Global Economics

Global Central Bank Watch

Global Central Bank Watch

Central bank mission creep

There have been several cases of central bank mission creep in recent months, with policy remits widening to cover areas other than consumer price inflation. The Bank of England is now helping to tackle climate change, the Bank of Japan is still trying to support banks' profitability, the US Fed has adjusted its employment goal to put some emphasis on equality and the Reserve Bank of New Zealand has been tasked with stabilising house prices. In this Global Central Bank Watch, we explain those changes and assess what the implications might be.

29 March 2021

Global Central Bank Watch

Taper talk a prelude to bigger policy debate

Talk of tapering in recent weeks has been premature and we suspect that most major central banks will keep up asset purchases at their current pace for the rest of the year. Assuming that tapering starts once recoveries are well underway, and that the process is well communicated, we do not foresee a repeat of the “taper tantrum” of 2013. With that being said, the sheer scale of the expansion in central banks' balance sheets over the past year will have major implications of the conduct of monetary policy in the post-pandemic era – and is likely to require further unconventional thinking by policymakers.

4 February 2021

Global Central Bank Watch

Taper talk a prelude to bigger policy debate

Talk of tapering in recent weeks has been premature and we suspect that most major central banks will keep up asset purchases at their current pace for the rest of the year. Assuming that tapering starts once recoveries are well underway, and that the process is well communicated, we do not foresee a repeat of the “taper tantrum” of 2013. With that being said, the sheer scale of the expansion in central banks' balance sheets over the past year will have major implications of the conduct of monetary policy in the post-pandemic era – and is likely to require further unconventional thinking by policymakers.

 

4 February 2021
Latest Publications

Global Central Bank Watch

Vaccines won't preclude looser policy

The encouraging news about vaccines has led us to expect most restrictions in advanced economies to be removed by Q2 next year, allowing them to embark on steeper recoveries towards their pre-virus path. But while some have speculated that this will prompt the major central banks to consider policy normalisation, or at least to stop loosening, we disagree. In this Global Central Bank Watch, we outline seven reasons why monetary policy may be loosened further in the coming months and will then remain ultra-loose for several years to come.

25 November 2020

Global Central Bank Watch

Average inflation targets from a global perspective

For the past thirty years the orthodoxy has been that central banks should focus on controlling inflation, targeting a rate (normally 2%) over a key policy horizon (often 18 months to two years ahead). In his address to the annual Jackson Hole monetary policy symposium, US Federal Reserve Chair Jerome Powell signalled a break with that orthodoxy by announcing that the Fed would now adopt “a flexible form of average inflation targeting”.

9 September 2020

Global Central Bank Watch

Lending facilities offering vital support

This month has seen a further shift among the world's major central banks from essential liquidity provision to recovery support, with a focus on uptake of the various lending programmes. The results so far have been somewhat mixed. It seems likely that uptake of the various schemes will rise in the months ahead as the newer ones become better established and as government schemes are gradually phased out.

2 July 2020

Global Central Bank Watch

Taking stock of central bank lending facilities

Traditionally, when central banks respond to economic downturns, slashing policy interest rates makes for the headline act. This time, with rates already near zero at the onset of the crisis, rate cuts were only the warmup and, in some cases, didn't even make the line-up. Instead, policy action by major central banks has in large part come in the form of a growing list of lending facilities.  Many of the schemes – such as the BoJ's “Special Operations” – are brand new. Some – including the Fed's Commercial Paper Funding Facility – are GFC-era schemes that have come out of retirement. Other, existing facilities – like the ECB's TLTROs – have been beefed up.

Global Central Bank Watch

Monetary policy pushing new limits

What a difference a month makes. At the time of our last Global Central Bank Watch, monetary policymakers in advanced economies had taken a cautious but relatively sanguine attitude to the coronavirus and made only small policy changes. Now, they have pulled out just about every stop.

1 to 8 of 39 publications
See More ↓