst case scenario laid out by new research from the Bank of Finland. The thoughtful, comprehensive analysis of eight central banks looks at unconventional tools adopted during the crisis, concluding: “The actions by central banks during the crisis raise a number of questions concerning exit from the measures taken, the impact of the measures, central banks’ risks and independence and their governance structures.”

The turn of the year – and the final post on this blog for 2010 – make a summary of this paper seem appropriate. Which of the unconventional tools – if any – will be discarded in 2011?

Continue reading: “2011: Rolling back the risks?”

Tags: central bank independence, central bank independence, Global, role of central bank, role of central banks, theory
Posted in Central banks | Permalink

Expanding central bankers

December 22, 2010 3:21 pm by Emma Saunders

There are 5,193 more central bankers now than last year, apparently, with the world total standing at 340,342. This from data contained in the Central Banking directory 2011, published today, which suggest the 1.5 per cent rise this year is universal, evident across regions and among large and small central banks.

The expansion is a modest reversal of the trend in recent years. Central banker numbers have been dwindling, by 241,900 or 39 per cent over the past decade.

European data show that in the past five years, staff levels in Hungary’s central bank alone have dropped 38 per cent. These European data also offer some general central bank factoids: the Bank of England makes do with the fewest central bankers per head of population, 3.1 staff per 100,000 people; Malta heads up the other end of the scale, with 78.7. Germany and France employ the most central bankers, at roughly 12,000 each, compared to 1,900 for similar-population Britain. Luxembourg and Estonia have the smallest central bank staff, at 247 and 243, respectively, though both are expanding at an above-average rate.

Tags: Europe, Global
Posted in Central banks | Permalink

From FT Alphaville December 9, 2010

Central bank mash-up, carry bash-up

Here’s Nomura on what it calls signs of ‘postmodern monetary policy’ in emerging Europe and the Middle East. It’s a very apt phrase describing the confusion in some central bank quarters. And it looks very familiar:

On balance, we see EEMEA central banks erring on the side of loose policy, even at the expense of higher inflation. Where there is concern about capital inflows, various policy tools are being used to decrease the carry appeal while not easing monetary conditions as much as rate cuts (or postponed hikes)…

Turkey‘s recent 400bp cut in the borrowing rate (and leaving the lending rate unchanged), while at the same time raising reserve requirements is one of the best examples of this creative policy in practice. Israel‘s efforts to ensure that implied forward rates remain at least 100bp below policy rates, or the Central Bank of Romania‘s operations in the basis swap market to minimise speculative capital flows are others. Meanwhile, the South African Reserve Bank appears to be maintaining an easing bias, despite real rates approaching negative territory, as it attempts to balance its concerns about the strength of the currency with stimulus being provided via looser fiscal policy. And in Hungary, the need for risk premia to secure inflation expectations against government policy changes is now leading to rate hikes, where none would have been expected otherwise…
Continue reading: “Central bank mash-up, carry bash-up”

Tags: Global, monetary policy
Posted in Central banks | Permalink

From Gavyn Davies blogs on macroeconomics December 1, 2010

Jean-Claude Trichet fights to save his legacy

Jean-Claude Trichet, ECB president, has been here before. Early in his life as governor of the Bank of France in 1993, Mr Trichet faced down a tidal wave of market pressure and prevented the franc from being devalued. I can vouch for the fact that not all of his tactics were those of a choir boy, and at one point he was forced to widen the ERM trading band within which the franc was allowed to fluctuate, but he eventually emerged without having to admit defeat. The rest, and the creation of the euro, is history. Now, at the very end of his career, Mr Trichet is fighting to save his legacy.

Continue reading: “Jean-Claude Trichet fights to save his legacy”

Tags: eurozone crisis, Jean-Claude Trichet
Posted in Central banks, European Central Bank | Permalink

Sweden raises rates as economy strengthens

September 2, 2010 12:02 pm by FT writers

By Andrew Ward, Nordic bureau chief

Sweden’s central bank raised interest rates for the second time in two months on Thursday, highlighting the strong recovery under way in the Swedish economy as the country’s centre-right government battles for re-election.

The Riksbank lifted its key rate by a quarter percentage point to 0.75 per cent and said further gradual increases would be needed to keep inflation in check.

Sweden in July became only the second European country after Norway to start tightening monetary policy since the global financial crisis, after a year on hold at a record low 0.25 per cent.

Read the full story on ft.com

Tags: sweden
Posted in Central banks, Riksbank | Permalink