Inflation

Labour and labour market point to slower BoE cuts

18 Dec 2024

The Bank of England is set to leave rates on hold this week. The economy is weak but pay growth is strong, keeping inflation above 2%. The government’s plans will boost GDP and prices in 2025. Until unemployment rises, Governor Andrew Bailey cannot ease as fast as foreign peers.

Golden visas are a leaden answer to economic needs

10 Dec 2024

Hungary is the latest country to launch a residency-by-investment scheme. Such plans appeal to rich foreigners. But they add less than 0.5% to GDP, inflate property prices and irk locals. As geopolitical risks spur demand, governments will have to either charge more or nix them.

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.

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.

India’s slowdown flashes an early-warning signal

2 Dec 2024

GDP growth slipped to 5.4% last quarter, the slowest pace in nearly two years, on weak manufacturing and spending. Perhaps it’s a blip. But the Adani fallout, Trump tariff threats and China stimulus could all deal blows to rosy assumptions about the world’s fifth-largest economy.

Trump trades will run into Trump reality

14 Nov 2024

The president-elect’s victory sparked wild euphoria in markets. Now comes the realization that tariffs and immigration crackdowns threaten major costs, including the return of inflation. In this Viewsroom podcast, Breakingviews columnists discuss the globe-spanning concerns.

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.

Fed’s victory lap runs into Trump-shaped detour

7 Nov 2024

The FOMC cut rates again, two days after the ex-president was voted back into office. His avowed higher tariffs and renewed tax cuts jeopardize the work that lowered inflation to 2%, alongside 4% unemployment. Threats to central bank independence also add to risks of stagflation.

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.

Global banks are nearing peak regulation

31 Oct 2024

Sixteen years after the financial crisis that triggered bailouts and new rules, CEOs like JPMorgan’s Jamie Dimon are pushing back. Sympathetic politicians and competition from shadow banks help their case. The best hope for watchdogs is to stop the system from fragmenting.

Companies bear brunt of Britain’s fiscal trade-off

30 Oct 2024

New finance minister Rachel Reeves raised 40 bln pounds through higher levies, mostly on employers, to fund public services like health. She also changed debt rules to borrow more. It’s a bet that fiscal rectitude will help revive growth. But the ailing UK has few other options.

Ishiba’s bad election bet will boost Bank of Japan

24 Oct 2024

The new prime minister’s decision to call a snap election next week could see his Liberal Democratic Party lose an outright majority in the lower house. That would weaken Shigeru Ishiba’s long-term prospects but would help safeguard the central bank’s push to slowly raise rates.

Inflation is not dead, it’s just resting

18 Oct 2024

Annual price increases are returning to the subdued 2% level targeted by many central banks. Official interest rates are falling too. Yet there’s a long history of policymakers prematurely celebrating the end of inflation. The experience of the 1970s offers a cautionary tale.

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.

China’s woes make Plaza Accord 2.0 less outlandish

16 Oct 2024

If Donald Trump becomes US President, he wants a weak dollar and taxes on Chinese imports. He may use the threat of tariffs to get Beijing to boost the yuan, an echo of the 1985 Plaza Accord. A strong currency hurts growth, but a trade war could be worse for President Xi Jinping.

France heads toward aimless short-term austerity

11 Oct 2024

PM Michel Barnier’s deficit-reduction plan mostly relies on 30 billion euros of tax hikes next year. That will hit growth just as corporate investment and consumer demand are flat. Long-term spending cuts would be a better solution. But this weak government cannot provide them.

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.

Arcane signal flags an ill-starred economic shift

26 Sep 2024

Borrowing costs are falling in major economies. But a pointy-headed academic concept which indicates the equilibrium level of interest rates – “R-star” – suggests they are unlikely to revert to pre-pandemic lows. Investors should brace for a future where money is more expensive.

Under-fire workers spell trouble for US and Europe

17 Sep 2024

Unemployment remained low in both blocs even as interest rates rose. Staff hoarding and healthy profits averted layoffs. Now, though, US job vacancies are at the lowest since 2021 and euro zone CEOs want to hire less. If labour markets crack, recessions will be harder to avoid.

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.