Monetary Policy

China’s wait-and-see approach exposes policy limit

7 May 2025

The country's top three regulators unveiled rate cuts, liquidity injections and other steps in a rare meeting but held off on major spending. It shows Beijing is biding its time ahead of US trade talks. Yet the reluctance also stems from limited room to expand the fiscal deficit.

Beijing’s firm yuan nudge can cool Asia FX rally

6 May 2025

The central bank is keeping its dollar trading band steady, suggesting President Xi won't throw exporters under the bus. Issues like de-dollarisation fears mean Asian currencies’ rise may not reverse. But China's approach can help anchor the region during Sino-US trade talks.

Trump Fed favorite has policies for different era

30 Apr 2025

Kevin Warsh, the likely next top US central banker, wants the institution to meddle less in government bonds and climate change policy. Focusing on its inflation-fighting mission makes sense in theory. But it risks destabilizing markets and inviting more political interference.

China’s US bond holdings are going nowhere fast

17 Apr 2025

The threat of Beijing dumping its $1.1 trln in Treasuries to gain leverage in trade talks or punish Trump has investors fretting. But the need for dollar reserves to manage the yuan means Chinese exposure to American debt will inhibit this part of the duo's financial decoupling.

Tariffs leave China with even more mouths to feed

16 Apr 2025

GDP grew 5.4% last quarter, but Trump's trade war means it's downhill from here. Beijing needs a plan to support exporters, as well as consumers and property. With officials now equating the economy with national security, a long-touted big stimulus package may finally emerge.

Tariffs tax markets-to-policy feedback loops

3 Apr 2025

When investors freak out, lawmakers tend to respond, as in 2008 when Congress rejected banking bailouts. Trump’s trade jolt has now led to a weaker dollar, lower Treasury yields and falling stock prices. Varied Washington translations, however, distort otherwise reliable signals.

Make in India could do with a dose of MAGA energy

1 Apr 2025

New Delhi may let its $23 bln flagship manufacturing scheme lapse after Reliance, Adani and others missed targets. The government offered subsidies but failed to cut red tape. Creating jobs for the country's giant workforce will require a Donald Trump-style all-it-takes approach.

China’s banks head towards new lending woes

1 Apr 2025

The state hopes injecting $72 billion of capital into four big lenders will spark consumer-driven economic growth. But it adds little firepower, and the country’s high savings rate suggests the banks have their work cut out. Doing Beijing’s bidding is already causing stress.

ECB fails to get the memo on Europe’s emergency

6 Mar 2025

The European Central Bank cut its key rate to 2.5%, but now looks coy about future monetary loosening. Its fears of the inflationary impact of a tariff war and higher defence spending look overblown. And geopolitical uncertainty calls for firm guidance, not excessive caution.

Trump will splinter world’s ‘China plus one’ plans

6 Mar 2025

The US president is moving aggressively against China’s exports, the economic pillar of its strategic adversary, by dangling secondary sanctions on third countries. It heralds a push towards a cleaner segregation of US-centric supply chains from those for the rest of the world.

Deficit will push Hong Kong closer to the mainland

25 Feb 2025

The Asian hub's fiscal reserve has dropped 40% since 2020 due to shrinking revenue from land and property sales. The city is ramping up borrowing in response. China is a natural buyer of the debt, allowing Beijing to diversify its reserves and protect its gateway to the world.

Trump’s economic trench warfare needs an off-ramp

3 Feb 2025

The US president is betting his economy can weather a tariffs tit-for-tat better than Canada and Mexico. But it'll raise inflation for Americans, too, and it's hard to see how he wins. Even if the battle is short, Washington's poor treatment of allies will have lasting effects.

India’s tax cuts grasp at a fleeting growth fix

3 Feb 2025

By hiking the income-tax exemption threshold, Narendra Modi’s government hopes the middle class will go out and spend. But that leaves the state relying on 1% of the working age population to help pay its bills. It throws the urgency to tackle stagnant wages into sharp relief.

Bond bulls put Beijing on the horns of a dilemma

28 Jan 2025

The relentless plunge in yields allows China to issue debt inexpensively to stimulate its $18 trln economy, but it also reinforces expectations of slow GDP growth, a weak yuan and the People’s Republic as a low-interest-rate country. Managing that tension is getting riskier.

Japan rates’ fate rests on Trump-Ishiba bromance

24 Jan 2025

The country's rising inflation and wage growth make the case for more hikes, but US tariffs could change the argument. The prime minister’s first trip to Washington will require ample charm and concrete offers on investment and defence policy to mollify the levy-prone president.

US tariffs may lead ratesetters to fight wrong war

14 Jan 2025

As Donald Trump returns to the White House, his trade policies could push prices up. Fed Chair Jay Powell and Europe’s Christine Lagarde may be tempted to respond with tactics they think helped lower inflation towards 2% in the latest crisis. That could hurt their economies.

Country Garden’s debt fix is a bet against Beijing

10 Jan 2025

The property developer, once China’s largest by sales, is offering a 90% haircut as an option to restructure $16 bln of offshore bonds. Acceptance would imply creditors have given up hope that the government is about to put more substantive policies in place to boost home prices.

Politicians will hinder central banks’ easing plan

3 Jan 2025

Economies are growing and inflation is falling globally. It’s an ideal environment for central bankers to lower rates. Yet governments are loath to cut debt, which hit 93% of GDP in 2024. Without fiscal restraint, monetary policy’s path will be bumpy, as will financial markets.

Warnings and worries haunt best-read views of 2024

31 Dec 2024

This year our readers fretted about imploding stocks, regulatory shocks and Washington’s new status quo, even as the S&P 500 Index hit record highs. Incoming President Donald Trump, Tesla boss Elon Musk, Russia’s Vladimir Putin, and Britain’s royal family all added to the drama.

Labour and labour market point to slower BoE cuts

18 Dec 2024

The Bank of England is set to leave rates on hold this week. The economy is weak but pay growth is strong, keeping inflation above 2%. The government’s plans will boost GDP and prices in 2025. Until unemployment rises, Governor Andrew Bailey cannot ease as fast as foreign peers.