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Tag Archives: Monetary Policy

Stability remains key to China

The most concerning aspect for the Chinese economy will still be to hold up domestic demand. The rapidly rising household debt will put further breaks of the households' ability to purchase durable goods2019 was a challenging year for China, featuring rapid growth deceleration. Consumption growth, long perceived as the key for China’s growth resilience, moved downwards significantly in 2019. What’s more, domestic investment remained sluggish, reflecting the shattered confidence among...

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Argentina, plus ça change…

Recent primary elections in Argentina saw the defeat by a wide margin of President Macri. This fueled market volatility given expectations of a reversal of reforms after national elections in October; the recent re-introduction of capital controls attests to the extent of the economic fallout. With Macri’s end in sight, this post will review the evolution of the Argentinian economy during his term.When Macri assumed office in 2015, markets viewed his economic programme favourably (the...

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La Banca centrale europea

This external publication delves into the new responsibility given to the European Central Bank: supervision on banks in the euro-area. It tells its history and illustrates its functions, structure and responsibilities and the exceptional answers to respond to the "perfect storm" of the crisis. By: Francesco Papadia Date: July 31, 2019 Topic: European Macroeconomics & Governance The European Central Bank is an independent and supranational institution with the primary task of...

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Director’s Cut: Priorities for the new ECB president

In this Director's Cut of 'The Sound of Economics', Guntram Wolff talks to two of the authors of Bruegel's memo to the new ECB president, Maria Demertzis and Grégory Claeys, to specify the most important issues at the beginning of this eight-year cycle and to clarify the parameters within which the new incumbent will have to work. By: The Sound of Economics Date: July 4, 2019 Topic: European Macroeconomics & Governance A...

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The breakdown of the covered interest rate parity condition

A textbook condition of international finance breaks down. Economic research identifies the interplay between divergent monetary policies and new financial regulation as the source of the puzzle, and generates concerns about unintended consequences for financing conditions and financial stability. The breakdown of the covered interest rate parity condition What’s at stake: a textbook condition of international finance breaks down. Economic research identifies the interplay between...

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Too crowded bets on “7” for USDCNY could be dangerous

The Chinese yuan has been under pressure in recent days due to the slowing economy and, more importantly, the escalating trade war with the US. While the Peoples Bank of China has never said it will safeguard the dollar-yuan exchange rate against any particular level, many analysts have treated '7' as a magic number and heated debates have begun over whether the number is unbreakable. Chinese yuan has been under pressure in recent weeks due to the double dip in recent economic data and...

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The ‘seven’ ceiling: China’s yuan in trade talks

Investors and the public have been looking at the renminbi with caution after the Trump administration threatened to increase duties on countries that intervene in the markets to devalue/undervalue their currency relative to the dollar. The fear is that China could weaponise its currency following the further increase in tariffs imposed by the United States in early May. What is the likelihood of this happening and what would be the consequences for the existing tensions with the United...

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China’s debt is still piling up – and the pile-up is getting faster

With looser monetary policy, China's policymakers hope to encourage banks to lend more to the private sector. This seems to imply a change from the deleveraging drive begun in mid-2017. Although this should be good news for China's growth in the short term, such a continued accumulation of debt cannot but imply deflationary pressures and a lower potential growth further down the road. This article was published by Brink. If you think China’s monetary policy became more lax in 2018,...

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Greening monetary policy: An alternative to the ECB’s market-neutral approach

The ECB’s market-neutral approach to monetary policy undermines the general aim of the EU to achieve a low-carbon economy. An alternative tilting approach would foster low-carbon production, accelerating the transition of the EU to a low-carbon economy, and could be implemented without undue interference with the chief aim of price stability. By: Dirk Schoenmaker Date: February 21, 2019 Topic: European Macroeconomics & Governance...

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Deep Focus: A greener monetary policy approach for the ECB

Bruegel fellow Dirk Schoenmaker walks Sean Gibson and 'The Sound of Economics' listeners through his latest working paper, focusing on how to make monetary policy in Europe more climate-friendly By: The Sound of Economics Date: February 21, 2019 Topic: European Macroeconomics & Governance In this episode of the Deep Focus podcast series, Bruegel’s Dirk Schoenmaker explains his proposed greener alternative to the ECB’s...

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