Inflation

UK pay-later fiscal giveaway amounts to self-harm

20 Nov 2023

Faster growth and inflation may gift Rishi Sunak a 13 bln pound war chest ahead of Wednesday’s budget update. But that’s only thanks to optimistic math. If Britain’s prime minister opts for fiscal fireworks, he may torch public spending and singe Britain’s prospects.

Biden’s economic scorecard touts fragile advantage

9 Nov 2023

Low unemployment and easing inflation should aid the US president’s reelection push. Yet most Americans aren’t impressed, and rising borrowing costs don’t help. A Breakingviews tally gives Biden a narrow economic lead over Republicans. The next 12 months will test that advantage.

Japan’s rates tweak is careful and crafty

2 Nov 2023

The central bank changed its policy to allow higher 10-year bond yields. Unlike the US, it can afford to raise borrowing costs slowly as inflation is low. In this Viewsroom podcast, Breakingviews columnists explain why monetary tightening as others loosen may give Tokyo an edge.

BoE’s tough talk on rates ignores weak homeowners

1 Nov 2023

The Bank of England is set to keep borrowing costs steady this week but insist they will stay high to curb inflation. That may be hard, given the sick housing market has yet to feel the pain of past hikes. The UK may ease policy sooner than its peers will, and the market expects.

ECB’s rosy outlook is a recipe for economic pain

26 Oct 2023

Frankfurt policymakers think the euro zone will grow by 0.7% in 2023 and want to keep rates high to fight inflation. Yet most data point to stagnation or recession. A gloomier perspective would enable the European Central Bank to ease policy and help the bloc’s economy.

How the Federal Reserve got inflation wrong

10 Oct 2023

US policymakers underplayed the spike in consumer prices in 2021. In this Exchange podcast, Don Kohn, senior fellow at the Brookings Institution and former Fed vice chair, argues that a rule change a year earlier was a key reason why the central bank failed to lift rates faster.

Israel flashes geopolitical warning at shaky time

9 Oct 2023

Bloody attacks in the Middle Eastern country raise the risk of contagion, possibly involving Iran. It’s a bad time for the region to join Ukraine as a conflict hotspot. And it’s yet another concern for a global economy grappling with inflation and rising borrowing costs.

Capital Calls: Food prices, Brookfield, SPAC spin

3 Oct 2023

Concise views on global finance: The cost of ingredients for the average UK meal fell 0.1% in September; the Canadian giant’s $1 bln renewables deal reflects how European green assets are getting more appealing; Singapore’s SPAC puts a new spin on blank-cheque targets.

Long US shutdown is avoidable but seems inevitable

26 Sep 2023

A group of Republicans are holding up approval of a $1.5 trln budget because they want $60 bln in cuts. Fiscal responsibility is fair enough, but they’re being contradictory and unreasonable. Even if Republicans were to reach an agreement today, other issues will get in the way.

Uncle Sam risks recession by a thousand cuts

22 Sep 2023

A government stoppage would shave a sliver from US economic expansion. Restarting student loan payments will have a similar effect. Add striking autoworkers, high oil prices and costly mortgages, and 0.8% growth forecast for the fourth quarter and 0.5% in early 2024 look shaky.

Capital Calls: US budget

21 Sep 2023

Concise views on global finance: US House Speaker Kevin McCarthy is siding with hardline conservatives to fund the government. Empowering the further-right flank narrows the already slim odds of new Ukraine aid, cannabis reform and crypto clarity.

Oil spike offers only a brief boon for Fed and MbS

21 Sep 2023

Crude prices are up 25% since July, swelling the Saudi crown prince’s budget. Fed boss Jay Powell wins too: he can use it to justify inflation-busting high rates. Yet long-term, a surfeit of energy demand over supply will complicate life for both central bankers and oil tsars.

Capital Calls: Disney, Cazoo

20 Sep 2023

Concise views on global finance: Boss Bob Iger’s $60 bln splash on theme parks and cruises invites further scrutiny of the Magic Kingdom’s wild cash flow ride; the UK-based online car retailer, valued at $7 bln in a SPAC deal two years ago, is handing the keys to bondholders.

New economic rules shatter US bonds’ crystal ball

19 Sep 2023

Government debt has been signaling a downturn for 440 days, but there’s been no recession. The famed predictive power of the yield gap between different vintages of Treasuries is waning. As the global economy evolves, warnings from the fixed-income markets can be safely ignored.

Sunak and Bailey agree on higher UK rates, for now

19 Sep 2023

The PM and the Bank of England chief both favour raising borrowing costs in the short run to curb price growth. But their paths may soon diverge. Downing Street would love easier monetary policy before an election in late 2024. The BoE cannot relent until inflation hits 2%.

ECB’s rear-view policy risks crashing the economy

14 Sep 2023

Fears of stubbornly high consumer prices prompted President Christine Lagarde to push rates to a record 4% on Thursday. Yet the central bank admits inflation will be around the 2% target by 2025. The bloc’s growth is already stagnating. The latest action will worsen its plight.

French iced tea feud will inflame grocer wars

14 Sep 2023

Carrefour is warning customers that suppliers like Unilever are raising prices on drinks and other goods by shrinking packages. The move will keep the government on side in its war against inflation. But smarter shoppers may hunt for bargains and go to discounters Lidl and Aldi.

Erdogan’s orthodoxy creates new economic problems

13 Sep 2023

Turkey’s president finally ditched his love of low interest rates and pledged to curb inflation, currently at 59%. But Tayyip Erdogan still needs growth and will boost spending to get that. Soaring budget deficits and a weak currency will keep the economy under pressure.

Grocers learn lessons of ‘greedflation’ drama

12 Sep 2023

Food-price rises are easing, which is good news for supermarkets that stand accused of profiting from consumer pain. In this Exchange podcast, Ahold Delhaize CEO Frans Muller explains why demand for own-brand goods gives the Dutch group an upper hand in supplier negotiations.

Capital Calls: British wages

12 Sep 2023

Concise views on global finance: UK pay rose by an annualised 8.5% in the three months to July – more than inflation. That’s good for retirees, whose pensions will rise by that amount. But such a hot labour market is likely to prompt the Bank of England to hike rates next week.