Inflation

Hadas: Covid gives monetary extremists false hope

27 May 2020

Those who fear rising prices think anti-pandemic stimulus will surely unleash uncontrolled inflation. Deflation-worriers are just as certain that the global demand shock means their old enemy is lurking. Both disasters are possible, but policy and habit point to price stability.

ECB’s low inflation problem is worse than it looks

30 April 2020

Depressed energy costs meant euro zone consumer prices rose 0.4% in April from a year ago. But President Christine Lagarde may in reality be even further away from her just-below 2% goal. Statisticians’ efforts to fill data gaps during lockdown risk overstating price pressures.

Chancellor: Monetary cure carries risk of its own

16 March 2020

Central bankers aren’t arguing that slashing rates and printing money will resolve the coronavirus panic. But the experience of the 1970s oil crisis suggests meeting a severe global supply shock with fiscal activism and easy money may bring inflation back in a nasty way.

Turkey set for good year before economic reckoning

27 December 2019

More fiscal and central bank stimulus will push growth towards President Tayyip Erdogan’s 5% goal for 2020. Yet inflation will be restrained thanks to lira stability. A credit binge encouraged by Ankara’s policies can last the better part of a year before screeching to a halt.

Hadas: Maybe Paul Volcker wasn’t all that great

17 December 2019

The U.S. central banker, who died on Dec. 8, supposedly broke the 1970s inflation with recession-inducing high interest rates. After 40 years of falling inflation worldwide, his contribution looks less certain. He also missed an early chance to criticise financial deregulation.

German weakness gives ECB carte blanche to be bold

14 August 2019

Europe’s biggest economy shrank in the second quarter as global trade tensions hurt export-orientated manufacturers. The problems will filter through to other sectors. That will lessen any Teutonic resistance to European Central Bank boss Mario Draghi’s planned monetary easing.

Beer gives a more sober view of African progress

14 August 2019

Rwanda and the World Bank have been tweaking poverty numbers to embellish the African state’s post-genocide recovery, the FT says. As in many emerging economies, both have reasons to deliver good news. Cement or beer sales may be more reliable gauges of continental development.

UK and German fiscal activism is just a palliative

9 August 2019

Britain’s GDP shrank in the second quarter. Germany may well report the same within the week. Brexit is largely to blame for the former and trade tensions for the latter. In both cases, budget stimulus would merely mitigate the economic slowdown without fixing its root causes.

Brexit makes Carney less of a central bank oddity

1 August 2019

Bank of England boss Mark Carney is, like everyone, in the dark about whether Britain will crash out of the EU. Without that uncertainty, he might be tightening policy when peers are either easing or hinting they might. Being odd man out would be better than the current limbo.

Aussie monetary future is everyone else’s past

31 July 2019

Australia managed to avoid the ultra-low rates other countries have shouldered for years. Now growth is slowing, and it is up against the limits of conventional policy. An improvement in second-quarter inflation and a cheerier end to 2019 won't change the need for new tools.

Swiss currency ticks towards new showdown

22 July 2019

The franc hit a two-year high against the euro. Policy interest rates are already negative so cutting them further may fail to dent its strength. A return to major intervention risks U.S. ire. Traders will take advantage of central bank boss Thomas Jordan’s bind.

New breed of central bankers is harder to read

11 July 2019

Jerome Powell at the Fed and Christine Lagarde, nominated to be the next ECB chief, are lawyers by training. Their thinking is more fluid than predecessors whose economic tenets informed a world view. That has benefits, but also means it’s harder to predict how they will react.

Hadas: Bond markets lost in inflation-growth gap

10 July 2019

Changing growth expectations explain most daily movements in bond prices, while falling inflation parallels the long-term trend of declining yields. Every so often, however, market gyrations reflect hopes that growth and inflation will reconnect. There’s little sign of that.

African swine fever nudges China towards peak pork

25 June 2019

The outbreak has sent prices of the meat up 18% in May from a year earlier. The surge is likely to get worse, even if overall inflation remains stable. It is already encouraging a lasting shift among the world’s top buyers - one that might even complicate a trade war compromise.

Guest view: Halve Bank of Japan’s inflation target

26 April 2019

Consumer prices are rising more slowly than the central bank’s 2 percent goal. Aiming for 1 percent is acceptable in a country with a low jobless rate, Koichi Hamada, economic adviser to Prime Minister Shinzo Abe argues. Any resulting yen appreciation will be manageable.

Turkey’s attack tactics are worst form of defence

27 March 2019

Ankara is making it harder to bet against the lira, but overnight swap rates of 700 pct also make hedging prohibitive. Probes by the bank watchdog mean a research drought. Investors will dump Turkish assets rather than stay exposed, especially when experts are opting to keep mum.

“Japanisation” of ECB will blight Europe’s banks

25 March 2019

Weak economic activity is raising the chances of the European Central Bank copying its Japanese counterpart, which has kept rates ultra-low for two decades and adopted ever more radical measures to boost inflation. Lenders in Japan show European peers the heavy toll that takes.

Jerome Powell’s boon is Mario Draghi’s bane

11 February 2019

Inflation in the U.S. and the euro zone is easing and looks set to subside further. That will help the Federal Reserve boss justify a pause in rate hikes, but is a headache for his European Central Bank peer who has yet to tighten monetary policy and has less room to manoeuvre.

U.S. intervention in Venezuela carries retro risk

28 January 2019

Uncle Sam is sanctioning state oil firm PDVSA in a bid to spur regime change. President Maduro’s woeful record has united much of the hemisphere in demanding his ouster. But a U.S. history of regional meddling means the Trump administration must avoid arrogance to retain allies.

Venezuela’s Maduro caught in pincer movement

23 January 2019

Protesters are demanding the socialist leader’s ouster. Opposition leader Juan Guaidó has, with U.S. blessing, declared himself interim president. But a self-inflicted wound will get Maduro in the end: By tanking oil output, he robbed himself of a key means of clinging to power.