Verslaafd aan stimuleren

Acht jaar na de financiële crisis is een onconventioneel monetair beleid gemeengoed geworden bij centrale banken. Ook in de toekomst zullen ze hun balansen opblazen en negatieve rentevoeten aanhouden. Meer zelfs, ze overwegen hun tools uit te breiden door bijvoorbeeld bredere beleggingscategorieën aan te kopen. Onconventioneel is zo het nieuwe normaal geworden. Dat onthoudt Joachim Fels, hoofdeconoom bij de Amerikaanse vermogensbeheerder PIMCO, als belangrijkste conclusie van de Fed-jamboree in Jackson Hole.

Hieronder vindt u het volledige artikel:

Diving Deeper Into the Echo Chamber of Despair

Joachim Fels Signposts | Thoughts on Global Macro | August 29, 2016
* PIMCO Global Economic Advisor

I guess you have to be an economist to spend a leisurely vacation weekend sifting through the central bankers’ speeches and academic papers given and presented at this year’s Jackson Hole economic policy symposium. But now that I’m done with it, I might as well share my thoughts with you.

As with past JH symposium, markets tend to focus on hints about the near-term policy outlook, and policymakers indeed threw a few crumbs to the crowd:

• Janet Yellen noted that “the case for an increase in the federal funds rate has strengthened in recent months” but refrained from getting any more specific – no big news here as Rich Clarida notes on the PIMCO Blog.
• Her vice-chair Stan Fischer came across a bit more hawkish by stating that even two hikes this year might be consistent with the chair’s comment and that the coming August payroll report would weigh on the September FOMC decision. Keep in mind though that Fischer has hinted at quite a few imminent rate hikes over the past one-and-a-half years that, well, didn’t happen.
• The ECB’s Benoít Coeuré admitted that there are unwanted side effects to monetary easing, but indicated that the ECB might have to “dive deeper into our operational framework and strategy” if governments don’t do their part in delivering stimulus.
• Last but not least, Bank of Japan governor Kuroda emphasized that “there is no doubt that there is ample space for additional easing in each of the three dimensions” of the BoJ’s ‘qualitative and quantitative easing with negative interest rates’ policy approach. If it wasn’t already clear, this should lay to rest any remaining expectations that the BoJ’s comprehensive review of its approach in September will result in a policy U-turn.

Y

et, what I found much more interesting than the hints about near-term policy action was the overall message about the future of monetary policy conveyed in the contributions by both central bankers and invited academics: Eight years after the Great Financial Crisis and Great Recession, there seems to be no way out of ‘unconventional’ monetary policies such as bloated central bank balance sheets, forward guidance, and negative interest rates. The ‘new normal’ and ‘new neutral’ view of the world is now deeply engrained in central bankers thinking, and it has led to a ‘new status quo’ of monetary policy.

The way I read (most of) the papers presented at JH, those new tools are here to stay and will continue to be employed in the future. Moreover, if the new tools don’t suffice, don’t expect central bankers to sit back and give up. Rather, to quote Janet Yellen, “future central bankers may wish to explore the possibility of purchasing a broader range of assets” and “additional tools may be needed and will be subject to research and debate.” Note how this rhymes with both Benoít Coeuré’s hint that the ECB will “dive deeper into our operational framework and strategy” and Haruhiko Kuroda’s “ample space for additional easing in each of the three dimensions” quoted above. Like it or not, central banks look set to dig themselves ever deeper into a (Jackson) hole.

And, to be sure, most of the academic papers presented at JH give central bankers cover to do just that (all papers can be accessed through the link to the JH symposium I provided at the outset). I’ll just mention two of these:

• Harvard professors Greenwood, Hanson and Stein (as in Jeremy Stein, the former Fed governor) argue that the Fed’s bloated balance sheet could be and should be used to be a very useful tool to preserve financial stability. By keeping the balance sheet large and offering an ample supply of safe short-term assets – interest bearing reserves and reverse repo agreements – the Fed would prevent private financial institutions from issuing too many of their own short-term liabilities and engaging in potentially destabilizing excessive maturity transformation. This crowding out of private maturity transformation would make the financial system more stable and, according to the authors, the Fed would be better placed to offer these safe short-dated assets than the Treasury as it doesn’t face the kind of “auction risk” the Treasury would have to deal with if it had to roll over huge amounts of one-week bills at auction every week. I’m sure most Fed officials in the audience were glad to hear this new justification for maintaining a large balance sheet forever..
• Carnegie Mellon professor Marvin Goodfriend (formerly Research Director at the Richmond Fed) lays out in much detail how beneficial negative nominal interest rates are and what could be done to allow central banks to take interest rates significantly more negative. After all, to quote from his paper, “removing the zero lower bound is nothing more than the sensible application of monetary economics.” As you might have guessed, one of the ‘sensible’ options is to abolish paper currency and introduce digital money administered by the central bank. You get the drift.

After reading all of the above, I finally found some comfort in Princeton professor Christopher Sims thoughtful lunchtime talk at JH on ‘Fiscal Policy, Monetary Policy and Central Bank Independence’. Looking at the recent experience through the lens of the fiscal theory of the price level, Sims concludes that:

• a large central bank balance sheet is NOT benign as it threatens the central bank’s independence;
• monetary policy has been ineffective in bringing inflation back up to target because it failed to generate fiscal expansion;
• and fiscal policy could replace ineffective monetary policy if it was made clear to the public that the deficits would be financed by future (higher) inflation rather than taxes or lower spending.

Alas, as far I can tell from the roster of participants, there were very few fiscal policy makers in the Jackson Hole audience. And so, the echo chamber at the foot of the Tetons is likely to repeat and repeat the mantra of diving ever deeper into ‘unconventional’ monetary policies.

Lees hier het hele artikel