Inflation

Trumponomics flirts with more debt and inequality

31 Jul 2018

Treasury Secretary Steven Mnuchin wants to cut capital-gains tax bills by accounting for inflation. It’s sensible to assess the true value of costs and profit. But it’d mostly benefit the wealthy and add to what may be a $1.1 trln deficit in 2019. It also smacks of self-interest.

Bank of Japan’s trial balloon shot down on runway

23 Jul 2018

Bond yields and the yen rose after Reuters reported the central bank was debating whether to scale back monetary stimulus. The move would be good for bank investors. But the scale of the market reaction and economic reality will make it hard for Governor Haruhiko Kuroda to act.

Turkey’s FX rot demands radical measures

23 May 2018

A massive one-off rate rise is the least it will take to halt the lira’s accelerating slide to new record lows against the dollar. Even then, investors might still fear President Tayyip Erdogan’s monetary policy meddling. Capital controls would then grow more likely.

Maduro election win will soon be his loss

17 May 2018

Securing another term as Venezuela’s president in Sunday’s poll is almost a foregone conclusion. But the country’s collapsing oil output may finally mean Nicolas Maduro’s days in power are numbered. Successors will face the mammoth task of rebuilding the economy he has trashed.

Mark Carney may flummox markets again

10 May 2018

The Bank of England chief’s latest comments made investors doubt he will tighten monetary policy this year. Such scepticism is overdone. The economy doesn’t have to grow very fast to generate inflation and the jobless rate is very low. Rate expectations could shift once more.

Macri risks IMF self-harm in search for stability

8 May 2018

Argentina’s president wants funding from the global lender as a further buttress against inflation and a run on the peso. It could help make reforms stick and provide an outsider to blame. But the country’s history with the IMF means it might also dim Macri’s political prospects.

Swiss central bank gets FX wish three years late

20 Apr 2018

The franc has weakened to 1.20 against the euro for the first time since the Swiss National Bank ditched its cap on the currency in January 2015. Several factors could explain why. Policymakers are unlikely to care much about the reasons given the moves may help revive inflation.

Texas downgrade worry is a good problem to have

12 Apr 2018

The Lone Star State’s comptroller reckons its increasingly underfunded pension obligations risk a credit markdown. Texas’ rainy-day fund helps give it more leeway than many states. Others face bigger problems because, as the U.S. economy has improved, their budgets haven’t.

Powell buys wiggle room with political savvy

27 Feb 2018

The new Fed chair deftly handled his first congressional testimony since taking office, giving few indications he is itching to tighten faster. If anything, his political nous and a friendly Republican majority might give the central bank more room to run the U.S. economy hot.

Venezuela’s crypto-currency reeks of snake oil

21 Feb 2018

President Maduro says early sales of its oil-backed petro raised $735 mln. Investing in the virtual coinage is tantamount to a bet on the increasingly autocratic administration’s probity, transparency and basic grasp of economic reality. Good luck with that.

Manila sleepwalks towards inflationary trouble

21 Feb 2018

Price rises are accelerating in the Philippines, as strong demand, a weak peso and new taxes boost living costs. The central bank risks falling behind the curve. Inaction could raise bond yields, slam stock values and further dent Asia’s worst-performing currency.

Trump’s next Fed pick in limbo for wrong reason

20 Feb 2018

Economist Marvin Goodfriend’s accession to the board of governors hangs in the balance after senators voiced concern about his past proposals to depreciate cash. Concern about his hawkish inflation views is fair. But penalizing him for creative thinking on a tricky issue is not.

Viewsroom: Volatility puts investors to the test

15 Feb 2018

Higher wages, inflation fears and the prospect of faster than expected rate hikes are posing challenges market players haven’t seen for years. Comcast may spike Walt Disney’s potion to acquire Rupert Murdoch’s entertainment assets. Plus, Singapore’s airshow has everyone buzzing.

Hints of inflation pose litmus test for Powell Fed

14 Feb 2018

U.S. consumer prices accelerated in January as the cost of food, housing, fuel and medical care rose. That’s not all bad after a decade of sub-target inflation. The fear is that new Fed boss Jerome Powell will step up the pace of rate hikes. The risk of policy error is rising.

German workers may frustrate ECB’s inflation hopes

9 Jan 2018

Industrial staff in Europe’s biggest economy are striking for higher pay. They may, however, trim wage demands in return for flexible working. If pay pressures fail to flare in such a tight labour market, the European Central Bank can hardly count on them surfacing elsewhere.

Tight U.S. labor market may finally move Fed

5 Jan 2018

December’s relatively weak jobs and wage growth gives policymakers a breather. But with 2.1 mln positions created in 2017 and unemployment historically low, long-awaited pay increases - along with new tax cuts - could soon start stoking inflation. That would force the Fed’s hand.

Bank of England is too sanguine on inflation

12 Dec 2017

Prices rose 3.1 pct in the year to November, the fastest pace in six years. The central bank blames Brexit and says inflation is near peaking. That’s convenient with further interest-rate hikes a risk to sluggish economic growth. But the BoE may not get off so easily.

Japan’s growth streak starts to look shakier

15 Nov 2017

GDP grew an annualised 1.4 pct last quarter, marking the longest unbroken growth run in 16 years. The data is volatile, and often revised, but a global boom appears to be offsetting weaker domestic demand. That underscores the need for further structural reform.

Heads or tails, Mark Carney loses

17 Oct 2017

British inflation has hit 3 percent, the highest level since 2012. No wonder the Bank of England chief is hinting policy rates may soon rise. Carney’s problem is that he will be criticised for hurting a slow-growing economy if he hikes and accused of inconsistency if he delays.

British wage mystery has non-British explanation

16 Aug 2017

The jobless rate has fallen to 4.4 percent, its lowest in over four decades, yet wage growth is tepid. Two things help explain the anomaly: a pool of people on zero-hour contracts available to switch into permanent jobs, and a surprising rise in EU nationals working in the UK.