Leaning against the wind
Stefan Ingves on central bank failings on inflation and financial stability
Riksbank veteran speaks about liquidity, interest rate and non-bank regulatory reforms, and the need for explicit legal definitions for digital money
Fed’s Quarles casts doubt on leaning against the wind
But we “do not fully understand” the potential trade-offs, he says
Riksbank’s Jansson changes his mind on leaning against wind
Deputy governor says his position on the policy has shifted with the benefit of hindsight
Five-year extension for Riksbank governor Ingves
Swedish governor receives additional term as opposition allegedly blocks appointment of Karolina Ekholm; first deputy also receives renewed term
Rate hikes could halt asset bubbles, research finds
Tighter policy can work if savings fall or holdings of bubble asset decline, paper says
Svensson launches fresh attack on leaning against the wind
Lars Svensson outlines “simple and transparent framework” he hopes will guide debate, as other papers challenge his results
Credit cycle matters for fiscal policy – BIS paper
Phase in financial cycle has “substantial” impact on public finances, authors find; commodities cycle less important but matters for some
Kashkari: Fed should not seek to deflate asset bubbles
Spotting bubbles is too difficult and the costs of failure too great, the Minneapolis Fed chief warns, although he concedes raising interest rates remains an emergency option
BIS economists model benefits of leaning against the wind
Endogenous model of financial crises points to benefits of using monetary policy to lean against financial imbalances, in contrast to many other studies
Climbing ‘Mount Economy’
The BIS’s quest for financial stability-oriented monetary policy throws up questions not only about decision-making but also how one should think about economics, as Claudio Borio explains
BoE prize-winning research favours CCB over leaning against the wind
Authors from Lancaster University find credit spread-augmented Taylor rule damages welfare, while a recent BIS paper takes a different analytical approach
Norges Bank paper offers insights on when to ‘lean against the wind’
Norges Bank working paper investigates the extent monetary policies should actively aim at mitigating the build-up of financial imbalances; using rates to curb credit growth could lower output
Bank of Thailand frets over zero lower bound
Minutes show latest policy decision influenced by worries over financial imbalances and perceived need to maintain “policy space” in event of economic hit
Canadian paper sees costs to leaning against the wind
Research estimates difference in policy rates between ‘lean’ and ‘clean’ central banks, while identifying costs in terms of inflation and output deviations
Ingves draws lessons from Sweden’s economic history
Riksbank governor emphasises the close link between financial stability and monetary policy, while promising to take further action ‘with force’ if necessary
Norges Bank’s Olsen backs ‘leaning against the wind’
Øystein Olsen presents evidence in favour of using monetary policy to lean against financial imbalances, which he says smooths inflation and output in the long run
Esther George questions macro-prudential approach
Kansas City Fed president says macro-prudential approach ‘expects too much of tools for which our understanding is imperfect' in Philippines speech
Leaning against the wind may boost shadow banking: BoE researchers
Contractionary monetary policy may encourage growth of shadow banking even as it restricts commercial banks, casting doubt on the ability of central banks to ‘lean against the wind’
Riksbank deputy dismisses criticism of interest rate ‘experiment'
Per Jansson says ‘leaning against the wind' played minor part in recent years' policy discussions; suggests outside predictions of low inflation have been overplayed
Riksbank board at a loss over falling inflation, minutes suggest
Ingves says Swedish economy needs ‘two different policy rates: one for households and one for companies', while central bank casts doubt on new mortgage repayment rules
Ekholm leaves Riksbank for post in finance ministry
Dovish deputy quits her term early to become state secretary to Sweden's new finance minister; vocal critic of central bank's ‘lean against the wind' policy