Global Economic Intersection
Advertisement
  • Home
    • 카지노사이트
  • Economics
  • Finance
  • Politics
  • Investments
    • Invest in Amazon $250
  • Cryptocurrency
    • Best Bitcoin Accounts
    • Bitcoin Robot
      • Quantum AI
      • Bitcoin Era
      • Bitcoin Aussie System
      • Bitcoin Profit
      • Bitcoin Code
      • eKrona Cryptocurrency
      • Bitcoin Up
      • Bitcoin Prime
      • Yuan Pay Group
      • Immediate Profit
      • BitQH
      • Bitcoin Loophole
      • Crypto Boom
      • Bitcoin Treasure
      • Bitcoin Lucro
      • Bitcoin System
      • Oil Profit
      • The News Spy
      • Bitcoin Buyer
      • Bitcoin Inform
      • Immediate Edge
      • Bitcoin Evolution
      • Cryptohopper
      • Ethereum Trader
      • BitQL
      • Quantum Code
      • Bitcoin Revolution
      • British Trade Platform
      • British Bitcoin Profit
    • Bitcoin Reddit
    • Celebrities
      • Dr. Chris Brown Bitcoin
      • Teeka Tiwari Bitcoin
      • Russell Brand Bitcoin
      • Holly Willoughby Bitcoin
No Result
View All Result
  • Home
    • 카지노사이트
  • Economics
  • Finance
  • Politics
  • Investments
    • Invest in Amazon $250
  • Cryptocurrency
    • Best Bitcoin Accounts
    • Bitcoin Robot
      • Quantum AI
      • Bitcoin Era
      • Bitcoin Aussie System
      • Bitcoin Profit
      • Bitcoin Code
      • eKrona Cryptocurrency
      • Bitcoin Up
      • Bitcoin Prime
      • Yuan Pay Group
      • Immediate Profit
      • BitQH
      • Bitcoin Loophole
      • Crypto Boom
      • Bitcoin Treasure
      • Bitcoin Lucro
      • Bitcoin System
      • Oil Profit
      • The News Spy
      • Bitcoin Buyer
      • Bitcoin Inform
      • Immediate Edge
      • Bitcoin Evolution
      • Cryptohopper
      • Ethereum Trader
      • BitQL
      • Quantum Code
      • Bitcoin Revolution
      • British Trade Platform
      • British Bitcoin Profit
    • Bitcoin Reddit
    • Celebrities
      • Dr. Chris Brown Bitcoin
      • Teeka Tiwari Bitcoin
      • Russell Brand Bitcoin
      • Holly Willoughby Bitcoin
No Result
View All Result
Global Economic Intersection
No Result
View All Result

Canada Says Forward Guidance Useful Only During Crises

admin by admin
October 27, 2014
in Uncategorized
0
0
SHARES
0
VIEWS
Share on FacebookShare on Twitter

Monetary Policy Week in Review: 20-24 October 2014

by Peter Nielsen, Central Bank News

Last week five central banks maintained their policy rates with the Bangko Sentral ng Pilipinas (BSP) the latest monetary authority to drop a hawkish bias or ease policy in response to waning inflationary pressures from the drop in commodity prices, especially energy, since June. Canada and Norway’s central banks also took note of the weaker global economy, with economists speculating Norges Bank in December will once again delay or weaken its plan to raise rates in 2016.

The Bank of Canada’s (BOC) policy statement was notable because it reflected the governor’s decision to drop the use of forward guidance in more normal economic times and instead be fully transparent about the risks the central bank is weighing as part of its policy deliberation. In its September policy statement, the BOC said it was “neutral” with respect to its next rate change, with the timing and direction of future changes depending on the outlook.

Last week’s policy statement didn’t change the essence of that guidance as the BOC’s outlook for inflation hadn’t shifted since its July forecast so the practical consequence on market rates of the BOC’s new policy about forward guidance has yet to be seen.

But the BOC’s thoughts about forward guidance are likely to be scrutinized by other central banks because it broke new ground in April 2009 when it pledged to keep rates at what it considered to be zero through the second quarter of 2010 in order to provide additional stimulus in the depth of the global financial crises.

In his speech on Oct. 15, BOC Governor Stephen Poloz argued that such guidance is useful in times of crises because it can help flatten the yield curve by reassuring markets about the horizon over which it expects to keep rates at zero, enhancing the economy’s response to the bank’s low policy rates.

But the downside of such guidance is that it essentially gives markets a one-way bet, Poloz said. As major market participants use increasing amount of leverage the longer the guidance remains in place, volatility tends to surge when the central bank is suddenly seen changing this guidance. This was clearly the case in May 2013 when the U.S. Federal Reserve first announced it was considering scaling back quantitative easing, a move that unleashed a major shift in global capital away from emerging markets.

The second downside for Poloz is that the forward guidance is inevitably conditional on assumptions and forecasts so central banks end up insert certain caveats into their guidance. This creates a fragile market equilibrium. Every new piece of economic data may be interpreted as a caveat so financial markets end up needing “repeated doses of reassurance.”

Poloz said:

“In short, forward guidance can become addictive for markets if it is overly precise or heavily weighted with caveats.”

His conclusion is that forward guidance is a useful tool at the zero lower bound because it removes a key source of uncertainty for markets about future policy rates. But by dropping its guidance, the central bank is shifting some of the uncertainty about an economy’s evolution back on the market, helping ensure a more balanced two-way market that is less vulnerable to unusual leverage and volatile shifts in sentiment.

As witnessed by the scrutiny of the Federal Reserve’s “dot” forecasts for the fed funds rate in recent months, Poloz said financial markets typically want central bankers to be specific in their forecasts and then expect any deviation in forecast from actual data to have a clear implication for monetary policy.

But Poloz argued that central bankers always grapple with uncertainty in deciding on policy and this has only worsened in the aftermath of the global financial crises. The BOC is thus likely to become more transparent about the assumptions surrounding its forecasts and clearly point out the fundamental uncertainties and policy risks it is facing.

Poloz said:

“The idea is simply to inject a little more realism about uncertainty into the narrative, while trusting markets to wrestle with the data flow and deliver two-way trading”

Through the first 43 weeks of this year, the 90 central banks followed by Central Bank News have cut their policy rates 53 times, or 13.6 percent of this year’s 390 policy decisions, up from 12 percent at the end of the first half and 12 percent at the end of the first quarter.

Meanwhile, rates have been raised 38 times, or 9.7 percent of all policy decisions, up from 9.3 percent at the end of June and 8.7 percent at the end of March. LIST OF LAST WEEK’S CENTRAL BANK DECISIONS:

  • Namibia holds rate but still concerned over credit growth
  • Canada maintains rate on balanced risks to inflation
  • Norway holds rate, no guidance for same rate by end-’15
  • Philippines holds rate, sees lower inflation 2014-2016
  • Turkey holds rates, tight stance until inflation improves

TABLE WITH LAST WEEK’S MONETARY POLICY DECISIONS:

COUNTRYMSCINEW RATEOLD RATE1 YEAR AGO
NAMIBIA6.00%6.00%5.50%
CANADADM1.00%1.00%1.00%
PHILIPPINESEM4.00%4.00%3.50%
TURKEYEM8.25%8.25%4.50%
NORWAYDM1.50%1.50%1.50%

This week (Week 44) 14 central banks or monetary authorities are scheduled to decide on monetary policy: Angola, Israel, Mauritius, Sweden, Hungary, the United States, Brazil, Albania, New Zealand, Fiji, Russia, Mexico and the Eastern Caribbean Central Bank (ECCB). TABLE WITH THIS WEEK’S MONETARY POLICY DECISIONS:

COUNTRYMSCIDATECURRENT RATE1 YEAR AGO
ANGOLA27-Oct8.75%9.75%
ISRAELDM27-Oct0.25%1.00%
MAURITIUSFM27-Oct4.65%4.65%
SWEDENDM28-Oct0.25%1.00%
HUNGARYEM28-Oct2.10%3.40%
UNITED STATESDM29-Oct0.25%0.25%
BRAZILEM29-Oct11.00%9.50%
ALBANIA29-Oct2.50%3.50%
NEW ZEALANDDM30-Oct3.50%2.50%
FIJI30-Oct0.50%0.50%
JAPANDM31-OctN/AN/A
RUSSIAEM31-Oct8.00%5.50%
MEXICOEM31-Oct3.00%3.50%
EAST. CARRIB. C.BANK31-Oct6.50%6.50%

www.CentralBankNews.info

Previous Post

The World’s Continents aren’t Always Created in the Way that We Thought

Next Post

Infographic of the Day: Pumpkins Are a Fruit, and Most USA Pumpkins Are Grown Within 80 Miles of Peoria, IL

Related Posts

Unlocking the Future: Google's Game-Changing Move to Advertise NFT Games Starting September 15th
Business

Unlocking the Future: Google’s Game-Changing Move to Advertise NFT Games Starting September 15th

by John Wanguba
September 8, 2023
Bitcoin Is Finally Trading Perfectly Like 'Digital Gold'
Economics

Bitcoin Is Finally Trading Perfectly Like ‘Digital Gold’

by John Wanguba
August 5, 2023
Can Worldcoin Overtake Bitcoin?
Economics

Can Worldcoin Overtake Bitcoin?

by John Wanguba
August 4, 2023
Bitcoin Is Steady Above $29,000 Awaiting US NFP Figures
Economics

Bitcoin Is Steady Above $29,000 Awaiting US NFP Figures

by John Wanguba
August 4, 2023
Namibia Will Regulate And Not Ban Crypto With New Law
Finance

Namibia Will Regulate And Not Ban Crypto With New Law

by John Wanguba
July 25, 2023
Next Post

Infographic of the Day: Pumpkins Are a Fruit, and Most USA Pumpkins Are Grown Within 80 Miles of Peoria, IL

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Browse by Category

  • Business
  • Econ Intersect News
  • Economics
  • Finance
  • Politics
  • Uncategorized

Browse by Tags

adoption altcoins bank banking banks Binance Bitcoin Bitcoin market blockchain BTC BTC price business China crypto crypto adoption cryptocurrency crypto exchange crypto market crypto regulation decentralized finance DeFi Elon Musk ETH Ethereum Europe Federal Reserve finance FTX inflation investment market analysis Metaverse NFT nonfungible tokens oil market price analysis recession regulation Russia stock market technology Tesla the UK the US Twitter

Archives

  • September 2023
  • August 2023
  • July 2023
  • June 2023
  • May 2023
  • April 2023
  • March 2023
  • February 2023
  • January 2023
  • December 2022
  • November 2022
  • October 2022
  • September 2022
  • August 2022
  • July 2022
  • June 2022
  • May 2022
  • April 2022
  • March 2022
  • February 2022
  • January 2022
  • December 2021
  • November 2021
  • October 2021
  • September 2021
  • August 2021
  • July 2021
  • June 2021
  • May 2021
  • April 2021
  • March 2021
  • February 2021
  • January 2021
  • December 2020
  • November 2020
  • October 2020
  • September 2020
  • August 2020
  • July 2020
  • June 2020
  • May 2020
  • April 2020
  • March 2020
  • February 2020
  • January 2020
  • December 2019
  • November 2019
  • October 2019
  • September 2019
  • August 2019
  • July 2019
  • June 2019
  • May 2019
  • April 2019
  • March 2019
  • February 2019
  • January 2019
  • December 2018
  • November 2018
  • October 2018
  • September 2018
  • August 2018
  • July 2018
  • June 2018
  • May 2018
  • April 2018
  • March 2018
  • February 2018
  • January 2018
  • December 2017
  • November 2017
  • October 2017
  • September 2017
  • August 2017
  • July 2017
  • June 2017
  • May 2017
  • April 2017
  • March 2017
  • February 2017
  • January 2017
  • December 2016
  • November 2016
  • October 2016
  • September 2016
  • August 2016
  • July 2016
  • June 2016
  • May 2016
  • April 2016
  • March 2016
  • February 2016
  • January 2016
  • December 2015
  • November 2015
  • October 2015
  • September 2015
  • August 2015
  • July 2015
  • June 2015
  • May 2015
  • April 2015
  • March 2015
  • February 2015
  • January 2015
  • December 2014
  • November 2014
  • October 2014
  • September 2014
  • August 2014
  • July 2014
  • June 2014
  • May 2014
  • April 2014
  • March 2014
  • February 2014
  • January 2014
  • December 2013
  • November 2013
  • October 2013
  • September 2013
  • August 2013
  • July 2013
  • June 2013
  • May 2013
  • April 2013
  • March 2013
  • February 2013
  • January 2013
  • December 2012
  • November 2012
  • October 2012
  • September 2012
  • August 2012
  • July 2012
  • June 2012
  • May 2012
  • April 2012
  • March 2012
  • February 2012
  • January 2012
  • December 2011
  • November 2011
  • October 2011
  • September 2011
  • August 2011
  • July 2011
  • June 2011
  • May 2011
  • April 2011
  • March 2011
  • February 2011
  • January 2011
  • December 2010
  • August 2010
  • August 2009

Categories

  • Business
  • Econ Intersect News
  • Economics
  • Finance
  • Politics
  • Uncategorized
Global Economic Intersection

After nearly 11 years of 24/7/365 operation, Global Economic Intersection co-founders Steven Hansen and John Lounsbury are retiring. The new owner, a global media company in London, is in the process of completing the set-up of Global Economic Intersection files in their system and publishing platform. The official website ownership transfer took place on 24 August.

Categories

  • Business
  • Econ Intersect News
  • Economics
  • Finance
  • Politics
  • Uncategorized

Recent Posts

  • Unlocking the Future: Google’s Game-Changing Move to Advertise NFT Games Starting September 15th
  • Bitcoin Is Finally Trading Perfectly Like ‘Digital Gold’
  • Can Worldcoin Overtake Bitcoin?

© Copyright 2021 EconIntersect - Economic news, analysis and opinion.

No Result
View All Result
  • Home
  • Contact Us
  • Bitcoin Robot
    • Bitcoin Profit
    • Bitcoin Code
    • Quantum AI
    • eKrona Cryptocurrency
    • Bitcoin Up
    • Bitcoin Prime
    • Yuan Pay Group
    • Immediate Profit
    • BitIQ
    • Bitcoin Loophole
    • Crypto Boom
    • Bitcoin Era
    • Bitcoin Treasure
    • Bitcoin Lucro
    • Bitcoin System
    • Oil Profit
    • The News Spy
    • British Bitcoin Profit
    • Bitcoin Trader
  • Bitcoin Reddit

© Copyright 2021 EconIntersect - Economic news, analysis and opinion.