From global markets to questions of development, money and economic activity.
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The report assesses India's FY23 budget, balancing gradual fiscal consolidation and investment support against longer-lasting pressures on yields and debt issuance.
Read the workChile’s policy stance was shifting sharply after fiscal expansion helped overheat the economy. In February 2022, Jonathan Fortun and coauthors assessed how simultaneous fiscal and monetary tightening could cool demand. They estimated that the extraordinary budgeted spending cuts could subtract five percentage points from growth and two from inflation, and expected overheating to end in the second half of 2022 despite continuing social challenges.
Read the workChina’s evolving interest rate framework links central bank decisions to benchmark and market rates. In this January 2022 report, Phoebe Feng, Jonathan Fortun, Gene Ma, Jonathan Pingle and Robin Brooks explain the roles of the rates used in that transmission mechanism. They identify the open market operations and medium term lending facility rates as the main policy instruments, describing how the different parts of the framework fit together.
Read the workThe recovery from COVID differed sharply across economies in January 2022. Robin Brooks, Jonathan Fortun and Jonathan Pingle attributed the comparatively complete US rebound largely to aggressive fiscal stimulus, with consumption and investment above their levels at the end of 2019. Their comparison of advanced and emerging economies warned that the euro area appeared headed for a major investment slump, comparable to weaknesses in South Africa and Colombia.
Read the workEquities dominated emerging market portfolio inflows at the end of 2021. Jonathan Fortun’s January tracker reports $16.8 billion in total December inflows and highlights $12.5 billion entering Chinese stocks. Debt attracted comparatively little investment, making the recovery heavily dependent on equity demand.
Read the workHigh public debt and very low bond yields coexisted in Japan under sustained central bank support. The December 2021 comparison asks whether the euro area was moving toward a similar configuration, as the European Central Bank’s role expanded and foreign government bond holdings declined. It presents an emerging parallel between the two monetary systems, rather than a completed convergence.
Read the workTurkey’s November 2021 currency selloff resembled the 2018 crisis in scale but occurred with a stronger external balance. Robin Brooks, Jonathan Fortun and Ugras Ulku attribute the pressure to continued rate cuts, changing market psychology and the reversal of speculative inflows. They interpret the fall as overshooting and retain their contemporary fair value estimate of 9.50 lira per dollar.
Read the workThe safe haven role of US Treasuries depends partly on the durability of foreign demand. Robin Brooks, Jonathan Fortun and Jonathan Pingle argue in November 2021 that dollar strength reduced foreign central banks’ need to intervene and accumulate Treasury holdings. Persistently weak inflows could leave the market more exposed to global shocks and require renewed Federal Reserve support.
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