Posted on April 13, 2016 by iMFdirect
By José Viñals
Versions in عربي (Arabic), 中文 (Chinese), Français (French), 日本語 (Japanese), Русский (Russian), and Español (Spanish)
Over the last six months, global financial stability risks increased as a result of the following developments:
- First, macroeconomic risks have risen, reflecting a weaker and more uncertain outlook for growth and inflation, and more subdued sentiment. These risks were highlighted yesterday at the World Economic Outlook press conference.
- Second, falling commodity prices and concerns about China’s economy have put pressure on emerging markets and advanced economy credit markets.
- Finally, confidence in policy traction has slipped, amid concerns about the ability of overburdened monetary policies to offset the impact of higher economic and political risks.
Filed under: Advanced Economies, banking, euro zone, Europe, Finance, Financial markets, IMF, International Monetary Fund, oil, U.S. | Tagged: banking, banks, China, corporate sector, debt, emerging market economies, euro area, Europe, Global Financial Stability Report, monetary policy, non-performing loans, NPLs, structural reforms | Leave a comment »
Posted on April 10, 2016 by iMFdirect
By Jose Viñals, Simon Gray, and Kelly Eckhold
Versions in: عربي (Arabic), Deutsch (German), 日本語 (Japanese), and Español (Spanish)
We support the introduction of negative policy rates by some central banks given the significant risks we see to the outlook for growth and inflation. Such bold policy action is unprecedented, and its effects over time will vary among countries. There have been negative real rates in a number of countries over time; it is negative nominal rates that are new. Our analysis takes a broad view of recent events to examine what is new, country experiences so far, the effectiveness of negative nominal rates as well as their limits and their unintended consequences. Although the experience with negative nominal interest rates is limited, we tentatively conclude that overall, they help deliver additional monetary stimulus and easier financial conditions, which support demand and price stability. Still, there are limits on how far and for how long negative policy rates can go. Continue reading
Filed under: Advanced Economies, banking, euro zone, Europe, Finance, Financial markets, IMF, inflation, International Monetary Fund, Japan | Tagged: bank balance sheets, banks, bonds, corporate bonds, Denmark, equities, European Central Bank, Japan, monetary policy, negative interest rates, nominal interest rates, quantitative easing, real interest rates, Sweden, Switzerland, unconventional monetary policy, zero lower bound | Leave a comment »
Posted on March 21, 2016 by iMFdirect
By Cheng Hoon Lim
(Version in Français)
Canada’s housing market is sizzling hot and the Bank of Canada has a monetary policy dilemma: increase interest rates to cool the housing market would hurt borrowers and the economy; keep interest rates low adds fuel to the borrowing that led to the rise in housing prices and in household debt. What to do?
Filed under: Advanced Economies, banking, Financial regulation, housing, IMF, International Monetary Fund | Tagged: Bank of Canada, Canada, financial stability, GDP, house prices, household debt, housing market, IMF, iMFdirect, monetary policy, mortgages | Leave a comment »
Posted on February 24, 2016 by iMFdirect
(Versions in عربي and Español)
Shanghai will welcome finance ministers and central bank governors for the first ministerial meeting under China’s Group of Twenty presidency this weekend. The meeting comes at a critical time for the global economy. A note by IMF staff prepared as background for the G20 meeting, Global Prospects and Policy Challenges, points to a tepid recovery, and warns that weaker global growth might well be in the cards. This calls for a strong policy response, both national and multilateral, including from the G20.
Filed under: Economic research, G-20, Globalization, growth, IMF, International Monetary Fund, refugees | Tagged: China, G20, Globalization, growth, IMF, iMFdirect, International Monetary Fund, monetary policy, recovery, refugees, spillovers, surveillance | Leave a comment »
Posted on January 20, 2016 by iMFdirect
(Version in عربي, 中文, and Español)
Technology and finance have always gone together. So what’s new this time around? Virtual currencies are part of a broader tech revolution that is driving fundamental change in the global economy.
Filed under: Finance, Financial markets, Financial regulation, International Monetary Fund, technology | Tagged: Bitcoin, currency, Davos, distributed ledgers, finance, financial inclusion, financial stability, global economy, history of money, IMF, monetary policy, technology, United States, virtual currency, virtual currency regulation | Leave a comment »
Posted on December 7, 2015 by iMFdirect
By Olivier Blanchard, Jonathan D. Ostry, Atish R. Ghosh, and Marcos Chamon
(Version in Español)
With the expected move by the Federal Reserve to raise interest rates before the end of the year, many are asking about the effects on emerging market countries. Will outflows increase, and how will this affect economic activity in emerging markets? To answer that, we need to know if capital inflows are in general expansionary or contractionary.
One would think that the question was settled long ago. But, in fact, it is not. It is a case where theory suggests one thing and practice another. The workhorse model of international macro (the Mundell-Fleming model), for example, suggests that, for a given monetary policy rate, inflows lead to an appreciation, and thus to a contraction in net exports—and a decrease in output. Only if the policy rate is decreased sufficiently can capital inflows be expansionary. Symmetrically, using a model along these lines, Paul Krugman argued in his 2013 Mundell-Fleming lecture that capital outflows are expansionary.
Filed under: Economic outlook, Economic research, Emerging Markets, growth, International Monetary Fund | Tagged: bonds, capital flows, emerging markets, foreign exchange, IMF, interest rates, macroeconomic models, monetary policy, Olivier Blanchard, United States | Leave a comment »
Posted on October 21, 2015 by iMFdirect
By Carlos Caceres, Yan Carrière-Swallow, and Bertrand Gruss
(Versions in Español and Português)
As the U.S. Federal Reserve prepares to raise policy rates for the first time in almost a decade, Latin America is in the midst of a sharp downturn with unemployment on the rise. In this context, many central banks across the region have kept interest rates low to support economic activity. But can monetary policy stay that way as global rates rise? What will the Fed liftoff imply for the region?
Filed under: Advanced Economies, Economic Crisis, Economic outlook, Economic research, Emerging Markets, Finance, Financial Crisis, Fiscal policy, growth, IMF, Inequality, International Monetary Fund, Latin America | Tagged: interest rates, Latin America, Mexico, monetary policy, Peru, Regional Economic Outlook: Western Hemisphere, spillovers, U.S. Federal Reserve, United States | Leave a comment »