Central Banks

  • 2019-06-13 06:05

    By Luke Heighton

    BERN (MNI) - The Swiss National Bank (SNB) could lower its already negative interest rates still further should the economic situation demand it, Governor Thomas Jordan said Thursday.

    "We still have room to manoeuvre, we can go to an even more expansionary monetary policy," Jordan said. "We have sufficient room to change our monetary policy in order to react to certain shocks."

    Asked when the SNB might return to positive interest rates, Jordan said: "If you look at the global economy at this moment, the point of time when interest rates will go up is probably postponed and pushed further into the future.

  • 2019-06-11 06:01

    By David Robinson

    LONDON (MNI) - Bank of England Monetary Policy Committee member Michael Saunders said Brexit was to blame for the disconnect between his message that more tightening was likely to be needed and market rate expectations of no rate hikes through 2020.

    "The disconnect is more to do with Brexit assumptions" than MPC communication, Saunders said in evidence to the Treasury Select Committee.

    --Saunders noted that the MPC's fan-charts, its probabilistic growth and inflation projections, under-estimated the uncertainty of the outlook by excluding the no-deal and remain options.

    "If either were to become the central case, the economic outlook could change materially," Saunders said in his written evidence.

    --Saunders said a no deal Brexit would likel

  • 2019-06-10 11:19

    By Jean Yung

    WASHINGTON (MNI) - Softer U.S. macro data do not present a clear case for an imminent interest rate cut, but persistent trade tensions may prove disruptive enough to warrant a course correction, senior Federal Reserve economists told MNI last week.

    Officials at the Richmond and Dallas Fed banks said in interviews that, in aggregate, the past few months' employment, consumer spending and other indicators look strong, even as they noted softness in recent manufacturing, investment and other data.

  • 2019-06-06 21:25

    TOKYO (MNI) - The Bank of Japan Friday increased the scale of its purchases of Japanese government bonds with a remaining life of 10 to 25 years to Y200 billion from Y160 billion.

    The increase followed the BOJ's decision of reducing the frequency of its purchases of super long-term bonds to three times from four times monthly.

    The scale of Y200 billion is the middle of a permissible range of Y100 billion to Y300 billion.

  • 2019-06-06 13:00

    By Jean Yung

    WASHINGTON (MNI) - With little room to cut interest rates should another crisis hit the U.S. economy, the Federal Reserve should reevaluate its strategies for hitting its 2% inflation target, New York Fed President John Williams said.

    "What can we do to prepare ourselves and our economies for the next crisis?" he said in remarks prepared for the Council on Foreign Relations in New York. "Starting with monetary policy, central banks should reassess their strategies, goals, and the tools they use to achieve them. This might include things like reassessing how we achieve our 2% goal."

    Inflation that's too low is "now a more pressing problem" following the financial crisis, he said, on the heels of a two-day Fed conference to reassess its policy framework.

  • 2019-06-04 09:55

    By Jean Yung

    WASHINGTON (MNI) - The Federal Reserve is closely monitoring developments in trade negotiations and is prepared to act "as appropriate" to sustain the expansion, Fed Chair Jay Powell said Tuesday.

    His comments come on the heels of U.S. President Donald Trump's latest plans to impose tariffs on Mexican goods, which has roiled markets in the past week, setting off fears of prolonged trade wars and calls for the Fed to lower interest rates this year.

    "We do not know how or when these issues will be resolved. We are closely monitoring the implications of these developments for the U.S.

  • 2019-06-03 15:15

    By Jean Yung

    WASHINGTON (MNI) - The narrative on global trade has darkened in recent days, driving Federal Reserve Bank of St. Louis President Jim Bullard's call for lowering interest rates soon, he told reporters Monday.

    "It's the global trade regime uncertainty," he said, adding he previously thought trade issues would get resolved over the medium term, but recent reports suggest "trade deals are not around the corner."

    He declined to give further details on how the Fed should loosen policy, including the timing and magnitude of rate cuts.

    "I'm anxious to see how my colleagues interpret the incoming data" at the June FOMC meeting, he said. "There is already a case on the table to cut because inflation is too low ...

  • 2019-06-03 13:25

    By Jean Yung

    WASHINGTON (MNI) - The Federal Reserve may need to lower interest rates soon to move inflation and inflation expectations back toward target and insure against a slowdown in U.S. growth exacerbated by trade tensions, St. Louis Fed President Jim Bullard said Monday.

    "A downward policy rate adjustment may be warranted soon to help recenter inflation and inflation expectations at target and also to provide some insurance in case of a sharper-than-expected slowdown," he said in slides prepared for the Union League Club of Chicago.

    Inflation and inflation expectations remain below the Fed's 2% target, "clearly concerning" for the Fed's credibility, Bullard said.

  • 2019-06-03 10:04

    By Jean Yung

    WASHINGTON (MNI) - The expectation that a central bank will maintain a large balance sheet after concluding a period of extraordinarily easy monetary policy could result in a deeper recession, according to new research into the potential costs of quantitative easing to be presented to the FOMC on Wednesday.

    Notre Dame economists Eric Sims and Cynthia Wu find that plans for balance sheet normalization can impact how the economy fares during a period at which interest rates are near zero. Specifically, a smooth balance sheet normalization is preferable to immediate normalization or to carrying a significantly larger balance sheet going forward.

  • 2019-06-03 10:00

    By Jean Yung

    WASHINGTON (MNI) - The Fed's should simplify its post-meeting statement and convert the quarterly Summary of Economic Projections into a more detailed Bank-of-England-style Inflation Report, according to a paper based on a survey of 24 policy experts to be presented to the FOMC Tuesday.

    The dot plot would be replaced with a matrix that links each FOMC member's projections for growth, unemployment, inflation and interest rates.