At an event at its central London Headquarters, chaired by The Times’ Economics Editor Philip Aldrick, Resolution Foundation Chief Economist Matthew Whittaker presented new analysis on the impact of monetary policy during the downturn. Former MPC member Kate Barker and Chief Economics Commentator at the Financial Times Martin Wolf then debated the future role of monetary policy, before taking part in a wider Q&A.
Below please find a link to our monthly market perspective piece for December. This month we examine the impacts of the rapidly changing low interest rate environment.
Below please find a link to our monthly market perspective piece for December. This month we examine the impacts of the rapidly changing low interest rate environment.
A review of Q4 2015 corporate earnings reveals a significant slowdown in revenue and earnings growth. While these developments have been affected by the sharp decline in commodity prices,they may reveal early signs of recessionary conditions.
Monthly Market Perspective - June 2016David Berger
The drivers of short-term market moves can be vastly different from those which underpin the cycles of longer-term market direction. This month we examine a variety of these factors.
Global synchronization provide upward bias to Equity based investments once again. In depth look at how Janney breaks down the year ahead and where to invest to take advantage of the reemergence of Global Growth.
Lately, there's been a lot of focus on the Fed and the potential for tapering. In today's Topic Talks, NEPC's Jennifer Appel breaks down the Federal Reserve's toolbox, the basics of quantitative easing, how tapering works, and what it could mean for capital markets.
Below please find a link to our monthly market perspective piece for February. This month, with the prospect for potential policy changes ahead, we take a deeper dive into the concept of inflation and what it means to investors.
Pace Executive MBA - Business Analysis Project on Macro and Statistical Analysis of Real Estate Investment.
We created a Market Report of Macroeconomic Indicators for distribution to Fidelity and their investors in order to keep them apprised of current macroeconomic factors relevant to the Real Estate industry, risks and performance.
What Impact Would Tighter Monetary Policy Have on Your Investments?InvestingTips
http://profitableinvestingtips.com/investing-tips/what-impact-would-tighter-monetary-policy-have-on-your-investments
What Impact Would Tighter Monetary Policy Have on Your Investments?
A new president is about to take office. Successful investors will be the ones who anticipate how the next administration and congress will affect the economy and how the various factors at play will affect investments. In the case of Trump and a Republican controlled congress we expect tax cuts, an attempt to bring corporate cash back from overseas and increased spending on U.S. infrastructure. If these plans come to fruition there will be at least short and medium term stimulus to the economy. A predictable result will also be increased interest rates, namely a tighter monetary policy. The value of the dollar will rise versus other currencies. Our concern today is what impact would tighter monetary policy have on your investments? Bloomberg writes about the outlook on the Fed, Trump and the dollar.
PKO Bank Polski, which topped Bloomberg’s overall accuracy rankings for the final quarter of 2016, sees the dollar’s rise pushing the euro to 95 U.S. cents or even lower by the end of June, a level not seen in 15 years. That’s the lowest call for the pair among 53 forecasters, according to data compiled by Bloomberg.
The forecast is based on the prospects of a tighter monetary policy from the Federal Reserve, coupled with markets expecting President-elect Donald Trump’s fiscal measures to “translate into higher growth and inflation,” said Jaroslaw Kosaty, the chief FX strategist at the bank, Poland’s biggest.
Will the impact of tighter monetary policy be solely because of a stronger dollar? How will inflation be affected if the Fed does not raise rates rapidly enough?
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The 2014 Mercedes-Benz C-Class is available at Walter’s Automotive, a leading Mercedes-Benz dealer serving Corona. Schedule a test-drive in the exciting 2014 Mercedes-Benz C250 Coupe today.
A review of Q4 2015 corporate earnings reveals a significant slowdown in revenue and earnings growth. While these developments have been affected by the sharp decline in commodity prices,they may reveal early signs of recessionary conditions.
Monthly Market Perspective - June 2016David Berger
The drivers of short-term market moves can be vastly different from those which underpin the cycles of longer-term market direction. This month we examine a variety of these factors.
Global synchronization provide upward bias to Equity based investments once again. In depth look at how Janney breaks down the year ahead and where to invest to take advantage of the reemergence of Global Growth.
Lately, there's been a lot of focus on the Fed and the potential for tapering. In today's Topic Talks, NEPC's Jennifer Appel breaks down the Federal Reserve's toolbox, the basics of quantitative easing, how tapering works, and what it could mean for capital markets.
Below please find a link to our monthly market perspective piece for February. This month, with the prospect for potential policy changes ahead, we take a deeper dive into the concept of inflation and what it means to investors.
Pace Executive MBA - Business Analysis Project on Macro and Statistical Analysis of Real Estate Investment.
We created a Market Report of Macroeconomic Indicators for distribution to Fidelity and their investors in order to keep them apprised of current macroeconomic factors relevant to the Real Estate industry, risks and performance.
What Impact Would Tighter Monetary Policy Have on Your Investments?InvestingTips
http://profitableinvestingtips.com/investing-tips/what-impact-would-tighter-monetary-policy-have-on-your-investments
What Impact Would Tighter Monetary Policy Have on Your Investments?
A new president is about to take office. Successful investors will be the ones who anticipate how the next administration and congress will affect the economy and how the various factors at play will affect investments. In the case of Trump and a Republican controlled congress we expect tax cuts, an attempt to bring corporate cash back from overseas and increased spending on U.S. infrastructure. If these plans come to fruition there will be at least short and medium term stimulus to the economy. A predictable result will also be increased interest rates, namely a tighter monetary policy. The value of the dollar will rise versus other currencies. Our concern today is what impact would tighter monetary policy have on your investments? Bloomberg writes about the outlook on the Fed, Trump and the dollar.
PKO Bank Polski, which topped Bloomberg’s overall accuracy rankings for the final quarter of 2016, sees the dollar’s rise pushing the euro to 95 U.S. cents or even lower by the end of June, a level not seen in 15 years. That’s the lowest call for the pair among 53 forecasters, according to data compiled by Bloomberg.
The forecast is based on the prospects of a tighter monetary policy from the Federal Reserve, coupled with markets expecting President-elect Donald Trump’s fiscal measures to “translate into higher growth and inflation,” said Jaroslaw Kosaty, the chief FX strategist at the bank, Poland’s biggest.
Will the impact of tighter monetary policy be solely because of a stronger dollar? How will inflation be affected if the Fed does not raise rates rapidly enough?
CA 2014 Mercedes-Benz C-Class | Mercedes-Benz Dealer Serving CoronaWalter's Automotive
The 2014 Mercedes-Benz C-Class is available at Walter’s Automotive, a leading Mercedes-Benz dealer serving Corona. Schedule a test-drive in the exciting 2014 Mercedes-Benz C250 Coupe today.
State of Living Standards 2014: Presentations by James Plunkett, Alex Hurrell...ResolutionFoundation
This is the presentation from the Resolution Foundation event: The State of Living Standards held on 11th February 2014.
Household incomes are set to start rising again in 2015 after six years of decline according to the Resolution Foundation. The findings come in a detailed and authoritative assessment of the state of Britain’s living standards.
However, the report from the independent think tank also finds that growth in disposable income for the typical household is likely to be modest, barely positive in 2015-16 and less than one per cent a year for each of the following three years. As a result, despite improving, typical living standards will still be 3.5 per cent lower in 2018-19 than they were before the financial crisis of 2008, only just inching above the level they were last at in 2005-06
To read the full report go to: http://res-fdn.org/1cvoLYC
WordPress Web Design in Birmingham (Infographic)Opace Web Design
Why consider a WordPress web design? From leading WordPress web designers in Birmingham, this infographic provides some compelling benefits of using the open source CMS giant WordPress. Originally used largely as a platform for blogging, WordPress is now increasingly used by organisations as the basis for their websites because it offers some distinct advantages over other commercial CMS and other freely available systems.
This is the presentation given by Vidhya Alakeson in response to the keynote speech by Elizabeth Truss MP at the event: Meeting the childcare challenge for working parents, held at Resolution Foundation on 13th February 2014.
In a keynote speech, Elizabeth Truss MP (Minister for Education and Childcare) set out the government's agenda for meeting the challenge of high-quality and affordable childcare for working parents.
Keynote speech:
Elizabeth Truss MP – Minister for Education and Childcare
Followed by responses from:
Vidhya Alakeson – Deputy Chief Executive, Resolution Foundation
Dr Eva Lloyd - Reader in Early Childhood, University of East London
Sir Robin Bosher - Director of Primary Education, Harris Federation
Jane Garvey - Presenter, BBC Woman's Hour (chair)
WATERGUARD EP is a two part, solvent free, epoxy resin based waterproofing coating for terrace, balconies, roof slabs & potable water tanks. The cured film is extremely tough & has a smooth, hard, semiglossy surface with good slip resistant property. WATERGUARD EP has excellent adhesion property & ensures flexibility to take care of thermal expansion contraction.
Ready for the next recession? Assessing the UK’s macroeconomic frameworkResolutionFoundation
The UK economy is facing its highest risk of recession since 2007, as Brexit uncertainty and global instability loom large. When the next downturn will arrive is impossible to say, but now is a good time to ensure that we are ready to respond. Crucially the world has moved on since we last prepared our framework – the tools we used to fight the last recession won’t necessarily work for the next one.
How severe are the constraints of near zero interest rates on monetary policy? What is the potential for Quantitative Easing to replay its major financial crisis role? And while there is a generally accepted case for a wider role for fiscal policy, are we ready to deploy it as effectively as possible?
The Resolution Foundation is setting up a new Macroeconomic Policy Unit to get to the bottom of these big economic questions and more. To mark its launch, the Foundation hosted an event that brought together leading macroeconomists and policy makers. The launch included the publishing of a comprehensive assessment of the UK’s current macroeconomic policy framework. Speakers included MPC Member Gertjan Vlieghe and Head of Bloomberg Economics Stephanie Flanders.
Speakers:
Gertjan Vlieghe, Member of the Monetary Policy Committee
Stephanie Flanders, Head of Bloomberg Economics
Kate Barker, Former MPC member
Rupert Harrison, Portfolio Manager at Blackrock
James Smith, Research Director at the Resolution Foundation
Torsten Bell, Chief Executive of the Resolution Foundation (Chair)
Rania Al-Mashat - Minister of Tourism
ERF 24th Annual Conference
The New Normal in the Global Economy: Challenges & Prospects for MENA
July 8-10, 2018
Cairo, Egypt
Over the past thirty years the neutral real interest rate across developed economies has declined substantially. Evidence suggests that secular rather than transitory factors are driving its decline. A lower neutral interest rate implies that the cumulative amount of tightening required for monetary policy to become neutral is much smaller than previously thought.
Swedbank was founded in 1820, as Sweden’s first savings bank was established. Today, our heritage is visible in that we truly are a bank for each and every one and in that we still strive to contribute to a sustainable development of society and our environment. We are strongly committed to society as a whole and keen to help bring about a sustainable form of societal development. Our Swedish operations hold an ISO 14001 environmental certification, and environmental work is an integral part of our business activities.
Swedbank was founded in 1820, as Sweden’s first savings bank was established. Today, our heritage is visible in that we truly are a bank for each and every one and in that we still strive to contribute to a sustainable development of society and our environment. We are strongly committed to society as a whole and keen to help bring about a sustainable form of societal development. Our Swedish operations hold an ISO 14001 environmental certification, and environmental work is an integral part of our business activities.
But resolving this legacy issue with continued application of past interventionist instruments does not incentivize the much needed structural reforms and private capital market activities. Financial repression has induced a re-allocation of capital across markets and greatly enhanced the role of public markets at the detriment of private market activities. Artificially low – or in some cases even negative – interest rates break the credit intermediation channel which can crowd out viable private investors.
Swedbank was founded in 1820, as Sweden’s first savings bank was established. Today, our heritage is visible in that we truly are a bank for each and every one and in that we still strive to contribute to a sustainable development of society and our environment. We are strongly committed to society as a whole and keen to help bring about a sustainable form of societal development. Our Swedish operations hold an ISO 14001 environmental certification, and environmental work is an integral part of our business activities.
AnsA) When financial markets stood on the verge of collapse in th.pdfsutharbharat59
Ans:
A) When financial markets stood on the verge of collapse in the summer of 2008, two of the
worlds most important central banks, the US Federal Reserve and the Bank of England, began
considering unorthodox policy measures. They turned to Quantitative Easing, or QE: injecting
money into the economy by purchasing assets from the private sector, in the hope of boosting
spending and staving off the threat of deflation. These were desperate measures for desperate
times.
With signs of a fragile economic recovery gathering enough momentum to reassure
policymakers in the US, the policy was expected to be wound down. But in a move that caught
commentators off guard, the Fed instead committed to continue with its existing level of asset
purchases. For the foreseeable future, at least, QE is here to stay. What began as a short-term
crisis measure has now become a key component of Anglo-American growth strategies. Its
important, then, to take stock of QE and the central role it has played within the Anglo-American
response to the financial crisis.
The way the Fed led the policy response to the financial crisis is important in two ways. First, it
reflects the extent to which the Anglo-American economies have become financialised: credit-
debt relations are pervasive throughout all facets of contemporary economic activity and there
has been a deepening, extension and deregulation of financial markets commensurate with this
development. In that context, with the increased competitiveness, scale and global integration of
financial markets intensifying the risk of financial instability, the crisis management capacities of
central banks have become increasingly important.
Second, central bank leadership of the policy response also reflects a key feature of neoliberal
political economy in practice. Despite all the rhetoric of free markets, competition and
deregulation that has been the mainstay of neoliberalism, there is a central contradiction at its
heart: neoliberalism has been extremely reliant upon the active interventions of central banks
within supposedly free markets.
The crisis has been warehoused on the expanding balance sheets of central banks, demonstrating
just how much scope for policy manoeuvre there is when governing elites want it. Government
debt and private assets, including toxic mortgage-backed securities, have been indefinitely
transferred onto central bank accounts. This strategy highlights the role of arbitrary accounting
processes, shaped by state institutions, at the heart of supposedly free market economies.
Given this room for manoeuvre, there is no doubt that a much more expansionary fiscal policy
and a progressive taxation system could have been implemented in response to the crisis, but that
response is foreclosed by the ideological confines of the prevailing neoliberal orthodoxy. Instead,
we have monetary expansion and fiscal austerity.
Incubated within the crisis conditions of the 1970s, the neoliberal revolution in the West.
Swedbank's Global Economic Outlook, 2010 March 18Swedbank
Swedbank was founded in 1820, as Sweden’s first savings bank was established. Today, our heritage is visible in that we truly are a bank for each and every one and in that we still strive to contribute to a sustainable development of society and our environment. We are strongly committed to society as a whole and keen to help bring about a sustainable form of societal development. Our Swedish operations hold an ISO 14001 environmental certification, and environmental work is an integral part of our business activities.
If U.S. politics do not derail the recovery, pent-up demand can drive faster economic growth. Fixed-income outflows appear likely to continue, pushing rates higher.
What recent and past actions have Canada and the US taken to counter.pdfmeejuhaszjasmynspe52
What recent and past actions have Canada and the US taken to counteract their exchange rates
with the economy in such distress over the past 10 years?
Solution
Since 2007, the world has experienced a period of severe financial stress, not seen since the time
of the Great Depression. This crisis started with the collapse of the subprime residential
mortgage market in the United States and spread to the rest of the world through exposure to
U.S. real estate assets, often in the form of complex financial derivatives, and a collapse in global
trade. Many countries were significantly affected by these adverse shocks, causing systemic
banking crises in a number of countries, despite extraordinary policy interventions. Systemic
banking crises are disruptive events not only to financial systems but to the economy as a whole.
Such crises are not specific to the recent past or specific countries – almost no country has
avoided the experience and some have had multiple banking crises. While the banking crises of
the past have differed in terms of underlying causes, triggers, and economic impact, they share
many commonalities. Banking crises are often preceded by prolonged periods of high credit
growth and are often associated with large imbalances in the balance sheets of the private sector,
such as maturity mismatches or exchange rate risk, that ultimately translate into credit risk for
the banking sector.
Crisis management starts with the containment of liquidity pressures through liquidity support,
guarantees on bank liabilities, deposit freezes, or bank holidays. This containment phase is
followed by a resolution phase during which typically a broad range of measures (such as capital
injections, asset purchases, and guarantees) are taken to restructure banks and reignite economic
growth. It is intrinsically difficult to compare the success of crisis resolution policies given
differences across countries and time in the size of the initial shock to the financial system, the
size of the financial system, the quality of institutions, and the intensity and scope of policy
interventions. With this caveat we now compare policy responses during the recent crisis episode
with those of the past. The policy responses during the 2007-2009 crises episodes were broadly
similar to those used in the past. First, liquidity pressures were contained through liquidity
support and guarantees on bank liabilities. Like the crises of the past, during which bank
holidays and deposit freezes have rarely been used as containment policies, we have no records
of the use of bank holidays during the recent wave of crises, while a deposit freeze was used only
in the case of Latvia for deposits in Parex Bank. On the resolution side, a wide array of
instruments was used this time, including asset purchases, asset guarantees, and equity injections.
All these measures have been used in the past, but this time around they seem to have been put in
place quicker (for detailed informatio.
MTBiz is for you if you are looking for contemporary information on business, economy and especially on banking industry of Bangladesh. You would also find periodical information on Global Economy and Commodity Markets.
Swedbank was founded in 1820, as Sweden’s first savings bank was established. Today, our heritage is visible in that we truly are a bank for each and every one and in that we still strive to contribute to a sustainable development of society and our environment. We are strongly committed to society as a whole and keen to help bring about a sustainable form of societal development. Our Swedish operations hold an ISO 14001 environmental certification, and environmental work is an integral part of our business activities.
Similar to All bound up? Monetary policy in recovery and beyond (20)
Building pressure? Rising rents, and what to expect in the futureResolutionFoundation
The combination of high house prices and stagnating incomes over recent decades, coupled with the decline of social housing, mean that millions more of us are private renters. And they are renting for longer too. Private rents have risen swiftly in the wake of the pandemic. What happens next matters hugely for millions of families, and yet the drivers of private rental costs are poorly understood with a range of explanations being proposed for the post-pandemic surge.
To what extent has landlords selling up driven the recent rise in rental prices? Or are other factors – such as earnings growth or higher interest rates – more significant? What should we expect the future to hold for rents? And what does this mean for renters, landlords, and policymakers?
The Resolution Foundation is hosting an in-person and interactive webinar to debate and answer these questions. Following a presentation of the key highlights from new research on what is driving recent trends in private sector rent levels, we will hear from leading experts on the short and longer-term outlook.
Game changer? Assessing the Budget’s economic, and electoral, impactResolutionFoundation
The upcoming Spring Budget may be the last big fiscal event before the General Election, one of few chances for the government to set the terms of the economic debate. And with the government trailing heavily in the polls, and the economy entering a mild recession at the end of last year, the pressure is on to make it a game-changing Budget economically and electorally. But the Chancellor will also have to confront real trade-offs if he’s deliver a Budget that works for both the next six months, and the five years after that.
How big are the Chancellor’s tax cuts? Do they change the big picture of the government’s wider tax raising plans? What is the outlook for public services after the election? Where does the government plan to take the social security system, as it copes with rising numbers of us being sick or disabled? And will any of this make any difference to who forms the next government, and what they’re able to do?
The Resolution Foundation is hosting an in-person and interactive webinar to debate and answer these questions. Following a presentation of the key highlights from the Resolution Foundation’s overnight analysis of Spring Budget 2024, we’ll hear from leading experts on what the Budget means for the election, and the economy.
03062024_First India Newspaper Jaipur.pdfFIRST INDIA
Find Latest India News and Breaking News these days from India on Politics, Business, Entertainment, Technology, Sports, Lifestyle and Coronavirus News in India and the world over that you can't miss. For real time update Visit our social media handle. Read First India NewsPaper in your morning replace. Visit First India.
CLICK:- https://firstindia.co.in/
#First_India_NewsPaper
‘वोटर्स विल मस्ट प्रीवेल’ (मतदाताओं को जीतना होगा) अभियान द्वारा जारी हेल्पलाइन नंबर, 4 जून को सुबह 7 बजे से दोपहर 12 बजे तक मतगणना प्रक्रिया में कहीं भी किसी भी तरह के उल्लंघन की रिपोर्ट करने के लिए खुला रहेगा।
31052024_First India Newspaper Jaipur.pdfFIRST INDIA
Find Latest India News and Breaking News these days from India on Politics, Business, Entertainment, Technology, Sports, Lifestyle and Coronavirus News in India and the world over that you can't miss. For real time update Visit our social media handle. Read First India NewsPaper in your morning replace. Visit First India.
CLICK:- https://firstindia.co.in/
#First_India_NewsPaper
01062024_First India Newspaper Jaipur.pdfFIRST INDIA
Find Latest India News and Breaking News these days from India on Politics, Business, Entertainment, Technology, Sports, Lifestyle and Coronavirus News in India and the world over that you can't miss. For real time update Visit our social media handle. Read First India NewsPaper in your morning replace. Visit First India.
CLICK:- https://firstindia.co.in/
#First_India_NewsPaper
In a May 9, 2024 paper, Juri Opitz from the University of Zurich, along with Shira Wein and Nathan Schneider form Georgetown University, discussed the importance of linguistic expertise in natural language processing (NLP) in an era dominated by large language models (LLMs).
The authors explained that while machine translation (MT) previously relied heavily on linguists, the landscape has shifted. “Linguistics is no longer front and center in the way we build NLP systems,” they said. With the emergence of LLMs, which can generate fluent text without the need for specialized modules to handle grammar or semantic coherence, the need for linguistic expertise in NLP is being questioned.
हम आग्रह करते हैं कि जो भी सत्ता में आए, वह संविधान का पालन करे, उसकी रक्षा करे और उसे बनाए रखे।" प्रस्ताव में कुल तीन प्रमुख हस्तक्षेप और उनके तंत्र भी प्रस्तुत किए गए। पहला हस्तक्षेप स्वतंत्र मीडिया को प्रोत्साहित करके, वास्तविकता पर आधारित काउंटर नैरेटिव का निर्माण करके और सत्तारूढ़ सरकार द्वारा नियोजित मनोवैज्ञानिक हेरफेर की रणनीति का मुकाबला करके लोगों द्वारा निर्धारित कथा को बनाए रखना और उस पर कार्यकरना था।
An astonishing, first-of-its-kind, report by the NYT assessing damage in Ukraine. Even if the war ends tomorrow, in many places there will be nothing to go back to.
All bound up? Monetary policy in recovery and beyond
1. All bound up?
Monetary policy in recovery and beyond
AngusArmstrong, NIESR
KateBarker,economistandformerMPCmember
Martin Wolf, Chief Economics Commentator at the FT
PhilipAldrick, Economics Editor at theTimes
Matt Whittaker, Resolution Foundation
#zerobounds / @resfoundation
2. Renewed Interest
The role of monetary policy in crisis and beyond
MattWhittaker
January 2016
@mattwhittakerRF
2
4. The 2008-09 cuts were not startling in their
depth, but in their destination: ZLB
The base rate was
cut by 4.5ppts
between Oct 08
and Mar 09,
broadly in line with
the average
loosening cycle
post 1970 of 5ppts
But the move took
the base rate to its
lowest ever level
(since 1699), with
the MPC
concluding that it
couldn’t go lower
4
5. To provide further stimulus the MPC introduced
QE, a policy not much discussed before 2008
Number of speeches mentioning QE
or related issues 1997-2007?
5
One (and that related toJapan)
Zero
6. 6
WE MAY BE CLOSER TO THE
NEXT DOWNTURN THAN WE
ARE TO THE LAST
7. Looking back over 300 years, we’re almost
certain to face at least one recession a decade
Probability curves
use the frequency
of recessions
during different
historic periods to
establish the
random chance of
a recession
occurring in a
single-year
horizon, and then
roll those
probabilities
forward over a 10-
year horizon
7
8. Post-war, the probability is a little lower, but
still high over a 10-year horizon
Probability curves
use the frequency
of recessions
during different
historic periods to
establish the
random chance of
a recession
occurring in a
single-year
horizon, and then
roll those
probabilities
forward over a 10-
year horizon
8
9. Post-globalisation, there’s an 84% probability
within 10 years
Probability curves
use the frequency
of recessions
during different
historic periods to
establish the
random chance of
a recession
occurring in a
single-year
horizon, and then
roll those
probabilities
forward over a 10-
year horizon
9
10. Post-globalisation, there’s an 84% probability
within 10 years
Probability curves
use the frequency
of recessions
during different
historic periods to
establish the
random chance of
a recession
occurring in a
single-year
horizon, and then
roll those
probabilities
forward over a 10-
year horizon
10
11. Market expectations imply a very gradual rise in
base rate over this period
OIS rates are
instruments that
settle on
overnight
unsecured
interest rates
and are the
basis of the five-
year
conditioning
path used by
the Bank of
England in its
Inflation Report
11
12. Pointing to a 2/3 chance of entering the next
recession with a base rate of just 1.6%
This is no more
than an
illustration –
outcomes could
look somewhat
different
But it highlights
the relatively
high likelihood of
re-encountering
the zero lower
bound in the
coming years
12
15. The monetary transmission mechanism
operates through a number of channels
15
We focus on one element of this –
mortgage repayments
16. The 4.5ppt cut of 2008-09 helped to reduce
aggregate mortgage payments by £24bn
This reflects not
what actually
happened to
aggregate
repayments, but
what the specific
impact of rate
changes was
Actual payments
were affected by
changes in the
overall volume of
borrowing and the
arrival of new
borrowers
16
17. Though it also generated ‘losses’ for savers:
£11bn on sight deposits alone
As with the
mortgage
example, this
reflects not what
actually happened,
but the isolated
impact of rate
changes
Inclusion of time
deposits would
significantly
increase these
‘losses’, but we
also ignore other
loans such as
credit cards and
overdrafts
17
18. In hypothetical recession of 2021 with base rate
at 1.6%, mortgage ‘gains’ are cut significantly
In the 2021
scenario, total
mortgage debt is
assumed to have
increased to £1.6tn
and mortgage
rates have
increased by
0.6ppts
This doesn’t mean
the overall impact
of conventional
policy is cut by
one-third, but it
gives a sense of
scale
18
19. In hypothetical recession of 2021 with base rate
at 1.6%, mortgage ‘gains’ are cut significantly
In the 2021
scenario, total
mortgage debt is
assumed to have
increased to £1.6tn
and mortgage
rates have
increased by
0.6ppts
This doesn’t mean
the overall impact
of conventional
policy is cut by
one-third, but it
gives a sense of
scale
19
21. The zero lower bound is likely to loom more
regularly in a world of secular decline in rates
Real ‘world’
interest rates have
been declining for
some time – well
before the financial
crisis – driven by
slow moving
demographics and
secular savings and
investment
preferences
While some forces
might slow in the
coming years,
there is little
prospect of rates
rising rapidly
21
23. By their nature, many of the alternatives are
unconventional and uncomfortable
23
More QE
• Probably helped in 2009, but questions over its longer-term efficacy
Negative interest rates
• Already in place in parts of Europe, but raises exchange rate concerns
Higher inflation targets
• Supports higher equilibrium rates, but we’re struggling to reach 2%
More active fiscal policy
• Mon/fisc balance affects efficiency and distributional outcomes
Structural reform
• Strategies for growth and investment might tackle structural decline of
rates at source
24. Renewed Interest
The role of monetary policy in crisis and beyond
MattWhittaker
January 2016
@mattwhittakerRF
24
25. All bound up?
Monetary policy in recovery and beyond
AngusArmstrong, NIESR
KateBarker,economistandformerMPCmember
Martin Wolf, Chief Economics Commentator at the FT
PhilipAldrick, Economics Editor at theTimes
Matt Whittaker, Resolution Foundation
#zerobounds / @resfoundation
26. National Institute of Economic and Social Research
Comments on ‘Renewed Interest’ by
Matthew Whittaker
Dr Angus Armstrong, NIESR
Resolution Foundation, 28th January, 2016
27. National Institute of Economic and Social Research
Section 6: Policy options
MW raises an important ‘contingency policy’ question
Changes to the Inflation Target?
• Inflation targeting is the latest in a long list of monetary
regimes, E.g., Bretton Woods, Monetary Targeting
• What drives national inflation rates? For OECD countries
around 70% seems to be common factors (ECB, 2005)*
Do inflation expectations really drive demand and inflation, or
is it the other way around?
* Governor Carney ‘s speech to Jackson Hole (2015) reports lower correlations (based on a 47
country dataset) implying national central banks continue to determine the inflation rate.
28. National Institute of Economic and Social Research
Section 6: Policy options
Negative interest rates?
• If the ‘market clearing’ real interest rate is substantively
negative, then the ZLB becomes a limit on delivering this
• Two modern contenders for negative rates:
o Get rid of cash and impose negative rate on central
bank reserves (Buiter, 2004)
o Introduce an exchange rate between paper money and
central bank reserves (Eisler, 1932 and Kimball, 2015)
Are we repeating the mistake of ignoring banking sector? Banks
not be forced to raise lending rates (to protect profit margins)
29. National Institute of Economic and Social Research
Section 6: Policy options
Even more unconventional monetary policies?
• More Quantitative Easing?
o Keynes (1933) “trying to get fat by buying a larger belt”
o Probably had a positive influence through long rates
• Monetary financing
o Coordinated buying of Govt debt directly with no
commitment to reverse purchases
• Helicopter drops
o Directly supplying money to private sector
30. National Institute of Economic and Social Research
Section 6: Policy options
What might happen / where are the risks?
• US probably less risk to fiscal policy or even monetary
financing because of universal use of dollar
o If there are credit doubts, Fed can issue dollars and the
exchange rate can depreciate
• For other nations this is more difficult because international
banks borrow in dollars – large depreciation may be a problem
o UK has fiscal space and banking system does not seem
exposed to weaker sterling
• Elsewhere, is the answer to stop becoming so dependent on
dollars? Will we see more capital controls?
31. All bound up?
Monetary policy in recovery and beyond
AngusArmstrong, NIESR
KateBarker,economistandformerMPCmember
Martin Wolf, Chief Economics Commentator at the FT
PhilipAldrick, Economics Editor at theTimes
Matt Whittaker, Resolution Foundation
#zerobounds / @resfoundation
Editor's Notes
Important to ask this sort of contingency question
Doubt we can really answer the ‘policy question’ without knowing why we are here
I’m just going to spend a couple of minutes on each option
In my view, word economy is continuing to suffer a shortage of effective demand
First option is to change the inflation target
A fair question to ask is about Inflation Targeting
Do central banks really control domestic inflation?
Financial instability? Pre-crisis:
Domestic overheating
Risk premia
If we persist with inflation targeting, then clearly a case for a higher rate
BUT THIS IS NOT THE PROBLEM TODAY
Does demand and inflation determine expectations or the other way round?
What if inflation expectations turn negative or the market clearing real rate is negative?
Zero lower bound problem
Funds are looking for cash like alternatives
Two ways to achieve negative rates (other than stamping money)
Before the crisis => economists excluded banking sectors from models
QE: through bank lending?
Monetary financing – coordinate with government and buy straight from govt.
Central bank balance sheet is still solvent
Helicopter drops => no longer solvent => but does not matter as long as the govt is credible
Option 1 – govt borrows
Option 2 – no borrowing in practice – but in theory