Central banks

Consumer expectations and actions during the recent trade tensions

09/22/2025 European Central Bank Central banks

Recent trade tensions and tariff announcements are significantly influencing the behaviour and expectations of European consumers. As revealed by the June 2025 Consumer Expectations Survey, consumers expect tariffs to drive up inflation, weaken household finances and dampen economic growth. In response, consumers are reducing overall spending or switching away from US products. While lower-income households are likely to cut back on spending, high-income households are more likely to substitute goods.

Are workers willing to accept pay cuts in exchange for remote working flexibility?

09/22/2025 European Central Bank Central banks

Since the pandemic, working from home has become more common. According to 2025 data, around 20% of employees in the euro area have a hybrid working pattern, i.e. they work from home between two and four days per week. Although a substantial share of workers (44%) work from home at least one day per week, most workers would not be willing to accept a pay cut in exchange for hybrid working possibilities. However, those employees who value being able to work from home would be willing to forgo up to 8.7% of their wages for this option.

Changes to the collection and publication of data on the further sectoral breakdown of non-resident business

09/22/2025 Bank of England Central banks

This article details a consultation to discontinue the collection and publication of statistical data via Form BN on the further sectoral breakdown of non-resident monetary financial institutions. It also outlines existing alternative sources of non-resident data available in Forms CC and CL which can be used to substitute Form BN data, albeit on a quarterly rather than monthly frequency.

IFDP Paper: Core Inflation in the Advanced Economies: A Regional Perspective

09/19/2025 Federal Reserve Central banks

Daniel O. Beltran and Julio L. OrtizWe explore differences in the dynamics of core inflation between Europe and North America using a Bayesian time series filter that decomposes the level of core inflation in the major advanced economies into regional, global, and country-specific components. We find a prominent role for both regional and global factors. Historically, the two regional components have at times diverged.

FEDS Paper: One Policy Rate, Many Stances: Evidence from the European Monetary Union

09/19/2025 Federal Reserve Central banks

Manuel González-Astudillo, Diego VilánA challenge for conducting monetary policy in a currency union is the diverse economic conditions among member states. Such disparities can drive natural interest rates apart, thereby undermining the stabilizing role of a unified monetary policy.

FEDS Paper: Where's The Bank? Banking Access in the Era of Branch Consolidation

09/19/2025 Federal Reserve Central banks

Robert M. Adams and Shane M. SherlundThis study examines changes in household and employment access to bank branches in the United States from 2014 to 2024, calculating distances with highly granular census block-level data. We develop a continuous measure of bank branch access that accounts for population and employment density, implicitly accounting for varying travel times within different urban and rural areas.

FEDS Paper: Non-homothetic Demand Shifts and Inflation Inequality

09/19/2025 Federal Reserve Central banks

Jacob OrchardThis paper shows that adverse macroeconomic shocks systematically increase inflation for low-income households relative to high-income households. I document two key facts: (i) during every U.S. recession since 1959, aggregate spending shifts toward products disproportionately purchased by low-income households (necessities); and (ii) relative prices of necessities rise during recessions.

FEDS Paper: Attention-Dependent Monetary Transmission to Household Beliefs

09/19/2025 Federal Reserve Central banks

Jaemin Jeong, Eunseong Ma, Choongryul YangWhen do households listen to the Fed? We show the answer lies in a simple but powerful force: household attention to macroeconomic conditions. We develop a model where attention acts as a crucial gatekeeper for the pass-through of policy news to beliefs, and confirm its predictions using household survey data.

FEDS Paper: Monetary Policy and Bank Funding Costs: Patterns and Predictability in the Transmission of the Policy Rate to U.S. Banks' Funding Costs

09/19/2025 Federal Reserve Central banks

Daniel A. Dias; Sophia C. ScottThis paper shows that U.S. commercial banks' funding betas rise predictably with the length, magnitude, and direction of each monetary policy cycle: longer cycles and those with larger changes in the policy rate yield stronger pass-through in both tightening and loosening cycles, with modest asymmetry favoring slightly greater transmission during loosening cycles. Nondeposit liabilities consistently adjust more than deposits.

FEDS Paper: Do Banks Price Flood Risk in Mortgage Origination: Evidence from a Natural Experiment in New Orleans

09/19/2025 Federal Reserve Central banks

David M. Arseneau and Gazi I. KaraThis paper uses a large-scale redrawing of flood zone maps for the City of New Orleans in 2016 to identify how banks respond to changes in perceived flood risk in residential mortgage origination. Using geo-coding, we separate loan-level data on mortgage originations into treatment versus control groups based on how individual properties were affected by the map changes.

Pages