Central Banks

  • 2020-07-09 12:00

    By Greg Quinn and Brooke Migdon

    WASHINGTON (MNI) - Congress should extend fiscal stimulus as damage from Covid-19 lingers while the Federal Reserve should be ready with forward guidance and expanded QE if the economy weakens further, the OECD said Thursday.

    The banking system also faces risks if stimulus is withdrawn and there is a surge in bankruptcies from highly leveraged companies, the Paris-based group said in an annual review of the world's largest economy.

    "A sharp fiscal retrenchment would be counter-productive and as such the temporary provisions in the recent tax reform should not be allowed to expire. Furthermore, automatic stabilizers and additional measures implemented as part of the crisis reaction should be allowed to play out," the OECD report said.

  • 2020-07-09 01:36

    --Second Straight Meet All Nine Regions Cut View

    TOKYO (MNI) - All nine of Japan's regions lowered their economic assessment from three months ago, as the coronavirus impacted personal spending, production and capital investment, the Bank of Japan's quarterly regional economic report showed Thursday.

    It is the second straight time that all nine regions lowered their assessment from their previous meeting.

    "According to assessments from regions across Japan, all nine regions revised down their assessments from the previous ones, as was the case in April 2020,due to the impact of the novel coronavirus (COVID-19), and reported that their economy had deteriorated or had been in a severe situation," the July report said.

    Many branch managers noted the drop in the three m

  • 2020-07-08 22:00

    TOKYO (MNI) - Bank of Japan Governor Haruhiko Kuroda has maintained his cautious view that economic conditions in Japan are expected to remain severe due to the impact of the coronavirus.

    "Looking ahead, economic activities are expected to resume but (the) severe situation will likely continue for the time being due to the infectious disease," Kuroda said at the opening of the quarterly branch managers' meeting on Thursday.

    He also said the BOJ will not hesitate to take additional policy easing measures if they are necessary to support the economy, while keeping a close eye on the impact of the coronavirus.

    However Kuroda did not elaborate on when or how the bank would consider additional policy easing.


    Kuroda said the BOJ continues to

  • 2020-07-08 02:31

    --BOJ Officials See Homeworking May Lead To Job Losses

    TOKYO (MNI) - The BOJ sees the labor market worsening from current levels, even if the economy recovers through H2, pushing the unemployment rate higher and worsening the output gap.

    At present, the BOJ will not take additional policy easing measures, believing recent measures to get financing in place for small and medium-sized companies will offer at least some support for employees, MNI understands.

    Pre-pandemic, the BOJ highlighted the tightness of labor market condition, or labor shortages, was, along with an ageing population, in part a bi-product of accommodative policy and helped keep upward pressure on wages and inflation.

    One concern is that an increase in unemployment levels will wei

  • 2020-07-07 15:53

    --Inflation Will Also Remain Subdued Due to Demand Shock

    Regional Federal Reserve Bank presidents Mary Daly and Tom Barkin on Tuesday highlighted risks that the U.S. job market won't return to normal and inflation will remain subdued through the Covid-19 restart.

    "I'm assuming that we will level off at some level that's not where we want it to be," because people may not visit stores and buy as much as they did before, Daly said of the labor market.

  • 2020-07-07 10:57

    By Pedro Nicolaci da Costa

    WASHINGTON (MNI) - Early hints of an economic recovery from the Covid-19-led slump are starting to peter out, Atlanta Federal Reserve Bank President Raphael Bostic said Tuesday, indicating some at the central bank are bracing for a more prolonged recession.

    More recent data suggest economic activity is "leveling off at a level lower than we were pre-crisis, which might suggest there is going to be some loss or that the time required to recover might be quite a bit longer than we might have otherwise expected," Bostic told a webinar sponsored by the Tennessee Business Roundtable.

    Until recently, Fed officials had been expressing confidence in a solid bounceback in the second half of the year after a historic second quarter downturn caused by ext

  • 2020-07-03 02:02

    TOKYO (MNI) - Japan's positive output gap has been estimated at 0.29 percentage points in Q1, sharply narrowing from 1.07 pp in Q4, the Bank of Japan said Friday.

    The output gap is expected to narrow further in the coming quarters as the labor market shortage has eased.

    --The positive output gap below 1.00 pp was the first since Q3 2017 when it

    was at +0.85 pp.

    --The result was the 14th straight quarter with a positive output gap, which, in theory, should increase pressure on consumer prices and inflation expectations, albeit with a lag of a few quarters.

    --The BOJ's estimate of the output gap, based on capital and labour stocks, was wider than the Cabinet Office's latest estimate at -2.4 pp, a figure based on revised Q1 GDP data of a 0.6% fall q/q, or an annualize

  • 2020-07-02 18:16

    By Evan Ryser

    WASHINGTON (MNI) - The Fed's balance sheet edged down for a third straight week as FX swaps and repos continued to roll off, Fed data released Thursday showed.

    The Fed's portfolio shrank USD73 billion to USD7.01 trillion, driven by a USD50 billion decline in FX swaps and a USD10 billion decline in repos. Usage of dollar swap lines by global central banks fell to USD225 billion from as high as USD450 billion only a month ago.

  • 2020-07-02 10:56

    By Luke Heighton

    FRANKFURT (MNI) - Government efforts to counter the economic effects of the coronavirus pandemic must not be allowed to permanently alter the relationship between the state and private enterprise, the head of one of Germany's largest SME business associations told MNI in an interview, as he voiced concern that red tape might drag down growth.

    "A crisis is a time that transfers decision-making power to the government," Ludwig Veltmann, CEO of the Mittelstandsverbund, told MNI. "The danger is that if you are not careful it remains there, it becomes a sort of automatism.

  • 2020-07-01 09:09

    -Haskel: Risks To Downside Of BOE Economic Scenario

    LONDON (MNI) - The UK's economic balance of risks are currently to the downside, but policy remains appropriate, Bank of England Monetary Policy Committee member Jonathan Haskell said Wednesday, noting that the BOE was looking into the fragmented pass through from its recent cutting of benchmark rates to 0.1%.

    "I believe the current stance of monetary policy is appropriate but, on balance, risks are to the downside," he said.

    He said that if there was a second Covid wave the Bank would respond to the economic consequences but that it had already built consumer caution, in part due to health fears, into its latest projections.

    Haskel said that at the June meeting he "readily joined the majority of