Tag Archives:

central banks

Negative Rate World (NRW) – a wiki of unintended consequences

The world has seen negative interest rates before – Switzerland set interest rates below zero for foreigners in the 1970s in order to slow flows into the Franc.  But today’s negative rate environment is far more widespread, with Switzerland, Denmark, Sweden, Japan, and the Eurozone all setting negative policy rates.  Lots has been written about the intended transmission mechanisms of negative r…

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Does the Overton Window apply to monetary policy? And four other things.

A few things that I’ve found interesting over the past week or so:

  1. I’m just back from a week’s holiday in France, and my news source whilst I was away was the hotel’s International New York Times. Terrible for English Championship football rumours, but lots about US politics and in particular the recent discussion about the Overton Window.  Joseph Overton’s theory is that there is a limited ra…

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Knowing your nordics

Knowing your Nordics: An overview of central bank policy and the negative rate environment

There has been a barrage of G7 central bank coverage in March, culminating in much talk, but resulting in – on the whole – little new action. The Bank of Japan remained on hold (after adopting a surprise negative rate policy at the end of January), the Federal Open Market Committee (FOMC) delivered a “dovish hold” (keeping interest rates unchanged while lowering their longer term rate guidance)…

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16.02.10-CC-blog-1

How long until China reaches the floor of the recommended reserve adequacy range?

Much has been discussed on the topic of the optimal level of foreign exchange reserves. One of the common methodologies is the IMF’s ARA (Assessing Reserve Adequacy) metric, which essentially provides a range based on a country’s trade, broad monetary aggregates and external liabilities. How much weight should be given to each factor varies according to the economic structure of each country, i…

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15.11.30 ME blog 1

The ECB may lower rates, but the Swiss shouldn’t follow suit

Expectations are high that European Central Bank (ECB) president Mario Draghi will announce additional easing measures at the next monetary policy meeting on Thursday this week. If the ECB decides to provide further stimulus via extended (or expanded) QE and/or lowers its negative deposit rate further, the Swiss National Bank (SNB) has some thinking to do. I am probably not the only Swiss perso…

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What has the recent fall in oil prices got to do with inflation over the next three decades?

What has the recent fall in oil prices got to do with inflation over the next three decades? Plus robots, charity, Morrissey.

First of all thanks to Business Insider.  Every now and then we come into work to find hundreds of new Twitter followers have joined us overnight – this week it was thanks to BI listing us second in its round up of finance Tweeters.  It’s a great list and pretty much everyone on it is worth a follow – I’d also recommend following Business Insider’s European markets editor Mike Bird (@Birdyword)…

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2015-09 blog RW

We are there – nothing to fear

The Bank of England’s Monetary Policy Committee (MPC) are due to meet on Thursday and most economists expect a dovish set of minutes to accompany the announcement of no change in the BoE base rate. Additionally, the minutes will likely emphasise the risks of a persistent undershoot in UK inflation given the continued fall in commodity prices and waning global demand. Despite these risks, the MP…

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Tweet inflation survey March 15

The M&G YouGov Inflation Expectations Survey – Q1 2015

Economic policy hawks love inflation expectation surveys. As do bond fund managers, who like to keep a close eye on inflation to ensure that fixed income returns aren’t being eroded away. Provided that inflation expectations are close to target, we tend to argue expectations are well anchored and thus central bankers can rest easy. However, the monetary policy actions undertaken by many central…

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Long US Treasury bonds are overvalued by 250 bps. Discuss.

As we started 2014 the US Treasury market was expecting 10 year yields to be at 4.13% in a decade’s time. This 10 year 10 year forward yield, derived from the yield curve, is a good measure of where the bond market believes yields get to if you “look through the cycle”, and disregard short term economic trends and noise. I wrote about it here and suggested that we were approaching the top of th…

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The M&G YouGov Inflation Expectations Survey – Q4 2014

Today we launch the next edition of M&G YouGov Inflation Expectations Survey which polled over 8,200 consumers across the UK, Europe and Asia.

The Q4 report reveals that consumers’ short-term inflation expectations continue to moderate across most regions, although they remain well above current inflation levels. Long-term expectations remain resilient despite this year’s low inflation environm…

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