Читать книгу Foreign Exchange: The Complete Deal - James McDowell. Sharpe - Страница 27

Monetary policy can operate through monetary targeting, exchange rate targeting or inflation targeting. A monetary targeting strategy will have an implicit inflation target, which is used to determine the optimal growth of the monetary aggregate. Central banks that pursue exchange rate targeting do not require a target rate for inflation. Ideally, the exchange rate would be pegged to a low inflation currency with the aim of mirroring their inflation performance; as such there is no need to specify an inflation target rate.

This is quite the opposite of inflation targeting, where there is a specific figure announced and widely communicated. In this case there is no interim target for the public to observe, which of course raises the profile of the final target. Practically, all three strategies are managed through short-term interest rates.

A recent approach has been to take account of all indicators, known as a look at everything strategy, rather than a single variable. This is very much allied to improved communications (signalling) between the policy makers and the public, and genuine accountability. In the UK this is seen in the letter that is sent from the Bank of England Governor to the Chancellor if inflation deviates over 1% from target.

One common feature in this transparent approach is the publication of minutes of monetary meetings, albeit with a time lag. It is important that the public believe in the policy makers’ commitment; anchoring inflation expectations is viewed as critical by all central bankers in public utterances and in official reports. The implicit assumption in inflation targeting is that low and stable inflation will promote macroeconomic goals such as economic growth and employment. Inflation targets are generally around 2% and are either published as a single figure or as a target range.

Events of 2008 and 2009 highlighted that monetary policy is not exclusively about preventing excessive inflation; many central banks at this time were looking to counter deflationary pressures (a decline in prices and weak growth) and in some cases sold their currency. Another good example of this is the Japanese policy response in 2001 to a decade long period of near zero growth and deflation. The policy conclusion was that the key to recovery was an expansion of the money supply. This was started in March 2001 by the adoption of quantitative easing (a term which has come into the public domain following the 2007-09 financial crisis). This was followed up by massive unsterilised intervention from the end of 2002 to 16 March 2004. To give some idea of the scale of intervention, on 5 March 2004 the Japanese purchased USD 11.2bn and sold yen.

By the end of 2003 there were signs of Japanese economic recovery and in March 2004 Alan Greenspan, the US Federal Reserve Bank Chairman, indicated that the intervention strategy had worked. He said:

“Partially unsterilised intervention is perceived as a means of expanding the monetary base of Japan, a basic element of monetary policy. In time, however, as the present deflationary situation abates, the monetary consequences of continued intervention could become problematic. The current performance of the Japanese economy suggests that we are getting closer to the point where continued intervention at the present scale will no longer meet the monetary policy needs of Japan.”

It should be noted that intervention had the full support of the US administration, which felt that economic stagnation was not in the interests of the US. ^[6] By not registering objections to the intervention the US effectively made it possible for the Japanese to operate in the market.