Guest view: Fed hikes spell emerging-market strain 4 Feb 2022 Poorer indebted economies face growing difficulties as the U.S. Federal Reserve signals its readiness to raise interest rates. William Rhodes, former president of Citibank, and economist Stuart Mackintosh lay out what creditors, borrowers and the IMF can do to avert a crisis.
ECB shows words matter more than actions 3 Feb 2022 President Christine Lagarde left interest rates unchanged while the Bank of England raised them. Yet she made the bigger market splash by admitting inflation risks had grown. It was the first clear sign that she may join global peers this year in tightening monetary policy.
New Bank of England guessing game begins 3 Feb 2022 A second rate rise in as many months raises the question of how quickly Governor Andrew Bailey will reduce bond holdings accumulated during the pandemic. A gradual approach won’t cause economic or market pain. But debt yields will become more volatile once the Fed follows suit.
Big Oil faces cash tug-of-war 1 Feb 2022 Both Exxon and Chevron slashed expenditures last year as economic slowdowns stalled oil demand. Both companies’ earnings show the cash spigot is on. With oil around $90, reformed spending sinners will get the urge to splurge. Shareholders might prefer cash goes back to them.
The Exchange: San Francisco Fed boss Mary Daly 1 Feb 2022 U.S. inflation is at its highest in four decades. The central banker explains to Swaha Pattanaik how the Federal Reserve plans to tackle price pressures without jeopardising growth or job creation, and outlines her views on the outlook for monetary policy.
Oil dims hope central bankers will walk fine line 28 Jan 2022 Brent crude topped $91 a barrel for the first time since 2014. Rate-setters can usually ignore temporary jumps, but not when inflation is already high. Fed boss Jay Powell and global peers will struggle to hike rates enough to curb price pressures without stifling growth.
Investors need to get used to working harder 27 Jan 2022 America’s economy expanded at a 6.9% annual pace in the last quarter of 2021. A healthy rebound supports the Fed raising interest rates soon. But the U.S. central bank faces a balancing act, and everyone else following markets will have to be more alert than before, too.
Jay Powell embarks on difficult Goldilocks act 26 Jan 2022 The Fed boss is likely to signal rates will start rising in March to curb inflation. The robust economy can cope with that as well as the three other hikes that investors expect him to deliver before year-end. Anything more will leave little room to deal with economic hiccups.
IMF’s economic crystal ball is cracked 25 Jan 2022 The Washington-based lender slashed global growth forecasts and hiked inflation predictions. The IMF has been too late to admit that Fed policy tightening is needed. That’s damaging for an institution that doles out economic advice and monitors financial stability risks.
Christine Lagarde will win rate rise timing tussle 19 Jan 2022 Money markets imply the European Central Bank will hike twice this year, even though its boss says policy tightening is unlikely in 2022. She will have to work hard to convince markets, but reason is on her side. Wage pressures are less evident in the euro zone than in America.
Central banks will give risky debt a helpful shock 13 Jan 2022 Benchmark bond yields are rising as rate-setters around the world scale back asset purchases. That will reduce the appeal of corporate debt, but a correction in credit markets is nothing to fear. A setback may lead to less hazardous terms for bondholders, and a rout is unlikely.
Inflation will dent U.S. consumers’ rosy mood 12 Jan 2022 Prices of goods and services rose 7% in December, the fastest annual pace in 40 years. The hit to their wallets has yet to puncture Americans’ optimism about the economy. Persistent hefty increases in housing costs and other basics could, however, change that this year.
Jerome Powell rides out Fed trading furor 11 Jan 2022 U.S. lawmakers went easy on the central bank boss about Vice Chair Richard Clarida's investments as the pandemic hit in 2020. They reflect poorly on the Fed but at least Powell has come up with tougher rules. It won’t derail his confirmation for a second stint in the job.
The Exchange: Australian Treasurer Josh Frydenberg 21 Dec 2021 With an election looming early next year, the Liberal Party’s deputy leader discusses everything from booster shots to Big Tech, climate change to China, immigration to inflation, and more. He tells Jeffrey Goldfarb how his country can overcome the many economic challenges ahead.
Trailblazing UK rate rise may pay off in the end 16 Dec 2021 The Bank of England is the first major central bank to hike its policy rate. The ECB faces less acute price pressures and the Fed must consider the job market alongside inflation. It’s a gamble, but acting now means British rate-setters will have less hiking to do in the future.
Inflation genie will be hard to banish 10 Dec 2021 Consumer prices will rise at a less hectic pace in 2022. But they’ll still overshoot targets that Fed Chair Jay Powell and his peers aim to hit. Policymakers are less apt to hit the brakes on stimulus than in years past. Also, businesses and workers are behaving differently.
Viewsroom: Omicron hits, Dorsey quits 2 Dec 2021 As the world gets to grips with a new coronavirus variant, Swaha Pattanaik looks ahead to how Omicron could frustrate attempts to rein in rising prices. Meanwhile, Gina Chon watches Twitter say goodbye to founder Jack Dorsey and usher in a new, still-quirky governance setup.
Transitory isn’t the only thing Fed should retire 30 Nov 2021 Chair Jay Powell reckons it’s time to stop using this adjective to describe current high inflation rates. That’s welcome, if overdue. Rate-setters could also usefully retire forward guidance. In such uncertain times, it’s counterproductive to appear to commit to a policy path.
Omicron may give inflation a chance to bed in 29 Nov 2021 The new coronavirus variant could ease short-term price pressures if it triggers wider lockdowns that curb consumption. But if it prolongs supply-chain problems the reverse will be true in the longer term. Especially if cautious central bankers delay tightening monetary policy.
Voters are last brake on Turkey’s lunatic express 19 Nov 2021 Bullied by President Tayyip Erdogan, the central bank slashed borrowing costs to 15%. Fearing runaway inflation, the lira plunged to record lows. With few other checks on a leader at war with interest rates, 2023 elections may be Turks’ best hope of restoring monetary sanity.