Japan’s first step to new normal is the easiest 19 Mar 2024 The central bank raised interest rates, ending 26 years of unconventional stimulus. Policymakers hinted they will keep borrowing costs steady for a while but the pressure to curb inflation, rather than unleash its virtues, may rise fast. The hard work for the country starts now.
Only an oil slump can stop Vladimir Putin 18 Mar 2024 To keep pumping money into his Ukraine war, the newly re-elected president will have to squeeze Russians. Nobody can prevent him from further unpopular measures. A sharp drop in oil revenue might force him to change course, but that is hard and risky for the West to bring about.
ECB’s money drain has silver lining for markets 14 Mar 2024 The European Central Bank is ready to exit its huge stimulus programme. With 4.7 trln euros of bonds on its books, that will take time but policymakers want few surprises. A new regime of setting rates and relying on banks to ask for loans will wean them off cheap money.
Japan’s rate shift will hit zombie firms hardest 14 Mar 2024 The central bank could end an era of negative borrowing costs as early as next week. In this Viewsroom podcast, Breakingviews columnists argue that large companies are ready for the tightening, but many struggling small businesses could hit the wall even if policymakers go slow.
UK monarchy suffers an impairment to its goodwill 13 Mar 2024 A poorly edited photo of the Princess of Wales has fanned a firestorm of speculation about her health. If Britain’s royal family were a listed company, it would have a fiduciary duty to provide more detail. While the hit to its brand equity is not visible, it’s still tangible.
Capital Calls: Small Fed windows 12 Mar 2024 Concise views on global finance: US consumer prices rose 3.2% year-on-year in February, above the Federal Reserve’s 2% target, prompting traders to rein in hopes for rate cuts. The agency’s Chair Jerome Powell could have avoided that by guiding markets towards a higher number.
Korea Inc’s Japan makeover only scratches surface 12 Mar 2024 South Korea is copying its neighbour's corporate reform drive to lift anaemic valuations. But voluntary disclosures and tax breaks are unlikely to spur change among chaebol like Samsung which dominate the $1.9 trln stock market. Seoul's push requires more stick than carrot.
IMF’s Egypt bailout chooses hope over experience 11 Mar 2024 Cairo has received an $8 bln IMF loan after a $35 bln cash injection from the United Arab Emirates. If President Sisi does not justify the Fund’s optimism about reforms, a painful restructuring of the $165 bln external debt lies ahead.
Biden’s imperfect pitch is pleasantly concrete 8 Mar 2024 The US president made a strong case in his annual address that his tenure saved the economy. Distinctly Democratic initiatives were surprisingly effective, but the next four years may leave less in any president’s control. At the very least, Biden has set the terms of the debate.
Slow growth puts ECB before Fed in rate-cut line 7 Mar 2024 The European Central Bank held borrowing costs but President Christine Lagarde suggested it might lower them in June. That could make her the first major central banker to ease policy, ahead of US Federal Reserve boss Jay Powell. Sadly, that’s only due to dire euro zone growth.
UK ‘non-dom’ slap is right move for wrong reason 6 Mar 2024 Finance minister Jeremy Hunt scrapped tax benefits for people living in the UK but officially domiciled abroad. That improves fiscal fairness and may raise over $3 bln per year. But the benefits are uncertain and the funds went to pre-election giveaways, not public services.
Taylor Swift is Thai economy’s antihero 6 Mar 2024 Singapore's exclusive deal to host the pop star's Southeast Asia concerts has irked its neighbours. Thailand, with the slowest post-pandemic recovery, is upset at missing out on the spoils. Those are debatable and in any event wouldn't shake off the $500 bln economy's malaise.
China Vanke looks too favoured to fail 6 Mar 2024 Investors are dumping the $14 bln developer’s bonds and stock on reports it wants to extend its debt. The firm says it can repay $630 mln due next week. And crucially, it has the effective backing of the Shenzhen government. Letting Vanke go under would send markets into a panic.
Excessive UK tax giveaways risk longer-term harm 5 Mar 2024 Finance minister Jeremy Hunt may spend some 15 bln pounds in pre-election fiscal gifts in Wednesday’s budget. He could be tempted to do more – and make life difficult for the next government – by further cutting public services. But that would put the country in a bind.
China’s economic managers have half a plan 5 Mar 2024 Beijing has kept last year's targets of 5% GDP growth and 3% inflation for 2024. Yet the economy has deteriorated, making them much harder to hit without stimulus. Plans to issue $139 bln of special bonds this year look promising, but details will be key to boosting confidence.
Japan faces a reckoning with its zombie companies 5 Mar 2024 Big firms are ready for the onset of higher wages and the end of negative rates. Smaller rivals, which employ 60% of workers, risk being crushed. One in six already struggles to cover interest payments. If too many fail, they can derail confidence and the economic recovery.
China’s financial clout will be hard to reverse 4 Mar 2024 Exports from the People’s Republic upended the world economy. Its $4.3 trln hoard of foreign assets is doing the same for global finance. As with trade, winding back the clock will not work. Multilateral problems require multilateral solutions.
Make in India can dial up Chinese characteristics 1 Mar 2024 India's $300 bln electronics dream is stuck on low-end work like assembling iPhones. To climb the manufacturing ladder, it can improve market access for its neighbour's firms in exchange for expertise. That will require officials to lower tariffs and open up to Chinese investment.
Hong Kong needs a purpose to steer its finances 29 Feb 2024 The Asian centre will log another budget deficit, and its fiscal reserve has nearly halved to $94 bln since 2018. Meanwhile structural issues, including a reliance on land sales, remain unresolved. The city is eroding its healthy buffers. It lacks a plan to make that worthwhile.
Why central banks risk making more mistakes 27 Feb 2024 Western rate-setters were late in fighting inflation. In this Exchange podcast, TS Lombard economists Dario Perkins and Davide Oneglia argue that, as price growth abates, the US Federal Reserve and European Central Bank may be too slow in easing monetary policy.