ECB needs a louder megaphone to reach bond markets 28 Oct 2021 President Christine Lagarde said she won’t hike rates as soon as investors anticipate. But that didn’t change their expectations and euro zone debt yields rose. She will have to do a better job of convincing them if she is to avert an unwanted tightening in financing conditions.
ECB has the least worrying inflation problem 1 Oct 2021 Euro zone consumer prices rose 3.4% in September, strengthening the hand of those who want boss Christine Lagarde to wind up emergency monetary stimulus. But structural unemployment is higher, the economy less robust and fiscal policy less stimulative than in the United States.
Easing crisis leaves Lagarde with tough transition 30 Sep 2021 The European Central Bank boss will have to fall back on a pre-pandemic bond-buying scheme once its emergency purchase programme runs out. The former is less flexible and may force Christine Lagarde to choose between flouting rules or curtailing support to the fragile economy.
Stagflation jitters are at least half wrong 29 Sep 2021 High inflation and stagnant activity would be a noxious mix for markets. Central bankers have the tools, and likely the will, to combat the former. But when price pressures are a symptom of supply shocks, as now, monetary policy is a crude weapon that will lead to weaker growth.
Turkey goes deeper into parallel monetary universe 23 Sep 2021 Ankara cut its main policy rate to 18% from 19%, kowtowing to President Erdogan just as other central banks take the opposite tack. A weaker lira and soaring energy bills add to the economy's inflation pains. With two years to another election, there’s little respite in sight.
Rishi Sunak pays if BoE inflation bet goes awry 22 Sep 2021 Surging prices mean the UK finance minister has to pay more interest on outstanding debt. Blame Britain’s love of bonds tied to inflation. The bill will be even bigger if price pressures are more stubborn than the Bank of England expects, forcing hasty monetary policy tightening.
Emerging economies face stages of inflation grief 16 Sep 2021 Central banks’ reactions to rising prices come in three steps, BNP Paribas reckons: denial, acceptance, and action. Brazil and Chile are further along, having hiked rates quickly as pressures mounted. Investors will prefer them to countries stuck in the first stage, like Turkey.
IMF skims over non-viral risks to global economy 27 Jul 2021 The emergence of new highly infectious Covid-19 variants could wipe about $4.5 trln off global GDP by 2025, the international lender warned. Its economic update pays less attention to policy missteps, market ructions, or more bankruptcies. Yet these also pose a threat to growth.
ECB’s old problem will defy new strategy 22 Jul 2021 Boss Christine Lagarde revealed the practical consequences of tweaking her inflation target: interest rates may stay at record lows for even longer. But given ultra-easy policy has failed for years to make prices rise faster, the chances of hitting her new goal are no better.
Nigeria flies the flag for corporate tax self-harm 20 Jul 2021 Abuja’s revenue collectors are trying to extract $4.4 bln from South African pay TV provider MultiChoice. Growing climate change pressures require Africa’s top oil producer to wean itself off energy receipts. Ad hoc squeezing of foreign companies is the wrong way to go about it.
Lagarde’s green turn may not need to be that sharp 16 Jul 2021 The ECB boss’s 293 bln euro corporate bond programme may soon tilt toward environmental saints and away from sinners. Too heavy a hand could distort markets and inflate green bubbles. But it’s a big enough change for it not to matter if, as seems likely, the intervention is mild.
Kiwis show world how to deliver sharp policy jolts 14 Jul 2021 New Zealand’s central bank is suddenly halting bond buying in a sign that it may soon raise interest rates. It’s a contrast to the long advance notice that Fed Chair Jay Powell or ECB boss Christine Lagarde need to give investors. The country’s relatively healthy finances help.
Capital Calls: China’s bank reserves 9 Jul 2021 Concise views on global finance: Beijing released more cash into its financial system as growth slows.
Giant leap for ECB is small step for euro zone 8 Jul 2021 The central bank tweaked its inflation target to stress how much it hates falling short of 2%. And boss Christine Lagarde wants to do her bit to fight climate change. The shifts may be a big deal for a cautious institution, but they won’t produce a revolution in terms of results.
The Exchange: Roger Ferguson talks monetary policy 22 Jun 2021 The former Fed vice chair and ex-TIAA CEO joins Swaha Pattanaik to discuss how the central bank is navigating economic recovery and price pressures. He also talks about whether corporate America is living up to its diversity pledges and suggests strategies to speed progress.
Capital Calls: Turkish gas, Generali, Garuda 4 Jun 2021 Concise views on global finance: President Erdogan’s “good news” on hydrocarbons smells off; the Italian insurer’s 1.5 bln euro bid for NN Group’s asset management unit may trigger a shootout; the Indonesian flag carrier’s long struggle to avoid bankruptcy is coming to a head.
Three scarcities make Jay Powell’s life harder 12 May 2021 U.S. inflation soared to 4.2% in April due to pricier raw materials and shortages of some goods. The Fed boss plans to ignore what he views as a short-lived phenomenon. It will only be transient if companies can find and retain workers more easily than is currently the case.
Fed’s Jay Powell picks the road less travelled 27 Apr 2021 The American and Canadian economies are both rebounding. Yet the U.S. central bank boss isn’t about to copy Canada’s bond purchase taper. It’s the difference between traditional and new-school monetary policy, which waits to see sustained inflation rather than anticipating it.
India’s pandemic hell could be purgatory 23 Apr 2021 There is hope rising immunity and the country’s massive vaccine industry will bring a rapid end to the misery brought about by a terrifying second wave of contagion. New Delhi has little room to act if the economy follows hospitals into a state of collapse. Cracks are visible.
Viewsroom: Turkish trouble and emerging markets 25 Mar 2021 President Tayyip Erdogan’s abrupt firing of a third central bank governor forced investors to contemplate whether this might precipitate a run on financial assets in other developing markets, including South Africa. Breakingviews columnists discuss the implications.