lunes, 12 de enero de 2015

lunes, enero 12, 2015
January 7, 2015, 5:41 PM ET

Fed Bond Purchases Had Larger Overseas Effects Than Rates, IMF Says

The Federal Reserve’s bond-buying programs have had a much larger impact on capital flows in and out of emerging markets than conventional interest-rate moves in the past, according to a new working paper from the International Monetary Fund.



The U.S. central bank brought interest rates to near zero in December 2008 and embarked on three rounds of asset purchases aimed at stabilizing markets during the financial crisis, combating the recession and spurring the recovery. The U.S. economy and labor market have improved, but inflation remains well below the central bank’s 2% target.

“When the U.S. resorted to unconventional monetary policy, spillovers on asset prices and capital flows were significant, though remained smaller in countries with better fundamentals,” write economists Jiaqian Chen, Tommaso Mancini-Griffoli and Ratna Sahay.

“This was not because monetary policy shocks changed (in size, sign or impact on stance). Instead, we find that larger spillovers stem more from structural factors, such as the use of new instruments (asset purchases),” they said.

The Fed completed its third bond-buying program in October and is now debating when to start raising interest rates for the first time since 2006. Most Fed officials expect liftoff this year, and many investors are expecting it around midyear.

Minutes from the central bank’s December meeting showed officials’ primary concerns regarding U.S. economic prospects emanating from overseas.

The IMF paper emphasizes the importance of communicating policy shifts with enough lead time for markets to respond in an orderly way.

“Clear central bank communication in advanced economies is key to minimizing spillovers,” the authors write. “To minimize the effect of market surprises, the U.S. Fed and other advanced economy central banks should focus on minimizing shocks to long-term yields when they exit from unconventional monetary policies.”

This could be achieved if the Fed allows the bonds on its books to mature rather than sell them, or by selling them “in a very predictable and mechanical fashion.”

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