Lagarde hides velvet policy in iron talk 27 Jul 2023 After lifting borrowing costs to a record high, the ECB president sounded tough on inflation to persuade markets interest rates will stay elevated. But she also hinted the central bank could pause. Investors can prepare for a less aggressive monetary stance.
Inflation dip puts central bankers in a pickle 27 Jul 2023 The Federal Reserve and ECB once again hiked interest rates. Yet US price rises are easing with few signs of economic pain. In this Viewsroom podcast, Breakingviews columnists discuss how this phenomenon, dubbed ‘immaculate disinflation’, complicates what policymakers do next.
‘Immaculate disinflation’ places Fed in purgatory 25 Jul 2023 Inflation is falling towards the US central bank’s 2% target without a recession or job losses. History and economic theory suggested such a feat was impossible. Doubts over conventional thinking leave policymakers in a bind over the next stage of their fight to rein in prices.
Unilever new broom’s best sweep is towards Asia 25 Jul 2023 The $137 bln Dove shampoo maker hiked prices without losing many sales in the first half. Yet falling European volumes and limited scope for structural tinkering make it hard for new CEO Hein Schumacher to boost margins. His best hope is to bulk up in his strongest region.
Biden has too much confidence in Bidenomics 20 Jul 2023 The president’s new slogan parades a revival of US manufacturing and jobs. Spreading the word now, however, could backfire. Sticky inflation and slower hiring are out of Biden’s control, and they could leave voters poorer or jobless by the time they reach the ballot box.
UK inflation dip puts Andrew Bailey on the spot 19 Jul 2023 The growth in UK consumer prices slowed more than expected in June, to 7.9%. It’s welcome news for households, and sent British stocks soaring. The Bank of England governor, though, is likely to keep hiking rates, increasing the risk he will go too far.
Gregorian calendar, Fed target spoil inflation dip 12 Jul 2023 New data suggests the US is close to beating inflation. Yet June’s 3% rate was somewhat helped by a yearly comparison that will only get tougher. And with the Federal Reserve sticking closely to its 2% inflation goal, the finish line is probably much further out.
Andrew Bailey’s silence is hurting UK homeowners 12 Jul 2023 Traders’ confusion over the Bank of England’s decisions is sending market interest rates wild. That has pushed the cost of a popular mortgage to a 15-year high. To limit household pain, the governor needs to ditch his usual reticence and tell markets that they are wrong.
The next revolution in monetary policy is underway 30 Jun 2023 Central banks are grappling with rising prices and fragile financial markets, raising doubts about their focus on price stability. Recent interventions by the International Monetary Fund and Bank for International Settlements are signs of a broader rethink, says Felix Martin.
Capital Calls: Digital euro, Thames Water 28 Jun 2023 Concise views on global finance: Brussels is in a new push to convince EU member states and the European Parliament to endorse a digital euro; Britain’s Thames Water could be placed into special administration.
Firefighting leaves central banks on shaky ground 22 Jun 2023 Policymakers in the UK, Switzerland, Norway and Turkey all hiked rates on Thursday. Stubborn inflation gives them little choice, even though they may cause recessions. In London and Ankara, ratesetters’ job is made much harder by politicians’ own failures and need for scapegoats.
UK has little wiggle room on mortgage aid 21 Jun 2023 Prime Minister Rishi Sunak is under pressure to cushion the 1.7 trln pound home loans market from high interest rates. Taxpayer support would spook markets and add to the Bank of England’s inflation headache. Targeted relief from banks would do less damage – but have less impact.
Credibility crisis requires BoE to write new plot 20 Jun 2023 The Bank of England’s inflation outlook is faulty because it relies on traders’ expectations. That leads markets to overreact to data, causing pain for homebuyers and firms. Adopting the US system, where policymakers make predictions, would curb policy mistakes and volatility.
Fed’s pause is now easier to extend 14 Jun 2023 Chair Jerome Powell’s rate-setting crew snapped its long streak of hikes. With the banking crisis stabilized, the FOMC can refocus on prices. Inflation persists, but is moving in the right direction, and there’s less reason to hew to investors expecting a fresh increase in July.
ECB’s autopilot raises risk of hard landing 14 Jun 2023 The European Central Bank is set to hike rates on Thursday and again in July. But traders’ hopes for cuts soon afterwards may be dashed, given pressure from hardline countries to tame stubborn inflation. Europe’s recovery is looking increasingly fragile.
Rich spending will buoy pesky inflation 13 Jun 2023 US prices rose 0.1% last month, suggesting inflation is slowing. Yet hotel and dining costs show Americans are still spending. That’s likely because high earners’ wages are moving in the right direction. They’ll keep pushing up prices, complicating the economic picture.
Greece offers UK handy way to axe ‘greedflation’ 8 Jun 2023 The cost of what Brits eat is up by almost a fifth in a year, so Prime Minister Rishi Sunak is mulling a cap on shoppers’ bills. That would hit grocers and may end up boosting inflation. Athens’ limits on retailers’ margins are a better way to make staples more affordable.
Pricey services are weary ratesetters’ last battle 1 Jun 2023 The rising costs of flights, restaurants and concerts are hampering central bank efforts to drag consumer price inflation back down to 2%. In the US the post-pandemic consumption boom is fading. In Europe and the UK, though, higher wages are prolonging the fight.
Erdogan win sends stark note on economy and votes 29 May 2023 People in Turkey effectively opted to prolong the president’s wild policies that have led to 44% inflation. The extension of his 20-year rule tees up the country to inch further away from the West. For global leaders, it’s a warning that success in money matters only goes so far.
Biden gives little, gets less in debt ceiling deal 28 May 2023 The White House reached an agreement with Republicans to raise the debt limit for two years. The deal will avoid a big knock on Biden’s reelection plans, but the victories end there. Spending caps and social-aid restrictions give Democrats little else to cheer.