ECB

ECB’s rearview mirror ignores economic crash ahead

10 Dec 2024

The European Central Bank is set to cut rates by just 25 basis points this week because GDP is growing at 0.4% - the quickest since 2022. But inflation is subdued and the outlook for consumers, businesses and exports is weak. The euro zone’s grim future warrants stronger action.

ECB approach to French storm can be a Gallic shrug

4 Dec 2024

The risk premium on France’s debt is at its highest since the 2012 euro zone crisis. Yet even if it worsens, the European Central Bank is unlikely to deploy knee-jerk rate cuts or bond-buying. It also has the tools to address spillover effects on other member states.

Why central banks were both lucky and smart

3 Dec 2024

Policymakers in major economies have quelled the post-pandemic inflation surge without causing recessions. In this episode of The Big View podcast, BlackRock’s Alex Brazier argues big rate hikes in the US, Europe and the UK helped – but so did unusually strong labour markets.

ECB will fail to get out ahead of US trade war

8 Nov 2024

Donald Trump’s return to the White House puts Europe in a bind. With the euro falling, slow growth and likely US tariffs, European Central Bank chief Christine Lagarde can help by slashing rates to 2.75% in December. But policymakers’ muddled priorities make that unlikely.

UK fiscal splurge limits BoE’s rate-cutting space

5 Nov 2024

The Bank of England is likely to lower borrowing costs to 4.75% this week. Next year, though, government spending will give Britain’s economy a sugar rush of growth and inflation. That will prevent Governor Andrew Bailey from easing policy as fast as peers in Europe and the US.

Lagarde struggles to dispel market’s gloomy vibes

17 Oct 2024

The European Central Bank lowered its key interest rate to 3.25% but didn’t commit to further cuts. Markets fear a recession and expect borrowing costs to be below 2% in 12 months. President Christine Lagarde may be forced to loosen policy faster – and reassure investors of that.

Middle East turmoil edges closer to global economy

3 Oct 2024

Military escalation between Iran and Israel may at some point affect the price of oil. In this Viewsroom podcast, Breakingviews columnists debate how the conflict may prompt a fresh inflationary headache for central banks – and how Saudi Arabia might offset that risk.

Commerzbank fight is stress test for EU bank union

27 Sep 2024

Regulators spent years trying to level the playing field for euro zone banks. That should clear the way for UniCredit CEO Andrea Orcel’s mooted bid for the $20 bln German lender. If Chancellor Olaf Scholz thwarts the Italian group, new barriers may soon spring up elsewhere.

Thrifty Europeans demand more aggressive rate cuts

12 Sep 2024

The European Central Bank lowered rates again on Thursday. President Christine Lagarde hopes to spark a consumer-led recovery. But households are saving 15% of their income, wage increases are slowing and mortgage costs rising. Only more rapid easing can cause a spending surge.

Central banks lay liquidity trap for stock markets

6 Sep 2024

The US Federal Reserve and its major peers took $200 bln out of the financial system in early August, likely deepening a global equity slump. Ratesetters control the money supply for good reasons. But their huge presence and investors’ herdlike behaviour add new layers of risk.

Euro is reluctant wearer of King Dollar’s crown

23 Aug 2024

The currency is up nearly 3% against the greenback this month. That is odd because markets think European interest rates will fall more than US ones. Worries about Washington’s budget deficit are a factor, but the export-led euro zone can ill afford a strong exchange rate.

The ECB is running out of time to revive euro zone

16 Aug 2024

The bloc’s GDP rose by a steady 0.3% in the second quarter. But business surveys and sentiment data suggest growth is flagging. Inflation is sticky so European Central Bank chief Christine Lagarde may be reluctant to cut rates decisively. But waiting risks impairing the recovery.

Flying PIIGS nations stir rethink in Europe’s core

12 Aug 2024

Former crisis economies like Spain, Greece and Italy have outpaced France and Germany by up to 20% since the pandemic. Lower exposure to manufacturing, a tourism boom and Brussels funds all helped. The role reversal may push Berlin to tolerate looser fiscal and monetary policy.

Inflation teaches five lessons for the next crisis

16 Jul 2024

After taming a 9% rise in prices without breaking economies, US Fed Chair Jay Powell and other central bankers are poised to pat themselves on the back. There’s also an opportunity to improve the playbook. Among the useful takeaways: embrace taciturnity, flexibility and humility.

UniCredit-ECB spat could sharpen watchdog’s teeth

10 Jul 2024

The 60 bln euro bank is contesting in court the regulator’s demand for a faster Russia exit. At issue is whether the European Central Bank can base orders on hypothetical risks. If the supervisor wins, it may be emboldened to take tougher action on issues like climate change.

Bond traders’ rate-cut party is yet to get going

26 Jun 2024

Central banks from Ottawa to Frankfurt are reducing rates. Bond prices should be rallying, but an index of euro zone debt is up just 0.1% since the ECB eased borrowing costs this month. While French elections are one reason why, tight US monetary policy is the key constraint.

France would feel lonely if debt crisis hit

18 Jun 2024

Market fears of a far-right victory in the elections sent yields on the country’s 2.3 trln euro debt to 12-year highs. If traders’ worries deepen, support from the European Central Bank is not a given. And a eurosceptic government would be deprived of Brussels’ goodwill.

ECB can start worrying about growth, not inflation

6 Jun 2024

The European Central Bank cut interest rates for the first time since September 2019, but predicted inflation will stay above its 2% target until 2026. That could tempt Frankfurt hardliners to delay further monetary easing. Doing so would endanger the bloc’s fragile recovery.

ECB has almost vanquished its final inflation foe

30 May 2024

Steeper bills for hotels, transport and other experiences are the European Central Bank’s key remaining enemy. Last month, services accounted for 68% of the rise in consumer prices. But those pressures, and wage growth, are waning, freeing rate-setters to start a series of cuts.

The dollar and the yuan are polar opposites

16 May 2024

The strong greenback and questions over a Chinese devaluation reflect the contrasting outlooks for the two economies. In this Viewsroom podcast, Breakingviews columnists debate why Beijing is unlikely to push down its currency and why the dollar will remain elevated.