WHERE IS MONETARY POLICY GOING ? GLOBAL OFFICIAL INSTITUTIONS - - PowerPoint PPT Presentation

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WHERE IS MONETARY POLICY GOING ? GLOBAL OFFICIAL INSTITUTIONS - - PowerPoint PPT Presentation

Oct 25, 2022 38 likes •258 views

WHERE IS MONETARY POLICY GOING ? GLOBAL OFFICIAL INSTITUTIONS CONFERENCE JACQUES DE LAROSIRE Paris, 21st June, 2018 1 CENTRAL BANK REAL POLICY RATE, % (DEFLATED WITH CORE INFLATION) ECB, repo rate FED, target Fed Funds BOJ, overnight call

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WHERE IS MONETARY POLICY GOING ?

GLOBAL OFFICIAL INSTITUTIONS CONFERENCE

JACQUES DE LAROSIÈRE Paris, 21st June, 2018

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2

Source: Central Banks, Thomson Reuters

1 CENTRAL BANK REAL POLICY RATE, %

(DEFLATED WITH CORE INFLATION)

| 21/06/2018 | Global Official Institutions Conference

  • 2.5
  • 2.0
  • 1.5
  • 1.0
  • 0.5

0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 ECB, repo rate FED, target Fed Funds BOJ, overnight call rate

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3

Source: OECD, May 2018

2 OUTPUT GAP, %

| 21/06/2018 | Global Official Institutions Conference

  • 6
  • 5
  • 4
  • 3
  • 2
  • 1

1 2 3 4 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018f Euro zone US Japan

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4

Source: Central Banks

3 CENTRAL BANK POLICY RATE, %

| 21/06/2018 | Global Official Institutions Conference

  • 0.5

0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 5.5 ECB, repo rate FED, target Fed Funds BOJ, overnight call rate

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5

Source: Central Banks, Thomson Reuters

4 CENTRAL BANK BALANCE SHEET, AS % OF GDP

| 21/06/2018 | Global Official Institutions Conference

10 20 30 40 50 60 70 80 90 100 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 ECB FED BOJ

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6

Source: Eurostat, BEA, Cabinet Office

5 REAL GDP GROWTH, Y/Y %

| 21/06/2018 | Global Official Institutions Conference

  • 9
  • 6
  • 3

3 6 EZ19 US Japan

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7

Source: CaixaBank, Monthly Report MR04, April 2018

6 FINANCIAL CONDITIONS ARE STILL LOOSER, IN SPITE OF

US TIGHTENING OF MONETARY POLICY

| 21/06/2018 | Global Official Institutions Conference

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8

Source: Central Banks

7 CENTRAL BANK POLICY RATE, %

| 21/06/2018 | Global Official Institutions Conference

  • 0.5

0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 5.5 ECB, repo rate FED, target Fed Funds BOJ, overnight call rate

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SLIDE 9

9

Source: Central Banks, Thomson Reuters

8 CENTRAL BANK BALANCE SHEET, AS % OF GDP

| 21/06/2018 | Global Official Institutions Conference

10 20 30 40 50 60 70 80 90 100 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 ECB FED BOJ

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10

Source: Eurostat, BLS, Ministry of Internal Affairs and Communications, Thomson Reuters

9 CORE INFLATION RATE

(CONSUMER PRICE INDEX EXCL. FOOD & ENERGY, Y/Y %)

| 21/06/2018 | Global Official Institutions Conference

  • 80
  • 60
  • 40
  • 20

20 40 60 80 100 120

  • 2
  • 1

1 2 3 Euro zone US Japan Brent oil price, y/y % (RHS)

Core inflation rate has remained remarkably stable over the last 13 years

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11

Source: Eurostat, BLS, Ministry of Internal Affairs and Communications, Thomson Reuters

10 HEADLINE INFLATION RATE (CONSUMER PRICE INDEX, Y/Y %)

| 21/06/2018 | Global Official Institutions Conference

  • 60
  • 40
  • 20

20 40 60 80 100 120

  • 3
  • 2
  • 1

1 2 3 4 5 6 Euro zone US Japan Brent oil price, y/y % (RHS)

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12

10b GROWTH IN THE EURO AREA HAS PICKED UP SINCE 2014

| 21/06/2018 | Global Official Institutions Conference

0.4 1.0 0.5 0.6 0.8 0.0 0.0

  • 0.4
  • 0.2
  • 0.3
  • 0.2
  • 0.4
  • 0.3

0.5 0.3 0.3 0.4 0.2 0.40.5 0.8 0.3 0.50.4 0.5 0.3 0.5 0.6 0.6 0.6

  • 0.6
  • 0.4
  • 0.2

0.0 0.2 0.4 0.6 0.8 1.0 2010 2011 2012 2013 2014 2015 2016 2017

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13

Source: Central Banks, Thomson Reuters

11 CENTRAL BANK BALANCE SHEET, AS % OF GDP

| 21/06/2018 | Global Official Institutions Conference

10 20 30 40 50 60 70 80 90 100 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 ECB FED BOJ

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14

Source: ECB

12 BANK LENDING RATES TO NONFINANCIAL CORPORATES,

1-5 YEARS MATURITY, %

| 21/06/2018 | Global Official Institutions Conference

1 2 3 4 5 6 7 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Euro zone Germany France Italy Spain

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15

Source: Bloomberg

12b A SIGNIFICANT PART OF SOVEREIGN YIELDS IS STILL NEGATIVE IN

NOMINAL TERMS

| 21/06/2018 | Global Official Institutions Conference

Suisse Japon Allemagne France Espagne Italie Etats-­‑Unis

1Y

  • ­‑0,80 ¡
  • ­‑0,13 ¡
  • ­‑0,64 ¡
  • ­‑0,58 ¡
  • ­‑0,37 ¡

0,52 2,31 2Y

  • ­‑0,74 ¡
  • ­‑0,13 ¡
  • ­‑0,59 ¡
  • ­‑0,49 ¡
  • ­‑0,16 ¡

1,00 2,53 3Y

  • ­‑0,64 ¡
  • ­‑0,11 ¡
  • ­‑0,49 ¡
  • ­‑0,34 ¡
  • ­‑0,01 ¡

1,32 2,67 4Y

  • ­‑0,51 ¡
  • ­‑0,10 ¡
  • ­‑0,33 ¡
  • ­‑0,15 ¡

0,23 1,69 2,79 5Y

  • ­‑0,43 ¡
  • ­‑0,10 ¡
  • ­‑0,14 ¡

0,02 0,51 1,98 2,81 6Y

  • ­‑0,28 ¡
  • ­‑0,07 ¡
  • ­‑0,02 ¡

0,29 0,68 2,28 2,91 7Y

  • ­‑0,17 ¡
  • ­‑0,04 ¡

0,11 0,45 0,88 2,47 2,91 8Y

  • ­‑0,10 ¡
  • ­‑0,02 ¡

0,24 0,61 1,12 2,62 2,99 9Y

  • ­‑0,014

0,02 0,37 0,71 1,30 2,77 3,02 10Y 0,064 0,05 0,49 0,88 1,44 2,86 2,96 15Y 0,374 0,26 0,64 1,26 1,98 3,19 3,11 20Y 0,523 0,53 0,91 1,37 1,98 3,38 3,12 30Y 0,629 0,73 1,18 1,73 2,58 3,59 3,10

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16

Source: OECD, May 2018

13 OUTPUT GAP, %

| 21/06/2018 | Global Official Institutions Conference

  • 6
  • 5
  • 4
  • 3
  • 2
  • 1

1 2 3 4 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018f Euro zone US Japan

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17

Source: World Bank

14 LABOUR PARTICIPATION RATE, %

(15 TO 64 YEARS OLD)

| 21/06/2018 | Global Official Institutions Conference

66 68 70 72 74 76 78 2000 2002 2004 2006 2008 2010 2012 2014 2016 Euro zone Japan US

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18

Source: Eurostat, BLS, Ministry of Internal Affairs and Communications

15 UNEMPLOYMENT IS RECEDING IN THE EURO AREA, BUT REMAINS

HIGH NOTABLY IN SOUTHERN COUNTRIES

| 21/06/2018 | Global Official Institutions Conference

2 3 4 5 6 7 8 9 10 11 12 13 Euro zone US Japan

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19

Source: Eurostat, BLS, Ministry of Health, Labour & Welfare

16 NOMINAL WAGES GROWTH, Y/Y %

| 21/06/2018 | Global Official Institutions Conference

  • 2

2 4 6 Euro zone, wages & salaries US, average hourly earnings, total private Japan, scheduled cash earnings, all industries

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20

17 THE HETEROGENEITY IN CURRENT ACCOUNT IMBALANCES IS

STRICKING: GERMANY +8%, FRANCE -2%

| 21/06/2018 | Global Official Institutions Conference

  • 20
  • 15
  • 10
  • 5

5 10

99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17e 18f GR IT PT IR EZ FR DE ES GER EZ IR PT GR FR SP IT

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21

18 FISCAL POSITIONS ARE IMPROVING IN PERIPHERAL COUNTRIES

| 21/06/2018 | Global Official Institutions Conference

  • 16
  • 12
  • 8
  • 4

4

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015e 2016f GR IT PT IR EZ FR ES

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THANK YOU!

BNP PARIBAS

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