Inflation

Rodrigo Duterte’s toughest foe may be inflation

21 September 2018

The Filipino strongman finds himself under pressure from quickly rising prices for fuel, rice and more. The weaker peso and the president’s ill-timed tax overhaul are factors. The central bank, late to recognise the scale of the issue, could help with an aggressive rate hike.

Turkey’s outbreak of common sense has limits

13 September 2018

The central bank has hiked rates more than markets expected, a welcome sign of independence after attacks by President Erdogan. The move may avoid a currency crisis, but Ankara’s political and economic vulnerabilities endure. And tensions between bank and state may get worse.

Guest view: Real rates matter more than inversion

13 September 2018

An inverted U.S. yield curve, with short-term interest rates higher than long-term ones, is seen as a recession warning. Myron Scholes and Ash Alankar of Janus Henderson Investments argue that monetary policymakers should worry more about the excess of yields over inflation.

Spectre of the late 1930s haunts Ray Dalio

12 September 2018

The Bridgewater founder made positive returns in 2008 when few other asset managers did. Today, he tells Breakingviews, he worries about the U.S. deficit and debt pressures that could soon go critical. The risk of populism and conflict sounds eerily like the pre-war years.

Indonesia can best defend rupiah by staying calm

6 September 2018

An emerging markets rout has pushed the rupiah to its weakest since the 1998 Asian crisis. Policymakers, who have until now been laudably proactive, appear rattled. But threats against speculators are less helpful than higher interest rates and reforms that encourage investment.

Virtuous Macri circle turns vicious for Argentina

30 August 2018

The pro-market leader of Latin America’s No. 3 economy has been laying the basis for long-term prosperity. But inflation, drought and soured investor sentiment threaten his efforts. A new run on the peso, and desperate rate hikes, make a return of his Peronist nemeses more likely.

Venezuela’s Maduro rearranges economy’s deckchairs

20 August 2018

The president’s plan to devalue the bolivar, peg it to an obscure state-backed cryptocurrency and raise the minimum wage will widen the already gaping hole in the OPEC member’s finances. Promised fuel-price hikes, if botched, could send his socialist government to the seabed.

Erdogan opens Turkish lira to new line of attack

6 August 2018

The currency hit a record low against the dollar after the United States said it was reviewing Turkey’s duty-free access to its markets. President Tayyip Erdogan has alienated investors. The tougher he talks to the world’s largest economy, the more they’ll punish Turkish assets.

India central bank doubles down on inflation fight

1 August 2018

The Reserve Bank of India raised rates by a quarter of a percentage point even though manufacturing activity slowed in July. The hike may hamper economic growth but removes doubts about policymakers’ commitment to a relatively new inflation mandate. The trade-off is worthwhile.

Trumponomics flirts with more debt and inequality

31 July 2018

Treasury Secretary Steven Mnuchin wants to cut capital-gains tax bills by accounting for inflation. It’s sensible to assess the true value of costs and profit. But it’d mostly benefit the wealthy and add to what may be a $1.1 trln deficit in 2019. It also smacks of self-interest.

Bank of Japan’s trial balloon shot down on runway

23 July 2018

Bond yields and the yen rose after Reuters reported the central bank was debating whether to scale back monetary stimulus. The move would be good for bank investors. But the scale of the market reaction and economic reality will make it hard for Governor Haruhiko Kuroda to act.

Turkey’s FX rot demands radical measures

23 May 2018

A massive one-off rate rise is the least it will take to halt the lira’s accelerating slide to new record lows against the dollar. Even then, investors might still fear President Tayyip Erdogan’s monetary policy meddling. Capital controls would then grow more likely.

Maduro election win will soon be his loss

17 May 2018

Securing another term as Venezuela’s president in Sunday’s poll is almost a foregone conclusion. But the country’s collapsing oil output may finally mean Nicolas Maduro’s days in power are numbered. Successors will face the mammoth task of rebuilding the economy he has trashed.

Mark Carney may flummox markets again

10 May 2018

The Bank of England chief’s latest comments made investors doubt he will tighten monetary policy this year. Such scepticism is overdone. The economy doesn’t have to grow very fast to generate inflation and the jobless rate is very low. Rate expectations could shift once more.

Macri risks IMF self-harm in search for stability

8 May 2018

Argentina’s president wants funding from the global lender as a further buttress against inflation and a run on the peso. It could help make reforms stick and provide an outsider to blame. But the country’s history with the IMF means it might also dim Macri’s political prospects.

Swiss central bank gets FX wish three years late

20 April 2018

The franc has weakened to 1.20 against the euro for the first time since the Swiss National Bank ditched its cap on the currency in January 2015. Several factors could explain why. Policymakers are unlikely to care much about the reasons given the moves may help revive inflation.

Texas downgrade worry is a good problem to have

12 April 2018

The Lone Star State’s comptroller reckons its increasingly underfunded pension obligations risk a credit markdown. Texas’ rainy-day fund helps give it more leeway than many states. Others face bigger problems because, as the U.S. economy has improved, their budgets haven’t.

Powell buys wiggle room with political savvy

27 February 2018

The new Fed chair deftly handled his first congressional testimony since taking office, giving few indications he is itching to tighten faster. If anything, his political nous and a friendly Republican majority might give the central bank more room to run the U.S. economy hot.

Venezuela’s crypto-currency reeks of snake oil

21 February 2018

President Maduro says early sales of its oil-backed petro raised $735 mln. Investing in the virtual coinage is tantamount to a bet on the increasingly autocratic administration’s probity, transparency and basic grasp of economic reality. Good luck with that.

Manila sleepwalks towards inflationary trouble

21 February 2018

Price rises are accelerating in the Philippines, as strong demand, a weak peso and new taxes boost living costs. The central bank risks falling behind the curve. Inaction could raise bond yields, slam stock values and further dent Asia’s worst-performing currency.