Federal Reserve

Chelsea’s generous buyer, U.S. inflation pain

12 May 2022

Roman Abramovich is selling the soccer team to a group led by LA Dodgers co-owner Todd Boehly for $3 bln. In this Viewsroom podcast, Breakingviews columnists discuss the chunky valuation and the owner’s spending plans. Also, high prices are hitting the rich as well as the poor.

Fed manages to hurt both rich and poor

10 May 2022

Past tardiness in tackling surging inflation means low-income U.S. households face huge increases in the cost of living. Now, Fed Chair Jay Powell may have to hike rates so much that growth falters – a prospect hitting stocks and richer households’ net worth. Misery has company.

Selloff shows China’s lack of investment traction

6 May 2022

U.S.-listed Chinese stocks underperformed during Thursday’s New York bloodbath, tumbling 8%. Beijing still hasn’t convinced global funds it’s more than just another volatile emerging market. Slowing growth and an inflationary environment will make it hard to change their minds.

Andrew Bailey unwillingly channels Paul Volcker

5 May 2022

The Bank of England boss raised rates to 1% to curb high inflation and may hike further despite the risk of recession. It’s old-school policymaking as practised by the former Fed chief. The more central banks behave this way, the more likely and severe a global downturn will be.

Fed jumps into field of financial land mines

4 May 2022

The American central bank has little choice but to hike interest rates and cut its balance sheet to fight inflation. But Chair Jay Powell’s moves make the $24 trln U.S. Treasury market more vulnerable to shocks. Bigger future increases could even tip the U.S. into recession.

Explaining the Fed’s tolerance for high inflation

21 Apr 2022

U.S. prices are rising by more than 8% a year, yet the central bank only just started raising interest rates. One possibility is that it fears a financial crisis, Edward Chancellor argues. Another is that inflation is the least painful way to resolve deep-seated social conflicts.

Fed’s 5-year balance sheet plan may be interrupted

7 Apr 2022

The U.S. central bank aims to reduce its $9 trln of assets by $95 bln a month. At that pace, even already fat pre-pandemic levels might not be reached until early 2027. That's a long time in economics, and in politics. Like the last attempt to slim down, it risks being thwarted.

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.

Markets may do Powell’s job for him

24 Mar 2022

The U.S. central bank chair is speaking aggressively about rate hikes. The Eurodollar yield curve implies it will lead to swift increases that will then be cut. Investors and companies respond to expectations by trimming spending and investing. That makes the Fed’s task easier.

Fed board flame-out still leaves banks on thin ice

16 Mar 2022

Sarah Bloom Raskin’s failure to clinch the supervisory lead role at the central bank proves what was already clear: only a centrist who avoids divisive issues like climate can get approval from a divided Senate. But while Big Oil may be off the hook, Wall Street probably isn’t.

Biden’s bungled Fed pick symptom of larger disease

16 Feb 2022

The U.S. president’s central bank nominee is a climate stalwart, prompting Republicans to boycott a vote. A pattern of drafting political candidates for non-partisan outfits, like the FTC, is emerging. It’s counterproductive and can also widen agency mandates in dangerous ways.

Soaring prices warrant bigger Fed rate hike

10 Feb 2022

U.S. inflation hit a 40-year high of 7.5% in January. Broad-based increases in costs and a robust jobs market give the central bank ample justification to hike rates by half a percentage point, rather than a quarter, and show that it’s serious about tackling price pressures.

Guest view: Fed hikes spell emerging-market strain

4 Feb 2022

Poorer indebted economies face growing difficulties as the U.S. Federal Reserve signals its readiness to raise interest rates. William Rhodes, former president of Citibank, and economist Stuart Mackintosh lay out what creditors, borrowers and the IMF can do to avert a crisis.

Big Oil elbows out banks as Fed’s new kingmaker

3 Feb 2022

The energy sector has come out swinging against Sarah Bloom Raskin, President Biden’s pick to lead supervision at the U.S. central bank. The ex-Fed governor is outspoken on climate risks. The business lobby could frustrate her confirmation, even with Democrats in Senate control.

The Exchange: San Francisco Fed boss Mary Daly

1 Feb 2022

U.S. inflation is at its highest in four decades. The central banker explains to Swaha Pattanaik how the Federal Reserve plans to tackle price pressures without jeopardising growth or job creation, and outlines her views on the outlook for monetary policy.

Jay Powell embarks on difficult Goldilocks act

26 Jan 2022

The Fed boss is likely to signal rates will start rising in March to curb inflation. The robust economy can cope with that as well as the three other hikes that investors expect him to deliver before year-end. Anything more will leave little room to deal with economic hiccups.

IMF’s economic crystal ball is cracked

25 Jan 2022

The Washington-based lender slashed global growth forecasts and hiked inflation predictions. The IMF has been too late to admit that Fed policy tightening is needed. That’s damaging for an institution that doles out economic advice and monitors financial stability risks.

Christine Lagarde will win rate rise timing tussle

19 Jan 2022

Money markets imply the European Central Bank will hike twice this year, even though its boss says policy tightening is unlikely in 2022. She will have to work hard to convince markets, but reason is on her side. Wage pressures are less evident in the euro zone than in America.

Banks’ rate-rise rewards may be bigger than ever

17 Jan 2022

Deposits at large U.S. lenders are up by a third since 2019 to $11 trln. They’ve stashed much of the cash in central-bank reserves, which immediately earn more as rates go up. Tighter monetary policy usually helps banks, but especially so given their current mix of assets.

Stressed Beijing will buck Fed’s tightening trend

17 Jan 2022

China's reported output grew 8.1% in 2021, well above target, but activity slowed sharply at the end of the year. Monetary easing has been restrained by debt concerns, but the central bank surprised markets with a rate cut on Monday. Low inflation and a strong yuan give room for more.