Inflation

Swiss currency ticks towards new showdown

22 Jul 2019

The franc hit a two-year high against the euro. Policy interest rates are already negative so cutting them further may fail to dent its strength. A return to major intervention risks U.S. ire. Traders will take advantage of central bank boss Thomas Jordan’s bind.

New breed of central bankers is harder to read

11 Jul 2019

Jerome Powell at the Fed and Christine Lagarde, nominated to be the next ECB chief, are lawyers by training. Their thinking is more fluid than predecessors whose economic tenets informed a world view. That has benefits, but also means it’s harder to predict how they will react.

Hadas: Bond markets lost in inflation-growth gap

10 Jul 2019

Changing growth expectations explain most daily movements in bond prices, while falling inflation parallels the long-term trend of declining yields. Every so often, however, market gyrations reflect hopes that growth and inflation will reconnect. There’s little sign of that.

African swine fever nudges China towards peak pork

25 Jun 2019

The outbreak has sent prices of the meat up 18% in May from a year earlier. The surge is likely to get worse, even if overall inflation remains stable. It is already encouraging a lasting shift among the world’s top buyers - one that might even complicate a trade war compromise.

Guest view: Halve Bank of Japan’s inflation target

26 Apr 2019

Consumer prices are rising more slowly than the central bank’s 2 percent goal. Aiming for 1 percent is acceptable in a country with a low jobless rate, Koichi Hamada, economic adviser to Prime Minister Shinzo Abe argues. Any resulting yen appreciation will be manageable.

Turkey’s attack tactics are worst form of defence

27 Mar 2019

Ankara is making it harder to bet against the lira, but overnight swap rates of 700 pct also make hedging prohibitive. Probes by the bank watchdog mean a research drought. Investors will dump Turkish assets rather than stay exposed, especially when experts are opting to keep mum.

“Japanisation” of ECB will blight Europe’s banks

25 Mar 2019

Weak economic activity is raising the chances of the European Central Bank copying its Japanese counterpart, which has kept rates ultra-low for two decades and adopted ever more radical measures to boost inflation. Lenders in Japan show European peers the heavy toll that takes.

Jerome Powell’s boon is Mario Draghi’s bane

11 Feb 2019

Inflation in the U.S. and the euro zone is easing and looks set to subside further. That will help the Federal Reserve boss justify a pause in rate hikes, but is a headache for his European Central Bank peer who has yet to tighten monetary policy and has less room to manoeuvre.

U.S. intervention in Venezuela carries retro risk

28 Jan 2019

Uncle Sam is sanctioning state oil firm PDVSA in a bid to spur regime change. President Maduro’s woeful record has united much of the hemisphere in demanding his ouster. But a U.S. history of regional meddling means the Trump administration must avoid arrogance to retain allies.

Venezuela’s Maduro caught in pincer movement

23 Jan 2019

Protesters are demanding the socialist leader’s ouster. Opposition leader Juan Guaidó has, with U.S. blessing, declared himself interim president. But a self-inflicted wound will get Maduro in the end: By tanking oil output, he robbed himself of a key means of clinging to power.

Fed hike leaves Powell exposed in multiple ways

19 Dec 2018

The U.S. central bank raised rates despite criticism from President Trump. Slowing growth and bearish markets will only complicate its task going forward. The chairman will give more public talks in 2019 just as it gets harder to offer guidance. It could be a bumpy ride.

Rodrigo Duterte’s toughest foe may be inflation

21 Sep 2018

The Filipino strongman finds himself under pressure from quickly rising prices for fuel, rice and more. The weaker peso and the president’s ill-timed tax overhaul are factors. The central bank, late to recognise the scale of the issue, could help with an aggressive rate hike.

Turkey’s outbreak of common sense has limits

13 Sep 2018

The central bank has hiked rates more than markets expected, a welcome sign of independence after attacks by President Erdogan. The move may avoid a currency crisis, but Ankara’s political and economic vulnerabilities endure. And tensions between bank and state may get worse.

Guest view: Real rates matter more than inversion

13 Sep 2018

An inverted U.S. yield curve, with short-term interest rates higher than long-term ones, is seen as a recession warning. Myron Scholes and Ash Alankar of Janus Henderson Investments argue that monetary policymakers should worry more about the excess of yields over inflation.

Spectre of the late 1930s haunts Ray Dalio

12 Sep 2018

The Bridgewater founder made positive returns in 2008 when few other asset managers did. Today, he tells Breakingviews, he worries about the U.S. deficit and debt pressures that could soon go critical. The risk of populism and conflict sounds eerily like the pre-war years.

Indonesia can best defend rupiah by staying calm

6 Sep 2018

An emerging markets rout has pushed the rupiah to its weakest since the 1998 Asian crisis. Policymakers, who have until now been laudably proactive, appear rattled. But threats against speculators are less helpful than higher interest rates and reforms that encourage investment.

Virtuous Macri circle turns vicious for Argentina

30 Aug 2018

The pro-market leader of Latin America’s No. 3 economy has been laying the basis for long-term prosperity. But inflation, drought and soured investor sentiment threaten his efforts. A new run on the peso, and desperate rate hikes, make a return of his Peronist nemeses more likely.

Venezuela’s Maduro rearranges economy’s deckchairs

20 Aug 2018

The president’s plan to devalue the bolivar, peg it to an obscure state-backed cryptocurrency and raise the minimum wage will widen the already gaping hole in the OPEC member’s finances. Promised fuel-price hikes, if botched, could send his socialist government to the seabed.

Erdogan opens Turkish lira to new line of attack

6 Aug 2018

The currency hit a record low against the dollar after the United States said it was reviewing Turkey’s duty-free access to its markets. President Tayyip Erdogan has alienated investors. The tougher he talks to the world’s largest economy, the more they’ll punish Turkish assets.

India central bank doubles down on inflation fight

1 Aug 2018

The Reserve Bank of India raised rates by a quarter of a percentage point even though manufacturing activity slowed in July. The hike may hamper economic growth but removes doubts about policymakers’ commitment to a relatively new inflation mandate. The trade-off is worthwhile.