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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.
A story about three economists agree with the prevailing consensus that the Phillips Curve of the US is flattened in the last few decades on the one hand; and dispute the idea that the Phillips Curve is dead on the other.
In a recent NBER working paper "Monetary Policy Communications and their Effects on Household Inflation Expectations", economists Olivier Coibion, Yuriy Gorodnichenko and Michael Weber tried to find out how the household's expectation for inflation change with regard to the information they received.
In their working paper "A Skeptical View of the Impact of the Fed's Balance Sheet," economists David Greenlaw, James D. Hamilton, Ethan Harris, and Kenneth D. West challenge some earlier studies that concluded QEs have a significant economic impact. Their major argument is that those research used simple event studies to quantify the impact of QE.
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