Central bankers face a balance sheet reckoning 26 May 2023 Assets held by central banks have exploded since 2008. As interest rates rise, some of those institutions are slipping into the red. We’re told normal accounting rules do not apply. However, losses erode inflation-fighting credibility and independence, argues Edward Chancellor.
‘Greedflation’ loosens its grip on food retailers 24 May 2023 Suppliers like Unilever and Kraft Heinz are easing inflation-busting price rises that hit grocers hard. That will benefit profit margins at the likes of Kroger and Carrefour. Their next challenge will be convincing cash-strapped consumers to pay, and buy, more in supermarkets.
Benched legislation has hidden costs 19 May 2023 Washington is laser-focused on raising the debt ceiling. But as spending debates rage, Congress’s back burner is getting crowded. Pending legislation, like one that secures bank services for cannabis businesses, enjoy broad support, but the window for easy passage is closing.
Shippers turn the tank around too slowly 17 May 2023 Americans are pulling back on spending after their pandemic-era shopping sprees. That's perhaps good news for inflation, but bad news for the shipping business, which is set for its biggest capacity jump since at least 2016. As demand cools, shippers can’t pivot fast enough.
Turkey votes for long-term market instability 15 May 2023 With President Erdogan and his rival set for a May 28 runoff, uncertainty is the main upshot of the country’s elections. That prolongs the agony for a $900 bln economy plagued by 44% inflation and wild fiscal policies. An even weaker lira and warier foreign investors will ensue.
BoE pioneers can make a virtue out of uncertainty 11 May 2023 The Bank of England is living a central bank nightmare. Inflation is 10.1% but growth is stalling. After hiking by 25 basis points, its best option is to avoid the playbooks of US and European peers, pause and be ready to loosen or tighten policy based on what the economy does.
Inflation’s real benefits beat theoretical costs 5 May 2023 A barrage of shocks have battered the world’s developed economies, leaving central bankers struggling to adapt. Allowing prices to rise not only eases the economic adjustment but shrinks big debt piles, argues Felix Martin. That’s helpful to everyone – except bond investors.
Lagarde fine-tuning will aid sputtering euro zone 4 May 2023 The European Central Bank’s move to raise rates by just 25 basis points and speed up its exit from bond-buying signals a less aggressive approach. High inflation calls for more hikes, but Frankfurt’s decision to use a scalpel rather than a hammer will benefit Europe’s economy.
ECB risks interest-rate blunder after messy data 2 May 2023 The European Central Bank is none the wiser following a raft of new numbers. Lenders may be reining in credit, but headline inflation is rising. Hardliners will still push for a 50 basis point hike on Thursday. The uncertain conditions call for an increase half that size.
Slowing growth will crash European stock party 2 May 2023 The region’s shares have risen 22% since September, trouncing their US peers. A resilient economy and low valuations lured investors. Aggressive rate hikes and falling earnings will drive them away. High-quality bonds and emerging markets’ equities are good alternatives.
Ending the retailers’ crisis has a high price tag 2 May 2023 Luring inflation-wary shoppers back to the high street won’t be cheap, executives at last week’s World Retail Congress said. Heavyweights like Zara owner Inditex, which has room to plough money into stores, stand to win big. H&M and others cutting to survive face a slow decline.
Capital Calls: Exxon, US regional banks 28 Apr 2023 Concise views on global finance: Exxon’s two golden eggs are the Permian and Guyana; market composure gives time for a First Republic fix.
Dollar bulls are praying for a mild downturn 26 Apr 2023 The greenback has lost 14% versus the euro since September, as investors bet on Europe’s recovery and China’s reopening. Inflation and interest rate trends still favour the single currency. The best hope for the buck is a minor economic slowdown to boost its safe haven status.
Politicians and policy wonks diverge on economy 20 Apr 2023 Prominent policymakers and world leaders met in Washington last week to discuss the economic outlook. In this Viewsroom podcast, Breakingviews columnists explain why US politicians are taking a rosier view of inflation and vulnerabilities in the banking sector than the IMF.
How US and allies can find common ground on China 17 Apr 2023 Emmanuel Macron is not the only US partner wary of being drawn into a Taiwan crisis. But America and its allies will be stronger if they can agree more about dealing with the People’s Republic. Part of the answer is to focus on de-risking rather than decoupling, says Hugo Dixon.
Central bank pilots risk leaving cockpit too soon 14 Apr 2023 Western policymakers at the IMF Spring Meetings hinted that their mission to slay inflation without a recession is nearly accomplished. Investors agree, and hope for rate cuts. That’s overdone. A soft landing is in sight, but so too is the danger of complacency.
A flawed but useful economic model for a bleak age 14 Apr 2023 Ideas become fashionable when they meet the needs of the era. John Cochrane’s fiscal theory, which states that governments ultimately determine the level of inflation, fits the bill. Despite its shortcomings, the model may be helpful, says Edward Chancellor.
Capital Calls: Inflation gets sticky 12 Apr 2023 Concise views on global finance: US inflation is increasingly coming from non-essential goods’ prices that rarely drop. That’s a bad sign for Americans since it signals a longer battle against price hikes and even higher interest rates.
Capital Calls: Reserve Bank of India 6 Apr 2023 Concise views on global finance: The central bank surprised by keeping its key borrowing cost at 6.5%, citing concern about global financial stability.
OPEC’s oil cut is less surprising than it looks 3 Apr 2023 The producer group’s shock call to slash output by another 1 mln daily barrels will annoy Joe Biden and spur inflation fears. But de facto leader Saudi Arabia had already shown it would ignore US wishes. And Chinese demand is sufficiently uncertain to justify pre-emptive action.