Bank of England

BoE is a more credible rate-cut sceptic than ECB

12 Dec 2023

Policymakers in London and Frankfurt are unlikely to touch borrowing costs this week. Their challenge is to persuade markets they are not about to start slashing them. Bank of England Governor Andrew Bailey has the easier task, but only because the UK is in worse economic shape.

Bank of England drags Bagehot into the shadows

1 Dec 2023

The 19th-century economist recommended lending freely to stem financial panics. Now watchdogs are pondering how to apply this principle to financial markets dominated by bond investors and unregulated entities. The UK central bank has an idea, but it only works in some cases.

Japan’s rates tweak is careful and crafty

2 Nov 2023

The central bank changed its policy to allow higher 10-year bond yields. Unlike the US, it can afford to raise borrowing costs slowly as inflation is low. In this Viewsroom podcast, Breakingviews columnists explain why monetary tightening as others loosen may give Tokyo an edge.

BoE’s tough talk on rates ignores weak homeowners

1 Nov 2023

The Bank of England is set to keep borrowing costs steady this week but insist they will stay high to curb inflation. That may be hard, given the sick housing market has yet to feel the pain of past hikes. The UK may ease policy sooner than its peers will, and the market expects.

Capital Calls: British wages

12 Sep 2023

Concise views on global finance: UK pay rose by an annualised 8.5% in the three months to July – more than inflation. That’s good for retirees, whose pensions will rise by that amount. But such a hot labour market is likely to prompt the Bank of England to hike rates next week.

Bank of England rate dilemma holds little mystery

2 Aug 2023

Governor Andrew Bailey must decide on Thursday whether to raise borrowing costs by a quarter or half a percentage point. The choice will make little difference to the long-term path of interest rates. Inflation is falling and monetary policy alone cannot boost sluggish UK growth.

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.

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.

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.

Why central banks cannot relax in inflation fight

4 Jul 2023

Western policymakers have frantically hiked interest rates to dampen consumer prices. In this Exchange podcast, Claudio Borio, a top official at the Bank for International Settlements, argues that rate-setters need to keep going to ensure costs of living won’t stay elevated.

UK banks are appropriate airbag for mortgage crash

27 Jun 2023

British politicians are starting to call out lenders that have delayed passing on higher rates to savers, even as they charge borrowers more. Bank share valuations already implied such windfalls might be temporary. The sector’s rising margins justify some political arm-twisting.

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.

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.

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.

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.

Sterling’s safe haven status will prove fleeting

6 Apr 2023

Investors have piled into the pound since the start of troubles at US banks, pushing it 5% higher against the dollar. Yet easing turmoil stateside will lead markets to fret more over UK issues: a probable recession, dire long-term growth, and a likely dovish central bank.

Capital Calls: Bank of England, Wonder drugs

23 Mar 2023

Concise views on global finance: The UK central bank has joined peers in raising rates, but there’s not much room to keep hiking. Meanwhile, a drug that might help smokers’ lung is could be good for makers Regeneron and Sanofi, but even better for society.

BoE’s inflation pickle can taste sweet in Britain

22 Mar 2023

A surprise jump in consumer prices will force the Bank of England to hike interest rates by 25 basis points, rather than pausing. Governor Andrew Bailey can now focus on helping a shaky UK economy by freezing borrowing costs for the rest of 2023 and start cutting them next year.

How central banks got the inflation crisis wrong

14 Feb 2023

Western policymakers have hiked interest rates by more than 10 percentage points since 2021. Yet prices remain high. In this Exchange podcast, Paul Donovan, chief economist at UBS Global Wealth Management, explains how rate-setters failed and what they should do next.

Britcoin flags promise of cashless world, and risk

7 Feb 2023

The UK plans to make up for being a late e-money adopter by widening access to its digital currency plan. Right now banks are the main way to access physical cash, but online equivalents could be more widely distributed. The business of money could get messy.