Central Banks

Shinzo Abe fires off another feeble arrow

5 Dec 2019

Japan’s latest fiscal stimulus package, worth just over $120 billion, will avert stagnation or worse. But a recent consumption tax hike and slower global activity pose risks that policymakers lack the firepower to tackle. Healthy growth and inflation will prove elusive.

TCI plays outrider to Mark Carney’s climate drive

2 Dec 2019

Chris Hohn’s hedge fund plans to penalise directors at companies who don’t publish climate change data. If others follow suit, it could boost the Bank of England governor’s push for transparency. What’s less clear is whether greater disclosure delivers investment rewards.

Aussie rate setters on a slow road to asset buying

2 Dec 2019

Consumption is weak and joblessness is rising. The central bank has room to cut rates from a record low of 0.75%, and can resort to bond purchases after that. But Governor Philip Lowe wants fiscal policy to do more. He can ramp up pressure on the government by taking his time.

Hadas: GDP is a measure ready for retirement

27 Nov 2019

The fuss over China’s revised growth statistics points to peak uselessness of the 85-year old Gross Domestic Product. Too many countries mess with a number which gives slow, blurry readings of the economic pulse, especially for megacities. The future is “now-casting”, and more.

Fed’s stability is an appreciating asset

20 Nov 2019

Ambassador Gordon Sondland implicated not just President Donald Trump, but also the vice president and secretary of state in the House impeachment probe. The central bank’s independence should comfort investors – unless Trump starts threatening Chair Jay Powell’s job again.

German fiscal rethink might backfire on euro zone

13 Nov 2019

ECB boss Christine Lagarde wants Germany and the Netherlands to spend more. Even if she gets her way, the economic benefits for others may be limited. Especially if a northern European rebound lifts the single currency and bond yields, or forces a rethink of easy monetary policy.

Hercules is set to soothe Greece’s Achilles heel

13 Nov 2019

A program named for the mythical hero should help slash the eye-popping 75 billion euros of bad loans at the country's banks. Pricing and tax credits remain unresolved. But the plan will give Athens a better shot at its ambitious goals for economic growth.

ECB decisions would benefit from a bit more light

11 Nov 2019

The central bank’s policy-making process is less formal and transparent than peers. New boss Christine Lagarde could change that by holding formal votes. Publishing the results, as the Fed does, would raise problems. But disclosing anonymous tallies would still be an improvement.

Hadas: Sweden raises tone of negative rate debate

6 Nov 2019

Its central bank plans to increase the policy interest rate to zero. Current conventional thinking says that is a step in the wrong direction. But there are reasons to worry about minus signs on rates. If the economy emerges unscathed, others may copy the Swedish experiment.

EU banking union needs more than German concession

6 Nov 2019

Finance Minister Olaf Scholz is willing to consider an EU deposit insurance scheme. Countries like Italy may balk at some of his conditions. That such a sensible plan can take so long to come to fruition shows how far Europe is from rational policy making on financial regulation.

UK gilts’ odd stability is precarious

6 Nov 2019

Britain’s main political parties are in a bidding war to woo voters before an election. Yet UK debt yields are steady. Hopes of more Bank of England easing is one reason. Bond vigilantes will wake up if a smooth Brexit opens the way for rate rises and government spending surges.

Fed cut is over-stuffing the cushion this time

30 Oct 2019

Another interest-rate reduction is what traders wanted. But U.S. stocks just hit a record high, the economy is chugging along with solid – if not spectacular – growth, and inflation has crept up. The Fed’s touted data dependency is looking more like addiction to the markets drug.

Mario Draghi’s tacit advice to Christine Lagarde

24 Oct 2019

The outgoing ECB boss says his successor needs no guidance. But his last big news conference contained clues. First, never give up, though economic risks are rife. Second, turn the page on infighting. Third, be wary of financial bubbles. Fourth, expect brickbats, whatever you do.

Christine Lagarde gets lucky with German ECB pick

23 Oct 2019

Berlin is set to nominate Isabel Schnabel to the central bank’s board. The university professor would bring economic expertise, and, judging by public comments, more open views on monetary policy than her Teutonic predecessor. The new ECB president would welcome both qualities.

World’s financial superheroes encounter kryptonite

21 Oct 2019

Fixing what’s blighting global growth prospects is, for once, beyond the combined capabilities of the finance ministers and central bankers who frequent the IMF’s annual meetings. They can do a lot, but are proving less potent when gravel is thrown in the gears of world trade.

Mario Draghi’s detractors prepare for next fight

10 Oct 2019

The outgoing ECB boss ignored technocrats’ advice not to resume bond buying, the FT says. The leaked guidance reflects increasingly vocal dissent. The central bank won’t reverse its looser policy any time soon. But incoming chief Christine Lagarde faces clear battle lines.

London IPO abattoir’s next victim could be African

9 Oct 2019

Trade bank Afrexim wants to raise $200 mln in the UK, despite recent troubled attempts by Kazakh and UAE groups. A new continental free trade deal bolsters its case. But demand for an entity controlled by regional governments could elicit a similarly lukewarm response.

Breakdown: Fed needs adaptable repo response

8 Oct 2019

Chairman Jay Powell says the U.S. central bank will start buying bonds again to help ensure money markets stay well behaved. The Fed has learned a tough lesson from last month’s spike in repo rates: exiting the era of quantitative easing isn’t going to be easy.

Bank of Japan tests the limits of monetary policy

1 Oct 2019

The weakest Japanese government-bond auction in three years caused global yields to jump. The swift reaction, rooted in uncertainty about new policies designed to keep rates low, should teach Europe a worrying lesson: A bond-purchasing safety net can sometimes be dangerous.

India’s financial fires are starting to rage

1 Oct 2019

An outsize scandal at a Mumbai-based co-operative bank, abetted by poor oversight, has battered confidence. Plummeting share prices, meanwhile, raise questions over the future of private lender Yes Bank, and others. It signals loan pain to come for an already scorched economy.