Central Bank News Link List - Mar 11, 2014 - BOE's Carney: Not unreasonable Bank Rate peak at 2.5%

Here's today's Central Bank News' link list, click through if you missed the previous link list. The list comprises news about central banks that is not covered by Central Bank News. The list is updated during the day with the latest developments so readers don't miss any important news.

• BOE's Carney: Not unreasonable Bank Rate peak at 2.5% (MNI)
• ECB’s Lautenschlaeger: Open to negative rates, asset purchases (WSJ)
• PBOC’s Zhou sees deposit-rate liberalization within 1 to 2 years (Bloomberg)
• ECB unlikely to end sterilization of SMP purchases: traders (Reuters)
• Brazil central bank: No decision yet on rollover for April FX swap contracts (WSJ)
• Pound forecasts boosted to highest since 2011 on rate outlook (Bloomberg)
• Ukraine central bank says ready to buy dollar at 9.2359 hryvnia (Reuters)
• Pleschinger: Hungary financially stable, risks remain (Reuters)
• RBNZ likely to raise OCR by 25 bps in March (Action Forex)
• Slim majority in poll see Thai central bank cutting key rate (Reuters)
• Irish lenders unlikely to need more capital – central bank governor (Reuters)

          www.CentralBankNews.info

BOJ holds policy, stronger investment, industrial output

     Japan's central bank maintained its goal of boosting the monetary base by an annual 60-70 trillion yen and voiced growing confidence about rising investment and industrial production though it also acknowledged that exports had "recently leveled of more or less."

 
   The Bank of Japan (BOJ), which embarked on an aggressive easing campaign in April 2013 to rid the country of 15 years of deflation, repeated that the economy "is expected to continue a moderate recovery as a trend, while it will be affected by the front-loaded increase and subsequent decline in demand prior to and after the consumption tax hike."
  

    Japan's government is raising the sales tax rate to 8 percent from 5 percent on April 1 to reduce its deficit and slow down the growing debt, and there is speculation that the BOJ will boost its stimulus to make up for any economic slowdown and to ensure that the bank meets its target of boosting inflation to 2 percent.

   
However, BOJ officials have often downplayed this speculation, arguing the economy can weather the impact of the tax rise. In 1997, when the sales tax was raised to 5 percent from 3 percent, the economy went into recession.

Central Bank News Link List - Mar 10, 2014 - Plosser: Fed may have to accelerate tapering pace

Here's today's Central Bank News' link list, click through if you missed the previous link list. The list comprises news about central banks that is not covered by Central Bank News. The list is updated during the day with the latest developments so readers don't miss any important news.

• Plosser: Fed may have to accelerate tapering pace (Dow Jones)
• Stronger sterling could delay BOE rate rise – Bean (Reuters)
• BOJ to maintain stimulus, exports seen as a concern (Reuters)
• Cyprus central bank head who led Cyprus through bailout quits (Reuters)
• Central banks must contain threat from low prices – Noyer (Reuters)
• China weakens yuan by largest degree since 2012 (WSJ)
• Evans: Fed must take balanced, symmetric approach, know limits (MNI)
• Brazil economists lower Selic forecast for second straight week (Bloomberg)
• Bundesbank criticizes Fed’s new bank rules (Dow Jones)
• IMF chief economist: Eurozone deflation risk is real – press (MNI)
• EU mulls 8-year trek to bank fund after Draghi warning (Bloomberg)
• RBA mulls higher home loan hurdles to curb risky lending (Sydney Morning Herald)
• RBA favors loan oversight over curbs in property, papers show (Bloomberg)
• N.Z. set to lift rates as quake rebuilding fuels prices (Bloomberg)
• Thai central bank likely to maintain rate this week or trim by 25 bps (The Nation)
• Bank of Israel members see stronger shekel threatening exports (WSJ)
• BOE’s Carney faces grilling over foreign exchange scandal (Reuters)
• Czech c.bank: Feb CPI below forecast due to big regulated price drop (Reuters)
• Malaysia central bank to keep rate in 2014 despite rising inflation (Borneo Post)
• IMF urges ‘early warning’ for Qatar banks (Gulf Times)
• Sri Lanka’s interest rates to remain steady in next 2-3 months (Reuters)

          www.CentralBankNews.info

Emerging market rate hikes may strain banks – BIS

    Swift action by central banks in emerging market helped dampen financial market turbulence in January but higher interest rates could put strains on overextended borrowers, making it critical to strengthen financial systems in those countries, said Cladio Borio of the Bank for International Settlements (BIS).

    Some of the rate hikes were in response to external forces so any financial imbalances could unwind suddenly, rather than gradually, especially in countries where the growth of credit was already slowing after after a long financial boom, said Borio, head of BIS’ Monetary and Economic Department.

   Although some countries have already taken measures to address the systemic challenges that face borrowers from higher rates, Borio warned they “may well be insufficient.”

    “It is critical to strengthen financial systems so they can withstand losses should assets fall or loans go sour,” Borio told journalists in connection with the release of the BIS March quarterly review, adding:
    "There is a disappointing element of déjà vu in all this.”

Non-US banks get cash abroad for 43% Fed reserves - BIS

    The higher cost of wholesale funding for insured banks in the United States following Dodd-Frank legislation had the unintended effect of leaving non-US banks holding 43 percent of reserves at the Federal Reserve, much higher than their 13 percent share of U.S. banking assets, according to an article in the latest quarterly review by the Bank for International Settlements (BIS).
    In a detective-like fashion, BIS economists Robert McCauley and Patrick McGuire follow the flow of money across borders and conclude that non-U.S. banks’ branches used funds from the rest of the world to take up $958 billion of the Fed’s $2.249 trillion in reserves that were created to fund its purchase of Treasury and mortgage bonds as part of its extraordinary monetary stimulus.
    The reason that non-U.S. banks have ended up with such a disproportionate share of Fed reserves is due to legislation following the global financial crises aimed at forcing banks to pay for an increase in the size of the Federal Deposit Insurance Corp. (FDIC) fund.
    An FDIC charge was levied on short-term wholesale bank funding, one of the factors that had contributed to systemic instability during the financial crises. But despite concern that such a charge could result in regulatory arbitrage if it wasn’t internationally coordinated, the charge was only applied to U.S. banks that operate with FDIC insurance.

Forward guidance lowers near-term rate volatility - BIS

    The final verdict on the usefulness of forward guidance will depend on how central banks navigate the final stages of the economic recovery and whether they can return to normal monetary policy after years of extraordinary accommodation, according to an article in the latest quarterly review by the Bank for International Settlement (BIS).
    In a roundup of the evidence on the effectiveness of forward guidance, two BIS economists find reduced volatility of near-term expectations about future policy rates, suggesting that major central banks - the Federal Reserve, the Bank of Japan, the Bank of England and the European Central Bank - have been successful in clarifying their intentions to financial markets and investors.
    But in the longer term, the effects on interest rates and the responsiveness of financial markets is more mixed and not very systematic in one direction or the other, according to Andrew Filardo, head of monetary policy at the BIS, and Boris Hofmann, senior BIS economist.
    “At the same time, the forward guidance raises a number of significant challenges. How they are managed will ultimately determine the enduring value of this communication tool,” they conclude.

Central Bank News Link List - Mar 7, 2014 - Fed seen raising rates a bit earlier after jobs report

Here's today's Central Bank News' link list, click through if you missed the previous link list. The list comprises news about central banks that is not covered by Central Bank News. The list is updated during the day with the latest developments so readers don't miss any important news. 

• Fed seen raising rates a bit earlier after jobs report (Reuters)
• RBA’s Stevens says he doesn’t see need to reduce rates further (Bloomberg)
• Russian central bank to continue emergency measures due to weak ruble (Pravda)
• Bank of Russia says preventing bankruptcy of Ukraine bank's Moscow unit (Reuters)
• NY Fed Dudley: Easy mon policy approp for 'considerable time' (MNI)
• Swiss central bank posts $10.4 bln loss on gold holdings (Dow Jones)
• BOE says rate-increase expectations rose to two-year high (Bloomberg)
• Serbian central bank steps in to support dinar (Reuters)
• Tokyo investors eye more central bank easing next week (AFP)
• Fed officials see high hurdle for changing course on QE taper (Reuters)
• Nigeria's economic growth to quicken, inflation to ease this year-IMF (Reuters)
• Philippine economic growth to breach 6 pct: central bank (Philstar)
• Fed’s Lockhart: New interest-rate guidance coming soon (WSJ)
• Monetary policy cannot solve jobs crises-South Africa’s Marcus (BDLive)
• A steady path for Indonesian monetary policy (Jakarta Post)
• ECB: E11.401 bln 3-year LTRO funds to be repaid Mar 12 (MNI)
• Mersch says ECB alone can’t boost business lending through ABS (Bloomberg)
• South Korea central bank to head for changes (Korea Times)
• Trinidad central bank denies IMF forex rule violation (Guardian)
• Botswana household debt put banks at risk (Southern Times)

           www.CentralBankNews.info

Central Bank News Link List - Mar 6, 2014 - Brazil central bank says inflation is still a concern

Here's today's Central Bank News' link list, click through if you missed the previous link list. The list comprises news about central banks that is not covered by Central Bank News. The list is updated during the day with the latest developments so readers don't miss any important news.

• Brazil central bank says inflation is still a concern (WSJ)
• Fed may fall ‘behind the curve’ if GDP keeps growing: Plosser (Reuters)
• Fed’s Dudley says threshold high changing taper plans (Reuters)
• Greek central bank confirms major banks need 6.4 bln euros (Reuters)
• Fed survey: Winter storms holding back economy (AP)
• Central bankers reach for atlas as Ukraine fallout gauged (Bloomberg)
• Hungary real interest rate level should be watched – government (Reuters)
• BIS chief urges central banks to stay course of normalization (Reuters)
• BOJ ready to adjust policy if needed to achieve 2% inflation: Iwata (RTT)
• No plans to shift monetary policy approach: MAS (Business Times)
• BOE heard traders’ currency-rigging concerns years ago (Bloomberg)
• IMF said to demand greater say on Greek banks in ECB wrangle (Bloomberg)
• Fed’s Fisher: Central banks must look out for own countries (WSJ)
• BoE’s Haldane says IMF needs more funds (Reuters)
• IMF says its ‘negative image’ steers countries away from borrowing (Reuters)
• Former Indonesia central bank deputy governor indicted of corruption (Antara)
• Kazakhstan central bank toughens requirements to borrowers (Tengri News)

     www.CentralBankNews.info