Inflation

Fed’s Jay Powell picks the road less travelled

27 Apr 2021

The American and Canadian economies are both rebounding. Yet the U.S. central bank boss isn’t about to copy Canada’s bond purchase taper. It’s the difference between traditional and new-school monetary policy, which waits to see sustained inflation rather than anticipating it.

Capital Calls: Chubb and Hartford, Swimming pools

22 Apr 2021

Concise views on global finance: The company led by Evan Greenberg twice raised its bid for its Connecticut rival, but so far to no avail; a blowout quarter for private-pool maker Pool Corp points to buoyant wealth and spending trends, but only for some.

Turkey’s monetary meddling offers scant rewards

15 Apr 2021

The country’s central bank kept its interest rate at 19%. Having replaced his chief rate-setter in March, President Tayyip Erdogan hasn’t yet got the lower borrowing costs he wants. Rising inflation, a weak currency and the loss of credibility mean policy will need to stay tight.

Jerome Powell’s tricky tightrope act begins

13 Apr 2021

U.S. consumer prices rose 2.6% in the year to March due to higher energy costs. The upswing may be brief and the Fed boss won’t rush to tighten policy. Still, inflation expectations are rising. If that continues, it will make his focus on jobs rather than prices hard to maintain.

Capital Calls: BlackRock’s Archegos angle, SPACs

30 Mar 2021

Concise views on global finance in the Covid-19 era: The fallout from the collapse of Bill Hwang’s family office gives regulators reasons to focus on funds, not fund managers; and bosses of blank-check companies don’t take investor questions.

Turkey’s soft capital controls are transitory fix

29 Mar 2021

Subtle curbs that make it harder to sell the lira will slow its fall. They won’t be enough if the central bank’s new boss starts cutting rates under political pressure. President Tayyip Erdogan can impose tougher restrictions but will hurt the economy if he is too heavy-handed.

Viewsroom: Turkish trouble and emerging markets

25 Mar 2021

President Tayyip Erdogan’s abrupt firing of a third central bank governor forced investors to contemplate whether this might precipitate a run on financial assets in other developing markets, including South Africa. Breakingviews columnists discuss the implications.

Turkey’s battered banks face a slow-burn crisis

25 Mar 2021

A plummeting lira creates the risk of a funding squeeze for Garanti BBVA, Akbank, Isbank and others. But they’ve survived past crises without a bank run. The more likely problem for the sector is mounting bad debt, which will drag down returns and capital for years to come.

South Africa offers Erdogan an inflation lesson

23 Mar 2021

A steep plunge in the lira, of the sort seen this week after Turkey’s president fired his central bank boss, usually drags down the rand. Not this time. The South African currency’s resilience shows the value of a credible and independent central bank left free to control prices.

Capital Calls: Airline IPO, Turkey’s central bank

18 Mar 2021

Concise views on global finance in the Covid-19 era: U.S. regional air carrier Sun Country Airlines’ IPO pop is justified by positive cash flow; Turkey shows how emerging-market policymakers face trickier choices than their rich-world peers.

Powell’s inequality goals put him over his skis

17 Mar 2021

The Fed boss wants to close the racial employment gap that widened as a result of the pandemic. But helpful policies are outside of Powell’s mandate, and stimulus might actually exacerbate the problem. The consequence is the economy could overheat before the gap closes.

The Exchange: The post-pandemic global economy

2 Mar 2021

Policymakers will face tricky choices about when to withdraw massive policy support as economic recovery kicks in. BNP Paribas’ group chief economist, William De Vijlder, joins Swaha Pattanaik to discuss their options, the focus on inclusive growth and the outlook for inflation.

Central banks will have to fight reflation tantrum

26 Feb 2021

Improving economic prospects have boosted bond yields. Fed boss Jerome Powell and his global peers will welcome the cause but not the effect. If their rhetoric can’t halt the sharp rise in borrowing costs, they will be forced to ramp up asset purchases to safeguard the recovery.

Wrong sort of inflation is coming down the tracks

14 Jan 2021

A global food price index has been rising. When commodities like cereal grow dearer, consumers end up paying more. The poorest in developed and developing economies, who spend a higher proportion of income on basics, will feel the pinch as wages are unlikely to keep up.

Corona Capital: Inflation, Poshmark

14 Jan 2021

Concise views on the pandemic’s corporate and financial fallout: Breakingviews panel predicts the end of the free-money era; and Poshmark’s IPO looks overdressed.

Forces lowering euro zone inflation aren’t all bad

7 Jan 2021

Euro zone consumer prices fell 0.3% in December from a year ago. Several factors, especially a weak economy, are to blame. Still, a long-term trend that also chips away at inflation is cheaper tech. That’s not something even ECB chief Christine Lagarde would want to see reversed.

Corona Capital: Icahn, Productivity, Natixis

4 Jan 2021

Concise views on the pandemic’s corporate and financial fallout: Carl Icahn sells half his Herbalife Nutrition stake; an ECB survey suggests Covid-19 will make big firms more productive, but that may not be all good news; and Natixis fast-tracks its overhaul.

Higher U.S. inflation hopes finally look credible

2 Dec 2020

Market gauges of how consumer prices are expected to behave in coming years hit their highest in a year and a half. There have been false dawns before but 2021 may be different. Vaccines will help unleash pent-up demand, and policymakers are intent on ensuring a robust recovery.

ECB has chance to avoid Fed’s strategy revamp flaw

12 Nov 2020

Christine Lagarde’s central bank is examining basics, like how it defines its price goal. Its U.S. peer earlier this year switched to aiming for inflation that averages 2% over time. But leaving things as vague as Jerome Powell did undermines efforts to lift price expectations.

Review: Picking the turning point in inflation

16 Oct 2020

In “The Great Demographic Reversal”, Charles Goodhart and Manoj Pradhan make a good case for why prices will take off. Ageing societies need more carers and labour scarcity may finally lift wages. But they’re perhaps too sanguine on how soon pandemic-stricken economies can heal.