Bank of England is too sanguine on inflation 12 Dec 2017 Prices rose 3.1 pct in the year to November, the fastest pace in six years. The central bank blames Brexit and says inflation is near peaking. That’s convenient with further interest-rate hikes a risk to sluggish economic growth. But the BoE may not get off so easily.
Bank of England transfer defies financial gravity 11 Dec 2017 Britain’s opposition Labour party says it may move parts of the central bank to Birmingham. That may appeal to voters, but both the BBC and HSBC have found relocating expensive and difficult. The idea also ignores the reasons London’s financial centre exerts such a strong pull.
Fed forecasts just enough sunshine for stress tests 7 Dec 2017 The central bank wants to provide more information about its models for loan losses and other inputs in the annual exams. That would suit lenders who complain the process is too opaque. But the Fed would retain some mystery, striking a balance that boosts the test’s credibility.
New bank rules are kind without being weak 7 Dec 2017 Big lenders will need a trifling 27.6 billion euros of fresh equity capital under new Basel regulation. Rules on the use of internal models are no worse than feared, and kick in slowly. This is hardly draconian – but that’s because banks have already done much of what was needed.
Cox: Trump bump aside, U.S. stocks lag in 2017 30 Nov 2017 The president has unprecedentedly staked his political colors to the mast of rising equity prices, calling the S&P's rally a validation of his policies. Yet most other markets around the world have done even better. There are bigger forces at work than U.S. corporate tax rates.
Indian economy shaking off Modi’s shock therapy 30 Nov 2017 Growth of 6.3 pct last quarter suggests fallout from the premier's policy pileup is fading. He’s leading a bold drive to improve the way India is governed. Getting a few more things right, like the resolution of bad debt, is a precondition to turn this into a solid economic run.
Bank of Korea had best go slow with rates 30 Nov 2017 Seoul’s first increase in benchmark borrowing costs for more than six years is a prudent step toward normalising monetary policy, given signs of economic strength. But crushing consumer debt and a housing slowdown mean the central bank must tread carefully.
Yellen gives Congress parting shot on growth, debt 29 Nov 2017 The outgoing Fed boss warned of growing deficit risks just as lawmakers weigh tax cuts that would exacerbate it. It’s also up to politicians to improve education, investment and infrastructure spending. Her message of central bank limitations is one her successor will echo.
Fed chair pick shows mastery of central-bank arts 28 Nov 2017 Jerome Powell breezed through his Senate confirmation hearing with Zen-like confidence. He dodged the tax-reform debate, kept rate-hike comments predictable, backed Fed independence and defended its bank-rules review. The prospect of post-Yellen stability will please markets.
Britain’s Brexit-ready banks a boon for government 28 Nov 2017 The country’s lenders are robust enough to handle even a messy exit from the EU, according to the Bank of England’s latest stress tests. The clean bill of health will help state-owned RBS restart dividend payments, making it easier for the UK to sell down its 71 percent stake.
Kuroda deserves second term at the Bank of Japan 27 Nov 2017 Prime Minister Shinzo Abe is being coy about whether Haruhiko Kuroda will get a second term as Bank of Japan head. Kuroda has earned it, and Japan’s deflation fight would benefit from continuity. But he also needs help from Abe’s team, which has been slow to enact vital reforms.
Powell’s mystery Fed board poses continuity risk 20 Nov 2017 As expected, Janet Yellen will leave the U.S. central bank when her successor takes over. Jay Powell will inherit a skeleton board in need of four more Trump appointees. The lack of holdovers, amid a pivotal shift away from crisis-era policies, could make for a bumpy transition.
Sorry is the hardest word for central bankers 16 Nov 2017 Bank of England Chief Economist Andy Haldane says rate-setters should speak simply and honestly to the public. The first is easier than the second. Admitting past mistakes or doubts about the present is tough for institutions whose clout depends on an aura of omnipotence.
Problem banks return to haunt Italy 16 Nov 2017 Mid-sized Carige has failed to sign up underwriters for its 560 million euro cash call, casting doubt on its future – and on a capital hike by similar-sized peer Creval. Resolution or a takeover are possible next steps. Either way, Italian taxpayers may need to help out.
Japan’s growth streak starts to look shakier 15 Nov 2017 GDP grew an annualised 1.4 pct last quarter, marking the longest unbroken growth run in 16 years. The data is volatile, and often revised, but a global boom appears to be offsetting weaker domestic demand. That underscores the need for further structural reform.
Central bankers go self-referential on rhetoric 14 Nov 2017 Fed Chair Janet Yellen and other top rate-setters took the stage in Frankfurt to discuss how they communicate. It’s a slightly meta admission of the role speechifying has come to play in monetary policy in an era of ultra-low interest rates. But wordiness brings its own perils.
Euro zone boom stimulates reform complacency 14 Nov 2017 From Germany to Italy, growth is picking up in the once-troubled region. Rosy conditions should endure: investment and employment are still catching up after years of crisis. The risk is that politicians avoid tough decisions to prepare the incomplete bloc for the next downturn.
ECB haste risks slowing its bad-loan cleanup 10 Nov 2017 The central bank overstepped its authority with proposals to impose stricter rules on banks for non-performing loans, the EU’s parliament says. The ECB is right to target European lenders’ 840 billion euro mountain of bad debt, but its clumsy move may set back the effort.
Hadas: Even China will struggle to control finance 8 Nov 2017 With state-dominated banks, capital controls and a trade surplus, along with a strong economy, the People's Republic would seem well-placed to limit the risk of foreign debt. Not so. As a new report illuminates, China, like its global peers, is vulnerable to a liquidity crisis.
Intesa’s bank pruning carries a short-term sting 7 Nov 2017 Rescuing two beaten-down lenders dragged on the Italian bank’s bottom line in the third quarter. However, a 1.3 bln euro tax-free state fund will soak up the cost of branch closures and layoffs, while Intesa will keep the upside. It’s still an attractive trade-off for investors.