Chart 1 Common Features of Recent Monetary Policy Conduct in Advanced Economies 1 Adopting % as the inflation target (or goal) Stabilizing inflation expectations at around % 3 Unconventional monetary policy under the zero interest rate lower bound Emphasis on financial stability and its relation to monetary and macroprudential policies
Chart Realized Inflation and Inflation Expectations in Advanced Economies 5 3 1-1 - -3 CY 1995 5 3 1-1 - -3 United States PCE (headline) 95 9 97 9 99 1 3 5 7 9 1 11 1 13 1 Euro area HICP (headline) CY 199595 9 97 9 99 1 3 5 7 9 1 11 1 13 1 Japan 5 3 1-1 - -3 CY 199595 9 97 9 99 1 3 5 7 9 1 11 1 13 1 United Kingdom 5 3 1 RPIX -1 - Target level -3 CY 199595 9 97 9 99 1 3 5 7 9 1 11 1 13 1 Note: The RPIX refers to the Retail Prices Index excluding mortgage interest payments, which was used as the target index until November 3. The target level between May 1995 and April 1997 was.5 percent or below. Sources: Bloomberg; Consensus Economics Inc., "Consensus Forecasts."
Chart 3 Current Unconventional Monetary Policy in Advanced Economies Large-scale asset purchases FRB ECB BOE BOJ Forward guidance Longer-term liquidity provision Long-term conditional lending Negative interest rate on reserves Sources: Federal Reserve; European Central Bank; Bank of England; Bank of Japan. Chart Classification of Exchange Rate Arrangements and Monetary Policy Frameworks Monetary policy framework Exchange rate arrangement Inflation targeting Monetary aggregate target Exchange rate anchor Other Free floating Floating Other managed arrangement Crawl-like arrangement Australia, Japan, United Kingdom New Zealand, Philippines, South Korea, Thailand Indonesia (maintains a de facto exchange rate anchor to the U.S. dollar) China (maintains a de facto exchange rate anchor to the U.S. dollar) Singapore (maintains a de facto exchange rate anchor to a composite) United States, Euro area Malaysia Source: International Monetary Fund.
Chart 5 Inflation Targets and Definitions Inflation target Introduction year Reference indicator Numerical value Duration to achieve the target United States Long-run goal 1 Headline PCE % Long term Fixed Euro area Definition of price stability 199 Headline HICP Below but close to % Medium term Fixed Japan Price stability target 13 Headline CPI % Medium to long term United Kingdom Inflation target 199 Headline CPI % Reasonable time Fixed Australia Inflation target 1993 Headline CPI -3% Medium term Fixed Target variability Fixed New Zealand Inflation target 19 Headline CPI 1-3% (with a focus on % target midpoint) Medium term South Korea Inflation target 199 Headline CPI.5-3.5% for 13-15 Pre-fixed term Indonesia Inflation target Headline CPI.5% ± 1% for 1-1 and % ± 1% for 15 Pre-fixed term Fixed Adjusted every few years Adjusted every few years Thailand Inflation target Core CPI.5-3% Annual Adjusted annually Philippines Inflation target Headline CPI % ± 1% for 11-1 and 3% ± 1% for 15-1 Pre-fixed term Adjusted every few years China Annual target n.a. Headline CPI 3.5% for 1 Annual Adjusted annually Source: Each central bank.
Chart -1 Exchange Rates against the U.S. Dollar (1) 1. Australian dollar 1.1 1..9..7..5. CY 199595 9 97 9 99 1 3 5 7 9 1 11 1 13 1 1. New Zealand dollar.9..7..5..3 CY 1995 95 9 97 9 99 1 3 5 7 9 1 11 1 13 1 1, Korean won 1, 1, 1, 1, Introduction of inflation targeting CY 1995 95 9 97 9 99 1 3 5 7 9 1 11 1 13 1 Source: Bloomberg.
Chart - Exchange Rates against the U.S. Dollar () 55 Thai baht 5 5 35 3 5 Introduction of inflation targeting CY 1995 95 9 97 9 99 1 3 5 7 9 1 11 1 13 1 Philippine peso 55 5 5 35 3 Introduction of inflation targeting 5 15 1 CY 199595 9 97 9 99 1 3 5 7 9 1 11 1 13 1 1, Indonesian rupiah 1, 1, 1,,,, Introduction of inflation targeting, CY 199595 9 97 9 99 1 3 5 7 9 1 11 1 13 1 Source: Bloomberg.
Chart -3 Exchange Rates against the U.S. Dollar (3) Chinese renminbi 9..5. 7.5 7..5. 5.5 5. CY 1995 95 9 97 9 99 1 3 5 7 9 1 11 1 13 1 Singapore dollar 1.9 1. 1.7 1. 1.5 1. 1.3 1. 1.1 1. CY 199595 9 97 9 99 1 3 5 7 9 1 11 1 13 1 Malaysian ringgit 5..5. 3.5 3..5. 1.5 1. CY 199595 9 97 9 99 1 3 5 7 9 1 11 1 13 1 Source: Bloomberg.
Chart 7-1 Inflation Rates and Policy Interest Rates in the Asia-Pacific Region (1) 1 % Australia - Cash rate (a) CPI (b) a - b - CY 1 3 5 7 9 1 11 1 13 1 1 - % New Zealand Cash rate (a) CPI (b) a - b - CY 1 3 5 7 9 1 11 1 13 1 1 % South Korea BOK base rate (a) CPI (b) a - b - - CY 1 3 5 7 9 1 11 1 13 1 Source: Bloomberg.
Chart 7- Inflation Rates and Policy Interest Rates in the Asia-Pacific Region () 1 1 - % Overnight repo rate (a) CPI (b) a - b Thailand - CY 1 3 5 7 9 1 11 1 13 1 1 1 - % Philippines Overnight policy rate (a) CPI (b) a - b - CY 1 3 5 7 9 1 11 1 13 1 1 1 % Indonesia - BI rate (a) CPI (b) a - b - CY 1 3 5 7 9 1 11 1 13 1 Source: Bloomberg.
Chart 7-3 Inflation Rates and Policy Interest Rates in the Asia-Pacific Region (3) 1 - - % China 1-year lending rate (a) CPI (b) a - b - CY 1 3 5 7 9 1 11 1 13 1 1 - - % Overnight policy rate (a) CPI (b) a - b Malaysia - CY 1 3 5 7 9 1 11 1 13 1 Source: Bloomberg.
Chart -1 Realized Inflation and Inflation Expectations in the Asia-Pacific Region (1) Australia 1 1 1 - CY 199595 9 97 9 99 1 3 5 7 9 1 11 1 13 1 1 1 1 New Zealand CPIX - CY 1995 95 9 97 9 99 1 3 5 7 9 1 11 1 13 1 Note: The target index is the headline CPI except for 199 and 1999, when the CPIX (CPI excluding credit services) was used. 1 1 1 South Korea CPI (core) - CY 1995 95 9 97 9 99 1 3 5 7 9 1 11 1 13 1 Note: The target index is the headline CPI except for the period from to, when the core CPI was used. Sources: Bloomberg; Consensus Economics Inc., "Consensus Forecasts."
Chart - Realized Inflation and Inflation Expectations in the Asia-Pacific Region () 1 1 1 - CY 199595 9 97 9 99 1 3 5 7 9 1 11 1 13 1 Philippines 1 1 1 - CY 1995 95 9 97 9 99 1 3 5 7 9 1 11 1 13 1 35 3 5 15 1 5-5 CY 1995 95 9 97 9 99 1 1 1 - Thailand CPI (core) Indonesia 1 3 5 7 9 1 11 1 13 1 Sources: Bloomberg; Consensus Economics Inc., "Consensus Forecasts."
Chart -3 Realized Inflation and Inflation Expectations in the Asia-Pacific Region (3) 3 5 15 1 5-5 CY 1995 95 9 97 9 99 1 1 1 - China 1 3 5 7 9 1 11 1 13 1 1 Singapore 1 1 - CY 1995 95 9 97 9 99 1 3 5 7 9 1 11 1 13 1 1 Malaysia 1 1 - CY 199595 9 97 9 99 1 3 5 7 9 1 11 1 13 1 Sources: Bloomberg; Consensus Economics Inc., "Consensus Forecasts."