Interest Rates

Taylor-led Fed would be dangerous in manifold ways

19 Oct 2017

In addition to the Stanford economist's dogmatic bent for a programmatic monetary policy, John Taylor backs bigger regulatory changes than others in the running to be the next U.S. central bank chief. His laissez-faire ideas about policing Wall Street are loaded with risk.

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.

Cox: Next Fed chair will need unusually thick skin

16 Oct 2017

The debate over who will lead the central bank is narrowly about hawks and doves. Policy matters, but the broader economic benefits of the Fed’s relative independence may count for more. Whoever gets the job will have to resist Trump's bullying – and stop doing Congress's job.

Fed balance-sheet runoff could rock fiscal boat

20 Sep 2017

The U.S. central bank will start shrinking its $4.5 trln bond portfolio next month. The timing is risky, with lawmakers set to spar over government funding and the debt ceiling. Fed downsizing will also cut the $92 bln it sent to Treasury last year, adding to budget pressures.

Breakdown: Killing Libor is a long, messy business

14 Aug 2017

Obituaries for the discredited global benchmark are premature. Its successors will take years to become as ubiquitous as a rate that is still the basis for trillions of dollars of financial contracts. Breakingviews spells out the legal pitfalls – and the trading opportunities.

ABN Amro can profit from blissful domesticity

9 Aug 2017

A thriving Dutch economy and divestments helped the state-owned lender boost first-half net income by 82 pct year-on-year. CEO Kees van Dijkhuizen wants to grow small business lending and ABN’s international operations. Cost-cutting would provide a surer route to earnings growth.

Draghi’s taper tizzy is sign of dangers to come

29 Jun 2017

Comments by ECB chief Mario Draghi drove up bond yields and the euro, despite later protestations that markets had misread him. The ado owes more to investor complacency than fuzzy talk. It highlights traders’ twitchiness and the challenges in withdrawing ultra-loose policy.

Hadas: Time for a big rethink on interest rates

28 Jun 2017

Central banks are told to worry first about prices. The long-term global trend of low inflation makes that a distraction. The right focus now is on weaning investors off the false highs of easy credit and rising asset prices. Part of the withdrawal is making money more expensive.

Draghi’s hints have more clout than Yellen’s deeds

28 Jun 2017

ECB chief Mario Draghi had more market impact by alluding to higher rates than Fed Chair Janet Yellen did by hiking them two weeks ago. That fits a recent pattern: central bankers who have yet to tighten policy are more apt to upset expectations – and that’s what moves prices.

Germany is dealing with its bank-branch addiction

23 May 2017

Measly interest margins and rising capital requirements are forcing the country’s savings institutions to cut costs and shut branches. Germany still has more banks than petrol stations, but the shift is helpful, and may benefit big lenders like Deutsche Bank and Commerzbank.

Euro zone bonds are taboo worth breaking

17 May 2017

Spain wants the bloc’s 19 governments to pool their debt. That idea is likely to be shunned by Germany. Yet mutualisation is happening anyway through bailouts and central bank largesse, and countries are less profligate than they were. Common bonds needn’t mean wayward spending.

Commerzbank limbo underscores its need for a deal

9 May 2017

The German bank’s first-quarter return on equity was a pitiful 3 pct, and its targets are uninspiring. In most sectors, a company destroying value for shareholders would be taken over. In banking, regulatory and practical uncertainties still stand in the way of logical tie-ups.

China’s money squeeze is making market suspicious

13 Apr 2017

The central bank is lifting short-term rates and draining liquidity to target speculators. Anxious banks and institutional investors are doing less business with each other as a result. This could cause rate spikes to intensify - and trouble could spill over into the stock market.

Libor did hit bank bosses, just not the right ones

11 Apr 2017

A leaked recording has reopened the question of how much senior bankers knew about interbank rate fiddling in 2012. Junior traders who were jailed say they didn't act in a vacuum. Their partial consolation is that today’s bank bosses are now much more under the gun.

Australia stares down its troublesome twins

8 Mar 2017

The central bank is on hold. But present inaction brushes off future uncertainty. Stubbornly low inflation argues for even lower interest rates, while a bubbly housing market cries out for tighter policy. At least rising U.S. rates should put helpful downward pressure on the currency.

Review: Libor revealed dark underbelly of trading

3 Mar 2017

Two new books show how the benchmark interest rate underpinning many of the world's financial products was rigged. Jailed trader Tom Hayes leads a cast of deceitful or inept bankers, brokers and regulators. Yet both tomes might have said more about how to stop future malfeasance.

Rate tweak whiplashes UK insurers

27 Feb 2017

Insurance companies will have to pay more for injury claims after the government said payouts must be discounted at a negative rate. The metric was too high before, and arguably still is. The real mystery, though, is why financial risk ends up with claimants, not insurers.

Banking whales have had their day

29 Dec 2016

A year ago, Bank of England boss Mark Carney suggested regulators had cracked the "too big to fail" bank problem. Yet new rules keep coming, and international cohesion is fading. The biggest cross-border lenders like HSBC will find it ever harder to make their cost of capital.

India’s central bank faces race against time

7 Dec 2016

One month after a dramatic banknote recall the economy remains chronically short of cash. Leaving official interest rates unchanged will make little difference. But any prolonged delay in circulating new notes could see social unrest derail India’s anti-corruption campaign.

Mongolia’s hangover needs more than IMF medicine

19 Aug 2016

The nomad state hiked interest rates to 15 pct to defend a plunging currency. An IMF rescue seems likely, and the new government has shown it is willing to take the pain needed. Longer-term, the real cure for its economic ills will be to woo nervous foreign investors back.