Riksbank

Claire Jones

Our week ahead email helps you to track the most important events in central banking. To see all of our emails and alerts visit www.ft.com/nbe

ECB cut likely
Next week’s two key events are the Bank of England’s and the European Central Bank’s monetary policy votes. Expect both central banks to act. Read more

Claire Jones

Quantitative easing is here to stay. At least if three economists at the Riksbank have anything to do it.

The Riksbank economists argue in a fascinating paper published at the end of last week that — far from being the sort of policy measure undertaken only in extreme circumstances — buying bonds should become commonplace for central banks.

Given what we’ve seen in the past few years, the Riksbank’s research makes some sense. Read more

Claire Jones

Our week ahead email helps you to track the most important events in central banking. To see all of our emails and alerts visit www.ft.com/nbe

BoE minutes

The minutes of the Monetary Policy Committee’s April meeting are out on Wednesday at 9.30am (8.30am GMT). Read more

Claire Jones

Our week ahead email helps you track the most important events in central banking. To see all of our emails and alerts visit www.ft.com/nbe

Inflation Report

The Bank of England’s Inflation Report is out on Wednesday, and with it the Monetary Policy Committee’s eagerly awaited forecast for inflation. Read more

Claire Jones

Money Supply will be running a series of Q&As on some of the more arcane but newsworthy aspects of central banking. Any suggestions for Q&As from our readers are of course welcome.

So the Federal Reserve on Wednesday will publish forecasts which will show us how long it plans to keep rates at more-or-less zero. Hasn’t it done that already?

Sort of. The voting members of the Federal Open Market Committee, which is responsible for setting interest rates, have already committed to keep rates at their current record lows until at least the middle of next year.

The move to produce interest rate forecasts however is a slightly different, slightly bolder step. Read more

Claire Jones

Lars Nyberg, deputy governor of Sweden’s Riksbank up until the turn of the year, has decried an IMF-led eurozone bail-out as absurd and lambasted the call for private sector involvement in the Greek debt crisis as having done irreparable harm.

The European Central Bank wouldn’t object – it too hasn’t liked either idea. But Frankfurt will be less pleased at Mr Nyberg’s calls to step into the breach. Read more

Claire Jones

Because monetary policy acts with a lag, it has to rely on forecasts.

However, as the Bank of England’s attempts at prediction have illustrated, central banks’ forecasts, and indeed those of most economists, tend to be pretty dire.

This is what Svante Öberg, first deputy governor of Sweden’s Riksbank, refers to in a speech out today as the “Catch-22 of monetary policy.” So what’s a central banker to do?  Read more

Claire Jones

Our week ahead email helps you track the most important events in central banking. To see all of our emails and alerts visit www.ft.com/nbe  Read more

Claire Jones

Our week ahead email will help you to track the most important events in the central banking world. To see all of our emails and alerts visit www.ft.com/nbe

The Federal Open Market Committee’s minutes are out on Wednesday for its late September meeting, where the majority backed Operation Twist, at 14.00 DC time (18:00 GMT). Read more

Claire Jones

Our week ahead email will help you to track the most important events in the central banking world. To see all of our emails and alerts visit www.ft.com/nbe

The majority of the world’s central bank governors and finance ministers are in Washington, DC this weekend for the IMF/ World Bank Annual Meetings.

Will there be any more policy coordination following the G-20 communiqué released late Thursday? Read more

Claire Jones

Lars Nyberg, one of the deputy governors at Sweden’s Riksbank, is a frequent critic of the eurozone authorities’ handling of the crisis. He has also been remarkably prescient.

So, what do the Riksbank’s minutes of its 6 September meeting, out today, reveal about what Mr Nyberg thinks will happen next? Read more

Claire Jones

Rate decisions

Next week sees a host of central banks vote on monetary policy.

The Reserve Bank of Australia’s board is expected to hold rates on Tuesday. On Wednesday Sweden’s Riksbank, the National Bank of Poland, the Bank of Japan and the Bank of Canada are all set to vote. Read more

Claire Jones

Long gone is the era when markets were left guessing about what the federal funds target actually was. Now we have a Federal Reserve which has not only told us about their current policy rate, but what they expect the rate to be two years from now.

At the forefront of these efforts for altogether more transparent monetary policy have been the select group of central banks that publish a projected path for interest rates.

Advocates say the projections give central banks greater influence over markets’ expectations, which in turn enhances the transmission of monetary policy. The case for projections, then, is similar to that for conditional commitments such as the Fed’s.

But do they actually work?

A report commissioned by Sweden’s parliament into the performance of the Riksbank – among this select group (which also includes the Czech National Bank, Norges Bank and the Reserve Bank of New Zealand) – suggests not. At least not past a year ahead.  Read more

Claire Jones

It is oft remarked that when the US sneezes, the rest of the world catches a cold. Given the slew of poor data in recent months, then, the risk of a double dip in the world’s largest economy is of mounting concern to policymakers around the globe.

Central bankers from Sweden and Japan have both touched on the issue in recent weeks.

This from the Bank of Japan’s minutes for its mid-June policy meeting, released Friday: Read more

Claire Jones

Minutes of the Riksbank’s July 4 policy meeting, published today, see deputy governor Lars Nyberg become the latest central banker to lambast the eurozone authorities over their handling of the Greek crisis. From the minutes:

Economically it would have paid off to find a solution to the Greek crisis a long time ago, given the costs in the form of less efficient markets and falling stock markets that the uncertainty has led to. However, Greece is now part of the euro area and this means that the crisis must be resolved politically and at the European level. Mr Nyberg noted that the European mechanisms for resolving crises do not appear to work particularly well.

Financial market investors are wondering, and justifiably so, how a crisis in a larger country could possibly be managed if it is not even possible to reach agreement on how to deal with Greece.

Quite. Because of this, he says, “a relatively minor economic crisis may quickly become a major political crisis”. (Note that this was before events in Italy took a turn for the worse.) Read more

Claire Jones

The blueprint for Basel III is more than a year old. And there is consensus on its fundamental tenets – to hold more and better quality capital, for liquidity requirements, leverage ratios, and countercyclical buffers.

Yet the devil is in the detail. There remains disagreement on the calibration of countercyclical buffers, not to mention what form the leverage ratio and liquidity buffers should take.

So Sunday’s appointment of Riksbank governor Stefan Ingves to chair the Basel Committee is significant. Read more

Rate rises might start to happen a bit quicker in Sweden following today’s rate rise. The repo rate rose 25bp to 1.5 per cent to help stabilise inflation and avoid resource utilisation being too high:

Inflationary pressures are still low in Sweden, but are expected to increase as economic activity strengthens… To stabilise inflation close to the target of 2 per cent and to avoid resource utilisation being too high, the repo rate needs to gradually increase. The Executive Board of the Riksbank has therefore decided to raise the repo rate by 0.25 percentage points to 1.5 per cent. The assessment is also that the repo rate needs to be raised somewhat faster in the coming period. Read more

The Riksbank has raised Sweden’s repo rate 25bp to 1 per cent, citing a rapidly growing economy. Inflationary pressures remain low but are expected to rise. The country’s central bank has said, however, that the repo rate will not “need to be raised so much in the coming years.”

For a statement announcing this expected rate rise, it was pretty bearish: Read more

Sweden is forecast to raise rates next week by 25bp, taking the repo rate to 1 per cent. If this happens, Sweden will have the honour of being the only European serial rate-raiser – an exclusive club spread across the globe, including Israel, Taiwan and Chile. Other rate-raisers have paused. From Citi:

We expect the Riksbank to continue its policy normalization, hiking by another 25bp to 1.0% at the upcoming October 25-26 meeting. Such a move would echo the September conditional interest rate path and also be in line with current market pricing (discounts about a 92% chance of such an outcome)…

We see compelling reasons building, though, for a downgrade of the longer-term part of the Riksbank’s rate path. There is little sign of inflationary pressures building and, combined with an uncertain global economic outlook and lower global interest rate expectations, the Riksbank should be in no hurry to hike, once the policy rate has reached more normal recessionary levels (of around 1.25-1.5%, in our view).

 Read more

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.  Read more