Tag: Monetary Policy

The European Central Bank reduced the deposit facility rate, its policy interest rate anchor, by a quarter of a percentage point to 3.5%, as the central bank slightly lowered its economic growth forecast.

The Bank of Canada lowered its target for overnight rate by 0.25 ppts to 4.75%, making it one of the advanced economy central banks to cut rates before Federal Reserve does.

Governor Macklem said the "Governing Council’s discussion of monetary policy is shifting from whether our policy rate is restrictive enough to restore price stability, to how long it needs to stay at the current level"

Bank of Canada maintained its benchmark interest rate at 5% but warned about persistent underlying inflationary pressure.

Bank of England on Thursday decided to raise its benchmark interest rate by 0.5% to 5%, larger than the market expectation of a 0.25% increase. The decision followed Office of Nation Statistics' publication of a 8.7% CPI inflation reading for the year to May on Wednesday.

Inflation projections by Fed officials show that PCE inflation will not reach 2% by the end of 2025. Why the Fed expects to cut rate next year then?

The financial market expecting the UK policy interest rate UK will break 4% by May, more than double the current level of 1.75%. Financial Times reported.

Luis de Guindos, vice president of the European Central Bank, depicted the coronavirus as an additional " layer of uncertainty to global and euro area growth prospects,"

Macroprudential policies, it is argued, are more targeted and can complement central bank’s use of interest rate policy.

In a recent research, four European Central Bank economists found that negative interest rate policy in the eurozone can encourage banks to increase lending and encourage cooperations to increase investments.That is, contrary to what macroeconomics models usually predict, interest rate policy can still has stimulative effect even the zero lower bound is reached.