Central Banks

Capital Calls: Lagarde channels Thatcher

9 Sep 2021

Concise views on global finance: The ECB boss will buy fewer bonds but tells markets: “The lady isn’t tapering.” A tough decision on whether to scale back bond purchases more decisively will come later.

Job market mismatches are a long-term headache

8 Sep 2021

There are more U.S. vacancies than unemployed people. The post-pandemic reopening is causing temporary staff shortages despite joblessness elsewhere. But it’s also a long-term trend that will pose a tricky problem for central bankers as unemployment and rising wages coincide.

Capital Calls: U.S. jobs, $7 bln tax settlement

3 Sep 2021

Concise views on global finance: Slow U.S. job growth signals caution for the Fed; meanwhile, a giant deal between hedge fund executives and the IRS gives legs to President Biden's tax plans.

Capital Calls: UK engineer bidding war, Inflation

11 Aug 2021

Concise views on global finance: U.S. aerospace group TransDigm tries to elbow out rival Parker-Hannifin with a $9.7 bln bid for Meggitt; predicting U.S. consumer prices is proving tricky.

Australian economy proves hard to wreck

10 Aug 2021

Fresh lockdowns are exposing Prime Minister Scott Morrison’s botched vaccine efforts. And yet business is upbeat, asset prices are rising and the central bank will curb support. Mounting fiscal and demographic costs have yet to faze a country conditioned to believe in miracles.

Rush for inflation insurance hedges faith in Fed

5 Aug 2021

The price of 10-year inflation-linked U.S. debt keeps hitting new highs. This partly reflects how expensive normal Treasuries have become. It also suggests investors are worried that price pressures could last far longer than U.S. central bank boss Jerome Powell expects.

Bonds and equities both mislead on future growth

4 Aug 2021

The fall in U.S. bond yields would normally flag an economic downturn, while record highs for the S&P 500 Index ought to be a sign of a brighter future. Central banks are distorting price signals. The reality – and growth – is likely to be somewhere in the middle.

Fed can’t ignore even fleeting inflation

28 Jul 2021

The U.S. central bank reiterated its belief that price spikes won't last. Still, polls show consumers worrying, making politicians edgy. Tapering the Fed's bond buying wouldn't directly counter inflation. But it has to happen sometime, and it would give Chair Jay Powell cover.

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.

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.

Biden could raise volume on Fed’s quiet message

14 Jul 2021

Even if Chair Jerome Powell keeps his role at the central bank, the U.S. president may choose as many as three of its seven governors. New picks are likely to exceed Powell’s expansive view of the Fed’s role. But its tools to tackle issues like inequality are limited.

ECB has reason to leapfrog Fed on digital currency

14 Jul 2021

President Christine Lagarde took the first step towards an electronic euro. China and some others are moving faster. But the innovation may be more useful in the euro zone than in the United States, especially if the ECB can impose negative interest rates directly on households.

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.

Bank investors sense a blockage in dividend gusher

13 Jul 2021

UK lenders like NatWest could in theory make payouts worth up to 25% of their market value, after the Bank of England lifted a ban. Despite a recent rally, they’re not getting full credit for this. Lingering coronavirus risks and IT investment needs may explain the scepticism.

Capital Calls: Disney hits two post-Covid targets

13 Jul 2021

Concise views on global finance: Netflix and the Mouse House have racked up 24 Emmy nominations each for “The Crown” and “The Mandalorian.” But Disney's "Black Widow" not only saw a stunning streaming debut but also topped the re-emerging theater box office.

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.

ECB’s risky loan crusade has limits

5 Jul 2021

Top European watchdog Andrea Enria is worried about banks’ exposure to highly indebted buyouts. He’s right to focus on a fast-growing market with weak investor protections. But clamping down risks further undermining sickly lenders and may only push the problem elsewhere.

Chancellor: Paying the piper for pandemic recovery

2 Jul 2021

The war on Covid-19 proved remarkably expensive. The U.S. federal deficit ran to $3.4 trillion last year. As the crisis eases, policymakers are thinking about how to foot the bill. Past wars have brought forth new taxes. Consider some fresh sources for raising government revenue.

Housing market can boom without pandemic-era drugs

1 Jul 2021

U.S. and UK real estate are rising at their fastest pace in over a decade. The Fed’s purchases of mortgage-backed bonds and UK tax breaks have outlived their usefulness. The longer that such supports are left in place, the wider the gap between haves and have-nots will grow.