Monetary Policy

Fed dot-plot shift gets lost in turmoil elsewhere

16 Mar 2022

Officials at the U.S. central bank changed their thinking about coming rate hikes and inflation. But the hawkish turn could be quickly upended by the war in Ukraine or Covid lockdowns in China. The window into the Fed's thinking will be less useful, and for less long, than usual.

ECB chucks growth ball into governments’ court

10 Mar 2022

President Christine Lagarde is winding down asset purchases. It’s the opposite of what the central bank did in past crises, but high inflation is forcing her hand. Shielding the euro zone economy from the Ukraine war’s consequences will fall to politicians, who are slower to act.

Gauging the global backlash against Russia

10 Mar 2022

The shockwaves from President Vladimir Putin’s invasion of Ukraine are reverberating around the world. In our Viewsroom podcast, Breakingviews columnists debate the country’s isolation, the impact on Asia, Europe’s plan to wean itself off Russian gas, and the fallout for banks.

Stagflation, like worst of pandemic, is avoidable

7 Mar 2022

Soaring energy prices amid the Ukraine invasion will stoke inflation, and the hit to consumers will hurt growth. But economic stagnation is not inevitable. The Covid-19 response showed how fiscal policy can mitigate shocks. It will mean accepting yet more Big Government.

ECB’s inflation problem has bigger Ukrainian twist

2 Mar 2022

Christine Lagarde faces the same commodity price surge as her Canadian peer, who just hiked interest rates, and Fed Chair Jerome Powell, who is set to do the same. But a less robust euro zone economy is more exposed to the war on its doorstep. Her least bad option is to dawdle.

Russian economic collapse will be hard to avoid

28 Feb 2022

The central bank more than doubled its main policy rate to 20% to support the plunging rouble. It won’t be enough. But further hikes or capital controls would compound pain in an economy where Western sanctions are spurring a run on banks. Moscow has few viable policy options.

China’s yuan plausibly mimics a safe-haven asset

25 Feb 2022

The currency, once subject to speculative swings, has stayed stable as Russia attacks Ukraine. It’s buttressed by a big trade surplus and central bank conservatism, both of which might change, but it has clearly gained traction with serious investors.

Viewsroom: Ukraine, ECB and India’s giant insurer

17 Feb 2022

Worries about an invasion of Ukraine have rattled markets, but Dasha Afanasieva says Russian investors are more sanguine. The European Central Bank faces a tougher inflation juggling act, argues Swaha Pattanaik. And Una Galani discusses the listing of India’s Life Insurance Corp.

Biden’s bungled Fed pick symptom of larger disease

16 Feb 2022

The U.S. president’s central bank nominee is a climate stalwart, prompting Republicans to boycott a vote. A pattern of drafting political candidates for non-partisan outfits, like the FTC, is emerging. It’s counterproductive and can also widen agency mandates in dangerous ways.

China prices are cold comfort for global shoppers

16 Feb 2022

Factory-gate prices softened, and consumer inflation rose just 0.9% as supply shortages eased. Domestic stimulus might not change much. That’s good news for overseas customers grappling with soaring costs. But a weak Chinese economy will have less desirable knock-on effects.

ECB has central banking’s hardest juggling act

15 Feb 2022

President Christine Lagarde faces a less acute inflation problem than U.S. or UK peers. But she’ll have to raise interest rates to curb price pressures while ensuring bond yield gaps between euro zone nations don’t widen to worrying levels. The two goals may become incompatible.

Soaring prices warrant bigger Fed rate hike

10 Feb 2022

U.S. inflation hit a 40-year high of 7.5% in January. Broad-based increases in costs and a robust jobs market give the central bank ample justification to hike rates by half a percentage point, rather than a quarter, and show that it’s serious about tackling price pressures.

Guest view: Fed hikes spell emerging-market strain

4 Feb 2022

Poorer indebted economies face growing difficulties as the U.S. Federal Reserve signals its readiness to raise interest rates. William Rhodes, former president of Citibank, and economist Stuart Mackintosh lay out what creditors, borrowers and the IMF can do to avert a crisis.

Big Oil elbows out banks as Fed’s new kingmaker

3 Feb 2022

The energy sector has come out swinging against Sarah Bloom Raskin, President Biden’s pick to lead supervision at the U.S. central bank. The ex-Fed governor is outspoken on climate risks. The business lobby could frustrate her confirmation, even with Democrats in Senate control.

ECB shows words matter more than actions

3 Feb 2022

President Christine Lagarde left interest rates unchanged while the Bank of England raised them. Yet she made the bigger market splash by admitting inflation risks had grown. It was the first clear sign that she may join global peers this year in tightening monetary policy.

New Bank of England guessing game begins

3 Feb 2022

A second rate rise in as many months raises the question of how quickly Governor Andrew Bailey will reduce bond holdings accumulated during the pandemic. A gradual approach won’t cause economic or market pain. But debt yields will become more volatile once the Fed follows suit.

Oil dims hope central bankers will walk fine line

28 Jan 2022

Brent crude topped $91 a barrel for the first time since 2014. Rate-setters can usually ignore temporary jumps, but not when inflation is already high. Fed boss Jay Powell and global peers will struggle to hike rates enough to curb price pressures without stifling growth.

Investors need to get used to working harder

27 Jan 2022

America’s economy expanded at a 6.9% annual pace in the last quarter of 2021. A healthy rebound supports the Fed raising interest rates soon. But the U.S. central bank faces a balancing act, and everyone else following markets will have to be more alert than before, too.

Jay Powell embarks on difficult Goldilocks act

26 Jan 2022

The Fed boss is likely to signal rates will start rising in March to curb inflation. The robust economy can cope with that as well as the three other hikes that investors expect him to deliver before year-end. Anything more will leave little room to deal with economic hiccups.

Fed rate feast leaves crumbs for bank customers

19 Jan 2022

Big U.S. lenders like JPMorgan are readying for an inflow of interest income as the central bank puts up rates. But the amount they pass to depositors is likely to be even more paltry than in past cycles. Competition from upstarts like SoFi may improve service but not returns.