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After hiking rates 14 consecutive times between December 2021 and August 2023 to arrest above-target inflation, the Bank of England (BoE) has held rates at 5.25 percent since then. As the BoE prepares for easing, this paper examines three concurrent monetary policy questions: (a) how have the macroeconomic and financial effects of BoE monetary tightening during the current cycle compared with experiences in other major advanced economies (AEs), and with previous UK tightening cycles; (b) what is the impact of US Fed decisions on UK monetary transmission, and the attendant implications thereof for BoE communications; and (c) how do model-based predictions of UK monetary policy paths (which seek to stabilize inflation and the output gap) compare with staff’s recommended path in the 2024 Article IV consultation. We find that (a) monetary transmission has largely mirrored previous episodes (and experiences in other major AEs), with the most notable exception of the mortgage channel, which has been slower due to a higher share of fixed-rate mortgages; (b) an outsized impact of Fed announcements on UK financial markets places a premium on BoE communications in a context where the BoE may diverge from the Fed; and (c) optimal rate path predictions are close to staff’s recommended path, although if the BoE attached a high weight to concerns about a prolonged period of above-target inflation leading to de-anchoring of inflation expectations, a slower pace of cuts would be warranted. A technical assistance mission from the IMF's Statistics Department visited Cambodia during April 10-21, 2023, to support the authorities in continuing to improve the compilation and dissemination of government finance statistics (GFS) and public sector debt statistics (PSDS).

Institutions and the Macroeconomy --- Monetary Policy, Central Banking, and the Supply of Money and Credit: General --- Money and Interest Rates: General --- United Kingdom

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The paper provides an overview of the role of the fiscal imbalances and the ensuing public debt in explaining major episodes in Israel’s recent economic developments. The main conclusions from the Israeli budgetary developments may have more general validity: (a) deficits lead to inflation and stopping inflation requires elimination of deficits; (b) a major effect of inflation is a large shift of the tax burden from capital to labor; and (c) shocks to labor supply, such as massive labor inflow through immigration, can be absorbed without worsening government finances, when the labor and the housing markets are sufficiently flexible.

Aggregate Factor Income Distribution --- Debt Management --- Debt --- Debts, Public --- Deflation --- General Aggregative Models: General --- Government debt management --- Income --- Inflation --- Macroeconomics --- Money and Interest Rates: General --- National accounts --- Price Level --- Prices --- Public debt --- Public finance & taxation --- Public Finance --- Public financial management (PFM) --- Sovereign Debt --- Tax administration and procedure --- Tax incidence --- Tax policy --- Taxation --- Taxation, Subsidies, and Revenue: General --- Israel

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I conduct interviews with 32 Central Bankers from Emerging Markets and present five unifying themes that explain their behavior when reacting to a U.S. monetary tightening. I then estimate the impulse response functions of their two main monetary tools, the policy rate and foreign exchange interventions, to an increase in the U.S. rate, using the answers from the interviews as a guide for the best econometric specification. I find that most Central Banks react to a U.S. tightening by raising domestic rates, regardless of the exchange rate regime, but their reasons for doing so vary – from controlling inflation to preventing capital outflows.

Macroeconomics --- Economics: General --- Money and Interest Rates: General --- Monetary Policy, Central Banking, and the Supply of Money and Credit: General --- International Finance: General --- Open Economy Macroeconomics --- International Policy Coordination and Transmission --- International Business Cycles --- Economic & financial crises & disasters --- Economics of specific sectors --- Currency crises --- Informal sector --- Economics --- United States

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Las políticas monetarias acomodaticias de las economías avanzadas han estimulado la entrada de capitales en los mercados emergentes desde la crisis financiera internacional. En un episodio que comenzó en mayo de 2013, cuando la Reserva Federal mencionó públicamente los planes de repliegue gradual de las políticas monetarias no convencionales, esos mercados emergentes experimentaron turbulencia financiera, en un momento en que su actividad económica interna se había enfriado. Este estudio examina sus experiencias y políticas de respuesta, y extrae lecciones generales. En los mercados emergentes, la solidez de los fundamentos macroeconómicos es importante, y la adopción sin dilación de medidas decisivas para fortalecer las políticas macroeconómicas y reducir las vulnerabilidades ayuda a suavizar las reacciones de los mercados a los shocks externos. En las economías avanzadas, la comunicación clara y eficaz sobre el retiro de la política monetaria no convencional puede contribuir a alejar el riesgo de volatilidad excesiva en los mercados, lo cual efectivamente ocurrió. Y en la comunidad internacional, la promoción de la cooperación internacional, que debe incluir una sólida red mundial de seguridad financiera, ofrece a los mercados emergentes una protección eficaz ante la volatilidad excesiva.

Exports and Imports --- Foreign Exchange --- Investments: Bonds --- Money and Monetary Policy --- Money and Interest Rates: General --- Financial Markets and the Macroeconomy --- Policy Objectives --- Policy Designs and Consistency --- Policy Coordination --- Fiscal Policy --- International Investment --- Long-term Capital Movements --- General Financial Markets: General (includes Measurement and Data) --- Monetary Policy --- Currency --- Foreign exchange --- International economics --- Investment & securities --- Monetary economics --- Capital flows --- Exchange rates --- Bond yields --- Unconventional monetary policies --- Foreign exchange intervention --- Capital movements --- Bonds --- Monetary policy --- United States

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We study a monetary, general equilibrium economy in which banks exist because they provide intertemporal insurance to risk-averse depositors. A "banking crisis" is defined as a case in which banks exhaust their reserve assets. Under different model specifications, the banking industry is either a monopoly bank or a competitive banking industry. If the nominal rate of interest (rate of inflation) is below (above) some threshold, a monopolistic banking system will always result in a higher (lower) crisis probability. Thus, the relative crisis probabilities under the two banking systems cannot be determined independently of the conduct of monetary policy. We further show that the probability of a "costly banking crisis" is always higher under competition than under monopoly. However, this apparent advantage of the monopoly bank is due strictly to the fact that it provides relatively less valuable intertemporal insurance. These theoretical results suggest that banking system structure may matter for financial stability.

Banks and Banking --- Money and Monetary Policy --- Finance: General --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- General Equilibrium and Disequilibrium: General --- Money and Interest Rates: General --- Financial Crises --- Monetary Systems --- Standards --- Regimes --- Government and the Monetary System --- Payment Systems --- Monetary Policy --- General Financial Markets: General (includes Measurement and Data) --- Banking --- Economic & financial crises & disasters --- Monetary economics --- Finance --- Banking crises --- Commercial banks --- Currencies --- Reserve requirements --- Financial crises --- Financial institutions --- Money --- Monetary policy --- Competition --- Financial markets --- Banks and banking --- United States