Financial institutions

FEDS Paper: How Firms Form Beliefs and the Implications for Inflation

07/31/2026 Federal Reserve Central banks

Robert Minton and Hugo MonneryUsing survey data from U.S. firms, we study the primitive beliefs for pricesetting: firms’ forecasts of their own marginal costs. These forecasts are disconnected from CPI expectations, (over)react to current and past costs systematically, and underreact to aggregate shocks until costs move. We show that under empirically realistic cost beliefs the New Keynesian Phillips curve is steeper and less forward-looking. Supply shocks are more inflationary because they hit costs quickly.

Minutes of the Meeting of the Court of Directors held on 4 June 2026

07/30/2026 Bank of England Central banks

The Bank's Court of Directors acts as a unitary board, setting the organisation's strategy and budget and taking key decisions on resourcing and appointments. Required to meet a minimum seven times per year, it has five executive members from the Bank and up to nine non-executive members.

Bank Rate maintained at 3.75% - July 2026 Monetary Policy Summary and Minutes

07/30/2026 Bank of England Central banks

The Bank of England’s Monetary Policy Committee is responsible for making decisions about Bank Rate.

Let the tree decide: FABART. A non-parametric factor model for nonlinear oil shock transmission

07/30/2026 European Central Bank Central banks

The question of how oil supply news shocks transmit to real activity, financial conditions, and regional labor markets is back at the center of the macroeconomic research agenda. To answer this question, we introduce the Factor Bayesian Additive Regression Tree (FABART) model, a nonlinear factor-augmented vector autoregression model, and apply it to a large U.S. macro-financial dataset with externally identified oil supply news shocks.

Subjective earnings and employment dynamics

07/30/2026 European Central Bank Central banks

We develop a new approach to estimating earnings, job, and employment dynamics using subjective expectations data from the NY Fed Survey of Consumer Expectations. These data provide beliefs about future earnings offers and acceptance probabilities, offering direct information on counterfactual outcomes and enabling identification under weaker assumptions. Our framework avoids biases from selection and unobserved heterogeneity that affect models using realized outcomes.

Let the tree decide: FABART. A non-parametric factor model for nonlinear oil shock transmission

07/30/2026 European Central Bank Central banks

Subjective earnings and employment dynamics

07/30/2026 European Central Bank Central banks

A SPOT in the dark: using AI to assess financial stability risks

07/29/2026 European Central Bank Central banks

Financial stability risks consist of two distinct components: vulnerabilities and possible trigger events. While there has been considerable progress regarding the measurement of vulnerabilities, the assessment of possible trigger events remains largely qualitative. To fill this gap, we employ Large Language Models to extract information about the Severity and Probability Of potential Trigger events (SPOT) from a large dataset of financial news articles over the period2005 – 2026.

A SPOT in the dark: using AI to assess financial stability risks

07/29/2026 European Central Bank Central banks

Threshold endogeneity in vector autoregressions: reassessing monetary state dependence

07/29/2026 European Central Bank Central banks

We develop an endogenous threshold VAR that addresses contemporaneous dependence between the threshold variable and reduced-form innovations— a pervasive issue when regime indicators are jointly determined with system dynamics. A regime-specific copula-based control function removes this dependence instrument-free, without parametric assumptions on the threshold’s marginal distribution, while preserving the linear regime-wise least-squares structure.

Financial institutions

Pages