Central Banks

UK growth requires an even less popular Liz Truss

23 Sep 2022

The new prime minister wants the economy to motor, and says she’s ready to take tough calls. Yet her 45 bln pounds of tax cuts have already alarmed debt markets, and may not deliver growth. If Truss wants the UK to grow without a fiscal mess, she will have to upset her base.

Tokyo blinks in game of forex chicken

22 Sep 2022

Japan has responded to the Federal Reserve’s rate hikes by moving to prop up the staggering yen, the first intervention since 1998. The country’s economy and Bank of Japan Governor Haruhiko Kuroda’s loose policy make it unlikely the plan will work. The attempt may even backfire.

Capital Calls: Novartis

22 Sep 2022

Concise views on global finance: The Swiss drugmaker hopes to fix its growth problem by listing its generic drug business and focusing on the U.S. market.

Fed makes inflation fight Joe Biden’s problem

21 Sep 2022

The central bank raised rates by 75-basis-points and suggested they could go higher than expected without a hard landing. That seems overly rosy. But inflation could do more harm than a recession – and if the Fed overshoots, it’s the man in the White House that carries the can.

Capital Calls: Byju’s revenue fail

15 Sep 2022

Concise views on global finance: Byju’s topline shrunk after its auditor advised it to recognise its revenue differently.

Capital Calls: U.S. railways steer clear of crisis

15 Sep 2022

Concise views on global finance: Major U.S. railroads and unions reached a tentative deal, avoiding a shutdown that could have widespread consequences on the U.S. economy.

Bank of Japan needs to pick yen battles carefully

15 Sep 2022

The central bank is signaling it may soon intervene as its currency hits 24-year lows. Slowing rather than reversing the U.S. dollar’s rates-driven strength may be achievable, but even that demands a cannier deployment of weaponry than just throwing money at the problem.

Capital Calls: Oil vs. ESG

13 Sep 2022

Concise views on global finance: The price of a barrel of Brent crude has fallen 30% since mid-summer, and over 10% in two weeks. If it stays below $100 a barrel, oil companies will start to become worse investments. That could help solve backlash to ESG investing.

Capital Calls: ECB rate hike

8 Sep 2022

Concise views on global finance: Europe’s central bank risks recession to combat inflation.

Trussonomics may freak out the markets

5 Sep 2022

If the UK’s new prime minister was only planning big energy subsidies, investors might not worry too much. But Liz Truss is also planning tax cuts – and may pick fights with both the Bank of England and European Union. If so, the pound could be clobbered, says Hugo Dixon.

ECB has reasons to avoid a panicky hike

2 Sep 2022

The European Central Bank looks set to jack up interest rates next week. Persistent inflation warrants some monetary tightening. But too sharp an increase would exacerbate the chances of a recession, at a time when rising debt gives governments less room to fight back.

Powell’s inflationary wrong could turn out right

25 Aug 2022

The Fed chief’s upcoming speech at Jackson Hole may skew hawkish, to make up for him dismissing rising prices too readily at last year’s confab. His mistake, though, protected the U.S. economy from rate hikes that would have hurt growth. By being late, the Fed may do less harm.

Capital Calls: Bank of England’s dark clouds

4 Aug 2022

Concise views on global finance: The UK central bank predicts inflation will hit 13% and the economy will slip into recession just as Boris Johnson’s successor as prime minister takes charge.

TD buys Cowen, and hopefully its people too

2 Aug 2022

The Canadian bank’s $1.3 bln purchase of investment bank boutique Cowen gives it a toehold in the U.S. market. Together the securities units are roughly the size of Jefferies. But successful investment banking deals always come down to employees – and paying enough to keep them.

People’s Bank of China is victim of own success

1 Aug 2022

The central bank sustained growth without aggressive easing through Covid and war in Ukraine, keeping inflation in check. However, its attack on financial risk tipped over the $52 trln housing market, and other fundamentals are wobbling. Unfortunately, the PBOC can’t help much.

Cerberus, J.C. Flowers put Indian bad debt on map

29 Jul 2022

The two investment firms are vying for $6 bln of soured client loans Yes Bank is selling, the country’s largest-ever such deal. The winner will bag a leading role in Indian debt workouts just as more lenders consider embracing market solutions. That deserves a premium fight.

Russia’s macro health hides chronic deficiencies

22 Jul 2022

Oil and gas exports and lower imports mean the rouble is strong, and GDP hasn’t yet collapsed. But longer term, Moscow needs to aid inflation-hit consumers, and help sanctions-hit firms fill the gap left by departing Western rivals. Graft and a brain drain will make that hard.

ECB plays with fire while unspooling its hose

21 Jul 2022

President Christine Lagarde hiked interest rates by 0.5%, double the amount she flagged last month, and unveiled a vague tool to control euro zone bond yields. If monetary tightening hastens an economic slowdown, the central bank will need its new powers sooner rather than later.

ECB risks forgetting 1990s currency crisis lessons

18 Jul 2022

President Christine Lagarde may soon unveil the central bank’s tool to control sovereign bond yields. Struggles with semi-fixed exchange rates before the euro offer a cautionary tale. To fend off speculative attack, authorities are best off keeping targets and methods vague.

Japan’s post-Abe future, Europe’s currency problem

14 Jul 2022

The assassination of former Prime Minister Shinzo Abe is an end of an economic era. In this Viewsroom podcast, Breakingviews columnists debate how his party’s success could bring about big spending. Also, the euro’s decline is a problem for central bank chief Christine Lagarde.