Interest Rates

Quest for central bank transparency has limits

5 Apr 2018

UK rate-setters are debating the merits of more openness, by for example issuing official interest rate forecasts, the Financial Times reports. More information may not mean more insight. After all, good policymakers change their minds when the economic environment does.

Stars align for Mark Carney to raise rates again

22 Mar 2018

UK inflation is high enough for the Bank of England boss to further tighten policy in a couple of months but not so high as to hurt consumer demand, especially as wages are picking up. And Brexit poses less of an immediate danger. Politics and economics are both on Carney’s side.

New Fed chief leaves more questions than answers

21 Mar 2018

Jay Powell sold a rate hike and hawkish economic outlook with dovish language at his first policy meeting. The central bank is divided over how low unemployment can go and whether tax cuts will spark inflation. The chair’s confident showing may buy time to resolve the tensions.

U.S. rate hike risks global fallout

21 Mar 2018

Gulf states, Hong Kong and others that peg their currency to the dollar worry that copying Fed moves will dent growth. But with five more hikes expected by the end of 2019, not doing so risks the ire of financial markets. It's a tricky dance that even China may be dragged into.

Volatility now has a life of its own

15 Mar 2018

Measures of how much asset prices are expected to gyrate have risen from ultralow levels. But investment strategies that worked a decade ago may not now. Volatility can now lead, not just follow asset prices and old market relationships may break down when turmoil hits.

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.

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.

Cox: Sliding stocks don’t surprise our readers

5 Feb 2018

From Mumbai to Milan, we polled participants at our Predictions 2018 summits. Even before last week's rout, most thought investors are too exuberant, bitcoin is a bubble and Donald Trump is doing poorly. More surprising were regional takes on NAFTA, Italian elections and Brexit.

Bad things may come in threes for stock investors

2 Feb 2018

U.S. wage growth and 10-year Treasury yields are both nearing 3 percent. The former may hasten rate rises and erode companies’ profits. The latter will boost borrowing costs and make it less attractive to hold stocks. That could spook an equity market priced for near perfection.

Bond market tightening complicates Powell’s task

31 Jan 2018

U.S. Treasury yields rose to near four-year highs even as the Fed left policy unchanged at Janet Yellen’s last meeting. A fresh growth spurt and worsening deficit outlook pose challenges for successor Jerome Powell. Hiking in a rising-rate environment is riskier for the economy.

Fed’s inflation-target rethink dodges big question

29 Jan 2018

Some U.S. rate-setters wonder about their 2 percent goal – both its level and whether it’s more a ceiling or a long-term average. The debate is welcome but could be even more radical. Today’s real issue is whether central bankers can fully explain, let alone control, inflation.

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.

Yellen’s fine legacy gives way to uncertain future

13 Dec 2017

With her fifth and final rate hike, the Fed boss has put monetary policy on a path to normalization without spooking markets or hurting growth. Her successor may not be so fortunate. As the central bank gauges potential tax cuts and trade wars, its moves become less predictable.

Bank of Korea had best go slow with rates

30 Nov 2017

Seoul’s first increase in benchmark borrowing costs for more than six years is a prudent step toward normalising monetary policy, given signs of economic strength. But crushing consumer debt and a housing slowdown mean the central bank must tread carefully.

Yellen gives Congress parting shot on growth, debt

29 Nov 2017

The outgoing Fed boss warned of growing deficit risks just as lawmakers weigh tax cuts that would exacerbate it. It’s also up to politicians to improve education, investment and infrastructure spending. Her message of central bank limitations is one her successor will echo.

Fed chair pick shows mastery of central-bank arts

28 Nov 2017

Jerome Powell breezed through his Senate confirmation hearing with Zen-like confidence. He dodged the tax-reform debate, kept rate-hike comments predictable, backed Fed independence and defended its bank-rules review. The prospect of post-Yellen stability will please markets.

Central bankers go self-referential on rhetoric

14 Nov 2017

Fed Chair Janet Yellen and other top rate-setters took the stage in Frankfurt to discuss how they communicate. It’s a slightly meta admission of the role speechifying has come to play in monetary policy in an era of ultra-low interest rates. But wordiness brings its own perils.

BNP Paribas earns benefit of capital doubt

31 Oct 2017

A drop in trading profit failed to do much damage at the French bank, which reported an impressive 11.6 pct return on tangible equity in the third quarter. Beating its own return targets, even though they’re modest, should help dispel perennial questions over BNP’s capital level.

Bank of Italy chief’s new term faces uphill start

27 Oct 2017

Ignazio Visco has been reappointed as central bank governor despite political opposition. His first challenge is to quell critics of his handling of Italy’s banking crisis. EU rules are also getting tougher and Mario Draghi’s departure from the ECB in 2019 will remove an ally.