Interest Rates

ECB’s old problem will defy new strategy

22 Jul 2021

Boss Christine Lagarde revealed the practical consequences of tweaking her inflation target: interest rates may stay at record lows for even longer. But given ultra-easy policy has failed for years to make prices rise faster, the chances of hitting her new goal are no better.

Capital Calls: Disney hits two post-Covid targets

13 Jul 2021

Concise views on global finance: Netflix and the Mouse House have racked up 24 Emmy nominations each for “The Crown” and “The Mandalorian.” But Disney's "Black Widow" not only saw a stunning streaming debut but also topped the re-emerging theater box office.

Giant leap for ECB is small step for euro zone

8 Jul 2021

The central bank tweaked its inflation target to stress how much it hates falling short of 2%. And boss Christine Lagarde wants to do her bit to fight climate change. The shifts may be a big deal for a cautious institution, but they won’t produce a revolution in terms of results.

Capital Calls: Infrastructure, Doximity, Deliveroo

24 Jun 2021

Concise views on global finance: President Biden’s $1 trln bipartisan plan for U.S. infrastructure is a feat of political engineering. Meanwhile, medical-themed social network Doximity finds riches in niches, and UK delivery outfit Deliveroo serves up a favorable court ruling.

The Exchange: Roger Ferguson talks monetary policy

22 Jun 2021

The former Fed vice chair and ex-TIAA CEO joins Swaha Pattanaik to discuss how the central bank is navigating economic recovery and price pressures. He also talks about whether corporate America is living up to its diversity pledges and suggests strategies to speed progress.

Fed’s goal is to see forest, not whipsawed trees

16 Jun 2021

The U.S. central bank’s sanguine attitude on inflation avoids getting lost in fickle data. Record lumber costs were a worry until they fell. Used cars may be next. The risk is the Fed misses signs of lasting price pressure. But it's still better to focus on the bigger picture.

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.

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.

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.

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.

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.

BoE preps negative rate gun it doesn’t want to use

4 Feb 2021

Bank of England boss Andrew Bailey told lenders to be ready to cope with sub-zero interest rates at any point from six months’ time. The weapon will be a handy addition to his arsenal. Covid-19 variants or post-Brexit trade frictions may yet derail the growth rebound he expects.

Stage is set for a record year of M&A

6 Jan 2021

S&P Global, AstraZeneca and Salesforce helped push fourth-quarter deal volume over $1 trln. Flush balance sheets and ultra-cheap money add momentum. So do CEOs struggling to find growth on their own. Regulators could get tougher, but the 2015 peak of $4.2 trln is within reach.

Lowly Europe bank values will outlast dividend ban

26 Nov 2020

Big lenders blame frozen payouts for depressing share prices, down 17% on average this year. But the selloff broadly matches the decline in profit forecasts for 2022, suggesting ultra-low interest rates are to blame. Even if dividends return, discount valuations may persist.

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.

The Exchange: The long wait for inflation

6 Oct 2020

Charles Goodhart and Manoj Pradhan tackle an issue perplexing policymakers and investors: if, and when, price pressures will rise. The authors of “The Great Demographic Reversal” discuss ageing societies, emerging economies, and why the world won’t follow in Japan’s footsteps.

Corona Capital: Newspaper rivals, College football

17 Sep 2020

Concise views on the pandemic’s corporate and financial fallout: the Wall Street Journal hits up the New York Times’ printing presses; U.S. college football’s Big Ten makes a comeback.