Central Banks

BOJ chooses slow path out of zero-rate limbo

31 Oct 2023

Japan’s central bank again tweaked its policy to permit slightly higher yields on 10-year government bonds as it inches back to positive interest rates. The snail’s pace is understandable. Yet with bond yields rising across the developed world, it remains a loose-money outlier.

ECB’s rosy outlook is a recipe for economic pain

26 Oct 2023

Frankfurt policymakers think the euro zone will grow by 0.7% in 2023 and want to keep rates high to fight inflation. Yet most data point to stagnation or recession. A gloomier perspective would enable the European Central Bank to ease policy and help the bloc’s economy.

Russian war economy is overheating on a powder keg

25 Oct 2023

Soaring military spending is Moscow’s main growth engine, leading to tight labour markets and 6% inflation. The government is strengthening its grip on a country gradually closing to the world and financially beholden to China. If peace returns, a collapse is a real risk.

Singapore policy review shift is sign of times

13 Oct 2023

The central bank will double the frequency of its monetary settings statements from 2024. The unexpected move to quarterly meetings is overdue. Flexibility to respond fast to the risks posed by volatile geopolitics is paramount, more so for Singapore’s open economy.

Bond rout threatens to feed on itself

6 Oct 2023

Strong jobs data pushed 10-year US Treasury yields up again. Alongside nagging inflation and political turmoil, it raises concerns the Fed will keep interest rates higher for a while. Pricier borrowing costs depress asset values, which can lead to a crisis that sparks more fear.

Central banks start game of chicken over rate cuts

21 Sep 2023

Officials in Sweden and Norway hiked borrowing costs, while their British peers didn’t. All hinted policy will stay tight, fearing that stoking expectations of an early start of the loosening cycle may fuel inflation. An economic slowdown may prompt rate-setters to be less tough.

Fed clarity effectively sends a strong buy signal

20 Sep 2023

Benchmark US interest rates probably will hover around 5.5% for a while. A stable cost of capital gives companies, consumers and investors good reason to stop putting off decisions any longer. It should help resolve valuation ambiguities and restart M&A, IPO and housing activity.

How Ukraine’s banks can survive another war

19 Sep 2023

The country’s former central bank Governor Valeria Gontareva explains on The Exchange podcast how the radical steps implemented in 2014 helped Ukrainian lenders withstand the Russian invasion and kept the financial system afloat, and why Ukraine needs to keep reforming.

ECB’s rear-view policy risks crashing the economy

14 Sep 2023

Fears of stubbornly high consumer prices prompted President Christine Lagarde to push rates to a record 4% on Thursday. Yet the central bank admits inflation will be around the 2% target by 2025. The bloc’s growth is already stagnating. The latest action will worsen its plight.

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.

Lagarde can stop fretting about rising salaries

11 Sep 2023

The European Central Bank chief worries that consumer prices will stay high because wages are growing at the fastest rate in 30 years. Yet raises are below inflation and slowing. In the past, the ECB cut rates even with strong labour markets. It may have to do so again soon.

Central bank peanuts highlight China’s policy gaps

15 Aug 2023

A surprise rate cut failed to soothe markets rattled by a weak economy and property defaults. The People’s Bank of China is limited by thin bank margins and the risk of outflows. Loose monetary policy won’t help demand, if President Xi Jinping keeps ducking bolder fiscal action.

Russia’s jumbo rate hike leaves Putin in hot water

15 Aug 2023

A plunge in the rouble and the Kremlin’s prodding forced the central bank to raise borrowing costs by 3.5 percentage points. The currency’s muted reaction leaves the president with more bad choices: restrict welfare spending or hope that even tighter policy can curb inflation.

Rate jujitsu is no blow to Japan’s foreign assets

4 Aug 2023

The central bank’s shock tightening of monetary policy last week sparked fears investors would rush to repatriate the $5.4 trln of assets they hold overseas. Low yields at home and funds’ caution after years of disappointment will ease any tide. Big debtors like the US can relax.

Capital Calls: Robinhood, Influencers, Inflation

3 Aug 2023

Concise views on global finance: The $10 bln brokerage’s first profitable quarter does little to quell growth fears; Adidas and AB InBev are unexpectedly resilient amid an online storm; the Bank of England has a longer inflation fight on its hands than its peers.

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.

Republicans struggle to diverge from Bidenomics

1 Aug 2023

White House hopefuls such as Ron DeSantis are decrying the president’s record, which includes adding 13 mln jobs. Their agendas also prioritize US factories and energy independence, areas already allocated some $480 bln. It will take more creativity to break from existing policy.

Capital Calls: Bank of Japan, StanChart

28 Jul 2023

Concise views on global finance: Governor Kazuo Ueda shook markets by introducing a more flexible approach to controlling government bond yields, but he can easily retreat if inflation drops. Meanwhile, Bill Winters’ lender is improving but the heavy lifting is far from over.

Lagarde hides velvet policy in iron talk

27 Jul 2023

After lifting borrowing costs to a record high, the ECB president sounded tough on inflation to persuade markets interest rates will stay elevated. But she also hinted the central bank could pause. Investors can prepare for a less aggressive monetary stance.

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.