Macron-Le Pen replay reveals deeper French splits 10 Apr 2022 President Emmanuel Macron resisted a surge in support for his far-right challenger Marine Le Pen in the first round of elections. But the vote laid bare more divisions than existed five years ago. These rifts will make running the euro zone’s second biggest economy arduous.
Christine Lagarde’s inflation excuses wear thin 1 Apr 2022 Euro zone prices rose at a record annual rate of 7.5% in March, almost as much as in the United States where the Fed has started hiking rates. There’s more going on than just surging energy costs. It’s getting harder for the European Central Bank boss not to follow Jerome Powell.
Where odd U.S. yields lead, Europe will follow 30 Mar 2022 Two-year U.S. Treasuries briefly yielded more than 10-year ones. There’s some way to go before such an inversion happens in the euro zone. But high inflation pushed German two-year bond yields into positive territory for the first time since 2014. A replay may be on the cards.
ECB squeeze leaves room for fiscal war response 24 Mar 2022 The central bank is fighting inflation and cutting bond purchases, leaving European governments to shoulder the cost of the Ukraine war. That may add up to 4% of GDP to public debt loads inflated by the pandemic. But even with rising yields, national budgets can afford it.
ECB chucks growth ball into governments’ court 10 Mar 2022 President Christine Lagarde is winding down asset purchases. It’s the opposite of what the central bank did in past crises, but high inflation is forcing her hand. Shielding the euro zone economy from the Ukraine war’s consequences will fall to politicians, who are slower to act.
Capital Calls: Bundesbank, Biogen 20 Dec 2021 Concise views on global finance: The new head of Germany's central bank is a reassuringly boring choice; cutting the price of its Alzheimer's drug could help Biogen squeeze something out of what looks like a flop.
Trailblazing UK rate rise may pay off in the end 16 Dec 2021 The Bank of England is the first major central bank to hike its policy rate. The ECB faces less acute price pressures and the Fed must consider the job market alongside inflation. It’s a gamble, but acting now means British rate-setters will have less hiking to do in the future.
ECB needs a louder megaphone to reach bond markets 28 Oct 2021 President Christine Lagarde said she won’t hike rates as soon as investors anticipate. But that didn’t change their expectations and euro zone debt yields rose. She will have to do a better job of convincing them if she is to avert an unwanted tightening in financing conditions.
Jens Weidmann’s best replacement is another hawk 20 Oct 2021 The Bundesbank president has unexpectedly resigned. Weidmann criticised Mario Draghi’s bond-buying plan, and a more dovish rate-setter could help the ECB keep policy loose in tricky times. But having an articulate and critical representative also helped keep German voters happy.
EU cheer only partly masks green bond shortcomings 12 Oct 2021 The bloc’s debut 12 bln euro issue of debt earmarked for environmental aims was a big success and may encourage more launches. But such securities only incentivise sustainable behaviour if issuers can borrow at cheaper rates. That’s not always the case.
ECB has the least worrying inflation problem 1 Oct 2021 Euro zone consumer prices rose 3.4% in September, strengthening the hand of those who want boss Christine Lagarde to wind up emergency monetary stimulus. But structural unemployment is higher, the economy less robust and fiscal policy less stimulative than in the United States.
Easing crisis leaves Lagarde with tough transition 30 Sep 2021 The European Central Bank boss will have to fall back on a pre-pandemic bond-buying scheme once its emergency purchase programme runs out. The former is less flexible and may force Christine Lagarde to choose between flouting rules or curtailing support to the fragile economy.
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.
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.
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.
EU bond ban is smarter way to police errant banks 16 Jun 2021 The bloc froze 10 lenders out of its first recovery bond sale because of past market-rigging, the FT reported. The direct hit for JPMorgan and others is small. But they can only rejoin the fold by proving they’ve changed. That’s a keener incentive to stay clean than fines.
The Exchange: EU Trade Commissioner Dombrovskis 8 Jun 2021 With vaccination programs catching up with America and Britain, Europe is poised to rebound, the former Latvian premier, who is also responsible for an “Economy that Works for People,” tells Rob Cox in an interview hosted by the European-American Chamber of Commerce New York.
Lagarde’s yen for consensus will be stress-tested 11 Mar 2021 The ECB will step up the pace of bond-buying to combat a rise in yields. Moving sooner wouldn’t have allowed President Christine Lagarde to get the governing council’s green light. Fast-moving markets may require speedier reactions than her instinct for forging unity permits.