Monetary policy



Report

How central bank mistakes after 2019 led to inflation

In this paper, the authors make a convincing case that stimulative monetary policy during the global COVID-19 pandemic contributed materially to the inflation surge that followed and which persists today. Equally important, they focus intensively on the various reasons that might have contributed to this...
Working paper

Inflation in the time of corona and war

The author of this paper argues that recent inflationary pressures have mostly supply-side origins, caused by the COVID-19 crisis, which have been enabled by poor macroeconomic policy choices.
Discussion paper

The yield and market function effects of the Reserve Bank of Australia’s bond purchases

In this paper, the authors examine the effect on government bond yields of three Reserve Bank of Australia policy measures implemented following the onset of the COVID-19 pandemic. They also assess the impact of the three measures on government bond market functioning.
Report

Structural reform of the Reserve Bank of Australia

Both major political parties support an external review of monetary policy after the 2022 election. This paper discusses some of the main issues a review should cover.
Report

The return of inflation: what it means for Australia

Inflation is rising around the world, the sting in the tail of the pandemic economic stimulus packages unleashed by governments in 2020. This analysis paper examines the implications for prices and wages growth in Australia.
Discussion paper

Central bank communication: one size does not fit all

High-quality central bank communication can improve the effectiveness of monetary policy and is an essential element in providing greater central bank transparency. This paper investigates three important aspects of central bank communication - audience, readability and degree of reasoning.
Discussion paper

Monetary policy, equity markets and the information effect

How monetary policy affects the economy is a central question in macroeconomics. Standard economic thinking predicts interest rate cuts boost economic activity. This idea has recently been challenged by claims that changes in monetary policy have a so-called ‘information effect’. Calvin He explores this concept...
Policy report

The shifting roles of monetary and fiscal policy in light of COVID-19

This white paper aims to understand how varying economies have changed their monetary and fiscal policies to respond to the pandemic-induced economic crisis.
Report

The end of monetary policy?

Monetary policy is not the answer to our economic problems; and central bank actions could be making matters worse. This paper outlines an argument that monetary policy in most advanced economies is suffering from overreach, and has been for much of the past decade.
Working paper

How does monetary policy affect welfare?

The present paper addresses the question of how to estimate a social welfare function defined over inflation and unemployment that can help inform the policy decisions of central banks by providing a way to measure the well-being costs arising from macroeconomic fluctuations.
Working paper

Uncertainty and monetary policy during extreme events

How damaging are uncertainty shocks during extreme events such as the great recession and the COVID-19 outbreak? Can monetary policy limit output losses in such situations? This paper outlines economic modelling for policymakers.
Discussion paper

The distributional effects of monetary policy: evidence from local housing markets

This paper examines how monetary policy affects housing prices across local areas. It also explores three related questions - How differently do housing prices respond to monetary policy across areas? What can explain these differences across areas? Does monetary policy cause changes in the housing...
Discussion paper

Credit spreads, monetary policy and the price puzzle

Identifying the causal effect of monetary policy on inflation remains a challenge. Researchers frequently find evidence of a ‘price puzzle’: increases in the policy rate are followed by higher rather than lower inflation.
Discussion paper

China's evolving monetary policy framework in international context

This analysis suggests that while some aspects of monetary policy in China are beginning to resemble those observed in advanced economies, convergence is neither likely nor even desired by the authorities, given China's institutional configuration and preferred model of economic development.
Report

The 'reserve currency' myth: the US dollar's current and future role in the world economy

This report examines the US dollar’s global role and its implications for Australia. The report looks at the dollar’s global pre-eminence and how this has increased over time. It also examines the role of the US dollar as a “reserve asset”, arguing that this reserve...
Report

Monetary policy is spent: it's fiscal policy or bust

This paper argues that monetary policy in Australia is no longer effective and the task of stimulating the economy should be taken up by more active fiscal policy leadership from the Australian government.
Report

Lessons from quantitative easing: a guide for Australian policymakers

This report argues that quantitative easing (QE) is an operating instrument for policy, rather than a monetary policy as such. As with policy conducted via official interest rates, QE’s effectiveness depends on the policy framework in which it is located, as well as how the...
Report

Beyond neoliberalism: insights from emerging markets

This report, which is the output of an academic workshop hosted in January 2019, is organized around five areas where neoliberalism provides incomplete or unsatisfactory policy guidance: growth strategies and industrial policy, inequality, finance and monetary policy, the environment, and power and politics.
Discussion paper

Explaining monetary spillovers: the matrix reloaded

Using monetary policy shocks for 7 advanced economy central banks, measured at high frequency, this paper documents the strength and characteristics of interest rate spillovers to 47 advanced and emerging market economies.
Transcript

Climate change and the economy

This speech, by Reserve Bank Deputy Governor, Guy Debelle, examines how climate change affects the objectives of monetary policy and some of the challenges that arise in thinking about climate change.