Financial Economics & Central Banking
Financial Economics & Central Banking latest publications
Last week the ECB held its first meeting since announcing its Strategy review of monetary policy a few days ago, in which it faced the dual challenge of nailing down future strategy and taking decisions on existing policies.
ECB’s first policy meeting after its monetary policy strategy review was marked by a lack of unanimity, likely reflecting an intense discussion between the doves and the hawks.
On June 24, the Board of Governors of Banco de México decided, with three votes in favor and two against, to increase the monetary policy rate by 25 basis points
The strategy review has been relatively moderate, introducing a symmetric and clearer (2%) inflatio target, and adopting as permanent the current toolkit. The change has been less ambitious than the one by the Fed. On climate change, the ECB is clearly more committed to specific action, but depends on other institutions
We provide a macro analytical framework to investigate what determines the RMB exchange rate trend in 2H21. RMB exchange rate is expected go back to the 6.4 to 6.5 range at end-2021 and will display two-way fluctuations.
The most recent U.S. inflation rate of 5%, a level unseen since 2008, has set the alarm bells ringing. In the eurozone, where recovery is intense but less dynamic, inflation is also rising, reaching 2% in May.
The increase in vaccination rates has enabled a gradual reopening of the economy, which, alongside the loosening of repressed demand and excess saving, means that the global economy is on track for a major recovery accompanied by a rise in inflation, which should, theoretically, only be temporary.
At present the significant growth in demand deposits has more than offset the slump of term deposits. Given that the rise in demand deposits can be related to temporary factors, the underlying question is: To what extent and how fast will households and companies reduce their accumulated liquid balances as COVID cases drop?