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Tag Archives: Interest rates

Global Policy Responses to Capital Flow Volatility

By Annamaria De Crescenzio, Annamaria Kokenyne, Dennis Reinhart, and Julia Schmidt The COVID-19 health and economic crisis has once again focused attention on the fickleness of capital flows and the need to have an adequate policy toolkit to manage the risks that stem from these flows, while maximizing their benefits. A virtual workshop organized by the Bank of England, Banque de France, International Monetary Fund and the Organization for Economic Co-operation and Development (OECD)...

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What to do When Low-for-Long Interest Rates are Lower and for Longer

By Tobias Adrian Central banks have played a pivotal role in easing financial conditions in response to the COVID-19 shock, and helped avert a catastrophic downturn. However, their work is far from done. Yet more monetary stimulus will be needed to support economic recovery, and central banks are implementing innovative new strategies to provide it. Policymakers must weigh the pros of more stimulus today against the cons of higher financial stability risks in the future. While the new...

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COVID-19 Worsens Pre-existing Financial Vulnerabilities

By Tobias Adrian and Fabio Natalucci عربي, 中文, Español, Français, 日本語, Português, Русский Much the same way COVID-19 hits people with pre-existing health conditions more strongly, so is the pandemic-triggered economic crisis exposing and worsening financial vulnerabilities that have built up during a decade of extremely low rates and volatility. Our recently released chapters 2-4 of the  Global Financial Stability Report focus on three potential weak spots: risky segments in global credit...

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Monetary and Financial Stability During the Coronavirus Outbreak

By Tobias Adrian This blog is part of a special series on the response to the coronavirus. The global spread of the coronavirus is a human tragedy unfolding across the world. Quantifying the economic impact is complex, giving rise to significant uncertainty about the economic outlook and the associated downside risks. Such an abrupt rise in uncertainty can put both economic growth and financial stability at risk. In addition to targeted economic policies and fiscal measures, the right...

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Chart of the Week Frontier Market Borrowing Binge

By IMFBlog Español, Português Rock bottom global interest rates have been a boon for so-called frontier-market countries, which have been able to borrow cheaply to finance their development needs. But there can be too much of a good thing: countries that don’t put the money to good use may have trouble servicing their loans and find themselves at risk of default. As the Chart of the Week shows, hard-currency bond sales by frontier issuers—countries such as Angola, Belarus, Ecuador, and...

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To Tackle Housing Affordability in Canada, Build More Houses

By Michal Andrle, Cheng Hoon Lim and Troy Matheson Français Policymakers across the world worry about affordable housing. They should. It represents the cost of a basic human need—shelter. Canada is no exception as it grapples to provide affordable housing in some cities, like Vancouver and Toronto, where rents are high, and for many, the dream of owning a home has faded. People who can afford a down payment typically borrow as much as they can to get a foothold in the market—stretching...

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Chart of the WeekTop 5 Charts of Summer

By IMFBlog Español, Português Our data nerds have been hard at work over the summer and we have taken a dive into the numbers beneath the surface of the daily headlines. Housing prices, powerful companies, corruption, and more have been on our sonar.   So you can catch up and learn more about the stories below the waterline, our editors have chosen the best from our Chart of the Week series on the blog over the past few months.  Housing prices, powerful companies, corruption, and more...

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Chart of the WeekCanada’s Housing Market Slowdown

By IMFBlog Following a period of escalating prices, Canada’s housing market is cooling. Measures designed to strengthen financial stability such as more stringent tests of borrowers’ ability to repay their loans, along with higher interest rates, combined to make mortgage financing more expensive. As a result, residential mortgage credit slowed to just 3.4 percent annual growth in December 2018. Nationwide, house prices are 2.5 percent lower than the peak in mid-2018. This week’s chart of...

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Chart of the Week House Prices Are Up: Should We Be Happy?

By IMFBlog Español, Português House prices around the world have recovered smartly since the 2008 global financial crisis. Depending on where you live, that may or may not be a good thing. IMF research shows that there is a tight link between movements in house prices, on the one hand, and economic and financial stability, on the other. In fact, more than half of the banking crises in recent decades were preceded by boom-bust cycles in house prices. So it’s no wonder that central bankers...

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Bank Profitability: Consider the Source

By Udaibir S. Das, Kun Hu, and TengTeng Xu Español, Português The global financial crisis of 2007–2009 and the ensuing period of low interest rates have renewed interest among policy makers in the relationship between bank profitability and financial stability. Despite the subsequent recovery, the return on equity of many banks remains below the cost of equity. Market valuations remain below the balance sheet value of banks, indicating the market’s assessment of banks’ ability to overcome...

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