Latest news with #centralbanking
Bloomberg
6 days ago
- Business
- Bloomberg
How a Central Bank Fumbled Its Communication
Communication has been a basic tool of central banking for decades, but it can be a tricky thing to get right. Merely fronting the microphones doesn't deliver superior results. The message sent has to be clear — and received. The Reserve Bank of Australia needs to do much better. The authority's decision to forgo a widely anticipated interest-rate cut this month left much to be desired, and the RBA's explanations for why it wrong-footed investors have been subpar. Press conferences and the signaling of intent through speeches aren't sidelines. No lesser person than Ben Bernanke, a Nobel laureate and former Federal Reserve chair, observed that successful policy was 98% talk and 2% action.
Reuters
03-07-2025
- Business
- Reuters
At Sintra getaway, central bankers mull threats to their domain
SINTRA, Portugal, July 3 (Reuters) - At their annual gathering in the hills of Portugal's Sintra, central bankers this week confronted rising challenges to their control of the global money system, from political attacks on the U.S. Federal Reserve to the rise of stablecoins. Recent editions of the European Central Bank's getaway event have been dominated by worries about high inflation - no surprise after central banks whose core task is price stability were mostly late to react to a surge in prices in 2021-22. But this year's discussions - from choreographed panel debates among central bank chiefs to late-night exchanges at the hotel bar - were centred on more existential threats to the monetary system as we know it. U.S. President Donald Trump's frequent, often personal, attacks on Federal Reserve chair Jerome Powell - and hints about his replacement - were the most obvious example. Any suggestion that the Fed might bow to pressure from the White House to lower borrowing costs would hurt its reputation for independence - for decades a core tenet of central banking seen crucial for keeping policy credible and investors on-side. Two in three reserve managers at central banks polled by UBS Asset Management said in a survey released this week they feared that Federal Reserve independence was at risk. Powell batted away such worries during a panel discussion, saying he and colleagues were focused "100%" on low inflation and full employment "in a completely non-political way". He drew applause from an audience of economists and central bankers, with ECB President Christine Lagarde saying she and her peers would do the same if they were in Powell's shoes. But confidence has already been shaken. Central bankers were openly fretting about a topic that was taboo only a few months ago: will the Fed, even under a Trump-picked chair next year, continue to lend dollars to foreign banks when they are in trouble? Commercial lenders outside the United States have been able to borrow dollars even when they are shut out of financial markets via swap lines between the Fed and some other central banks created during the 2008 global financial crisis. These facilities underpin the $25-trillion market for dollar credit outside the United States and also serve a domestic purpose: by helping to douse financial fires abroad, they effectively prevent them from spreading to Wall Street. The Trump administration's retreat from international coordination has raised some concerns about these lifelines, even though there has been no action so far to suggest they will be cut. Governor Rhee Chang-yong said his Bank of Korea, which unlike the ECB and other major central banks does not have a standing arrangement with the Fed and relies on temporary help when needed, might have to fend for itself in the future. "If there's no global dollars shortage, our understanding is that the Fed cannot extend the swap-line in that case and we have to self-defense ourselves," Rhee said at the conference. His Japanese peer Kazuo Ueda emphasised the importance of regional swap lines, such as the Chiang Mai Initiative of the Association of Southeast Asian Nations (ASEAN), as an additional safety net. One European central banker speaking on condition of anonymity said pooling dollar and gold reserves across countries could also serve as a stopgap, although it was unlikely to be sufficient to plug major shortfalls. These fears fed a broader debate about the dollar losing its status as the world's currency of choice for saving and trading, with a lack of viable alternatives in sight. Seeking to reassure colleagues, Powell said the Fed retained its legal authorities and was "still prepared to use" them. Stablecoins - crypto tokens pegged to an official currency - were a new entry among Sintra's topics of debate, even keeping some central bankers up late in informal discussions at the conference venue's bar. While some recognised stablecoins' efficiency as a means of exchange, their proliferation in recent years - and especially since Trump threw his weight behind them as a way to extend the dollar's global reach - was seen as alarming by many central bankers. They fear stablecoins may be prone to "runs" if investors suspect the issuing company does not have enough currency to back outstanding tokens, as happened to TerraUSD in 2022. Bank of England Governor Andrew Bailey said stablecoins must show they can "hold their nominal value" if they are to be treated as a legitimate means of exchange. The ECB's Lagarde went as far as saying stablecoins amount to "a privatisation of money", taking the supply of currency away from central bankers and undermining their capacity to conduct monetary policy. Rhee was even more specific, saying stablecoins denominated in South Korean won - one of President Lee Jae Myung's election pledges - could undermine the domestic currency by making it easier to switch to dollars.
Reuters
01-07-2025
- Business
- Reuters
ECB Sintra Forum Live: Fed Chair Powell and other central bankers discuss policy
Summary ECB central banking forum in Sintra, Portugal Fed chair Jerome Powell and other central bank heads are speaking Uncertainty dominates the forum ECB unveiled update to five-year strategy on Monday It expects more volatile inflation Investors are shifting focus to Europe from U.S. South Korean central bank is keeping eye on financial stability risks 4 minutes ago 10:23 EDT Balazs Koranyi and Francesco Canepa South Korea's central bank remains in a monetary easing cycle but is watching out for risks to financial stability amid rising house prices, he said on Tuesday. When asked about the dollar's value, Bank of Korea's Rhee said the South Korean currency's appreciation against the greenback in the last two months was mostly a reversal of declines caused by domestic political uncertainty. Powell receives applause for saying he shakes off Trump attacks 6 minutes ago 10:21 EDT Ann Saphir and Rajaa Bint Talal Powell received an applause from the audience and from his colleagues on the stage when saying he is focused on his job in response to Trump's personal attacks. 'I'm very focused on just doing my job. The things that matter are using our tools to achieve the goals that congress has given us, maximum employment, price stability, financial stability. And that's what we focus on, 100%,' Powell said. The Fed and Powell have endured a barrage of pressure from Trump to cut rates and the president has mused about picking a replacement for Powell soon - well ahead of the expiration of the chair's term in May 2026. 17 minutes ago 10:10 EDT Francesco Canepa The euro's recent appreciation against the dollar doesn't just reflect market conditions but also the strength of the euro zone's economy, Lagarde said. "It's a reflection of the market conditions and assessment," Lagarde added. "It's also a reflection of the strength of our economy." BOJ's Ueda says underlying inflation still below 2% 23 minutes ago 10:04 EDT Balazs Koranyi and Francesco Canepa FILE PHOTO: Ueda attends a press conference in Tokyo, Japan June 17, 2025. REUTERS/Issei Kato Bank of Japan Governor Kazuo Ueda said on Tuesday the country's underlying inflation was still "somewhat below" the central bank's 2% target. He also said the range of the BOJ's estimate on the neutral rate was "very large," though the bank's current policy rate was "below neutral." BoE's Bailey says policy remains restrictive 32 minutes ago 09:55 EDT He added that he expected the restrictiveness to come down. Powell also said policy was modestly restrictive. What to know about Andrew Bailey 41 minutes ago 09:46 EDT Kylie MacLellan Andrew Bailey is the Governor of the Bank of England. He began his 8-year term on March 16, 2020, succeeding Mark Carney. Bailey is the Bank's 121st Governor in its 325-year history. He joined the BoE in 1985 and has been a member of the Bank's Financial Policy Committee since 2012. He was previously Chief Executive Officer of the Financial Conduct Authority. 41 minutes ago 09:46 EDT BoE governor Andrew Bailey said there were signs of softening in the economy and the labour market. The direction of rates continues to be downwards, he added. Bank of Korea's Rhee says tariffs tend to be deflationary 44 minutes ago 09:43 EDT The bank is keeping an eye on financial stability risk in deciding about further cuts, he said. What to know about Bank of Korea Governor Rhee Chang-yong an hour ago 09:40 EDT Cynthia Kim and Rajaa Bint Talal The 65-year-old economist was appointed Bank of Korea Governor in 2022. He was widely expected to continue the bank's efforts to curb inflation with interest rate hikes. Rhee came to the post after eight years at the International Monetary Fund where he served as director of the Asia and Pacific Department. Prior to that he was Chief Economist at the Asian Development Bank from 2011 to 2014. During his tenure as governor, Rhee has addressed issues related to rising inflation, fluctuation of unemployment rates, the depreciation of the won currency, and high interest rates. Six months of political turmoil in South Korea which culminated in a June 3 snap election saw the won weaken. Rhee said in May the BOK would likely have to cut the growth forecast and lower lending rates to boost the economy. The governor is three years into his four-year term.
RNZ News
01-07-2025
- Business
- RNZ News
Former Reserve Bank acting governor Grant Spencer appointed to its board
Grant Spencer. Photo: RESERVE BANK A former acting governor of the Reserve Bank has been appointed to its board. Finance Minister Nicola Willis has approved the appointment of Grant Spencer for a five-year term to fill one of two vacancies. "Grant Spencer brings expertise in central banking, financial stability, and monetary policy," Willis said. Spencer served as a RBNZ Deputy Governor, in charge of the supervision of banking and insurance sectors. He was appointed acting governor by the former National-led government for six months after the departure of Graeme Wheeler in September 2017 and the appointment of Adrian Orr by the newly elected Labour led government in 2018. Spencer was critical of the RBNZ's policies which were a factor in setting house prices alight at the start of Covid. He replaces Rawinia Higgins, whose term has ended. RBNZ chair Neil Quigley said Spencer would strengthen the board. "Mr Spencer's appointment will enhance the Board's expertise in prudential regulation, macro-prudential policy, and financial market operations, offering complementary strengths to existing board members, particularly in the context of New Zealand's central banking landscape." A current member of the board, Byron Pepper, has been reappointed for another five-year term. There is one remaining vacancy on the RBNZ board, which has come under scrutiny and criticism after the abrupt resignation of Adrian Orr. Sign up for Ngā Pitopito Kōrero , a daily newsletter curated by our editors and delivered straight to your inbox every weekday.
Reuters
01-07-2025
- Business
- Reuters
Former RBNZ Acting Governor Spencer appointed to central bank's board
July 1 (Reuters) - Former Reserve Bank of New Zealand (RBNZ) Acting Governor Grant Spencer has been appointed to the central bank's board for a five-year term, effective July 1, Finance Minister Nicola Willis said on Tuesday. Spencer served as RBNZ deputy governor and head of the bank's financial stability committee from 2007 to 2017, and was the bank's acting governor from 2017 to 2018. "Grant Spencer brings expertise in central banking, financial stability, and monetary policy," Willis said in a statement. Spencer's appointment to the board comes as the centre-right National Party-led coalition government continues its search for a permanent leader for the central bank after the surprise resignation of Adrian Orr in March. Willis was critical of Orr's stewardship while she was in opposition, blaming him for soaring inflation after the pandemic and the high interest rates that led to recession. Christian Hawkesby, who had been serving as RBNZ's acting governor following Orr's resignation, was appointed in April as the RBNZ Governor for a six-month term. Willis said she had also reappointed Byron Pepper to the board for another five years.
