Monetary Policy

Rouble’s strength is sign of Russia’s weakness

6 Apr 2022

The Russian currency has appreciated 70% against the dollar since early March. Capital controls, 20% interest rates, and forced conversion of export revenues have been enough to push it up in very thin trading volumes. The rebound is a sign of economic woes, not resilience.

Inflation regime shift looks scarily plausible

6 Apr 2022

Fed boss Jay Powell and other global rate-setters admit surging prices warrant policy action. Where they disagree is how forcefully they need to combat such pressures. The BIS, the umbrella body for central banks, says a new inflationary era may lie ahead. Its case is persuasive.

Strong U.S. jobs are blessing and curse for Fed

1 Apr 2022

The unemployment rate fell to 3.6%, near pre-pandemic levels. Dining out is back, and even travel is returning to normal. That all gives the central bank room to fight inflation. But employers are still short of workers, and continued robust hiring may make price pressures worse.

Christine Lagarde’s inflation excuses wear thin

1 Apr 2022

Euro zone prices rose at a record annual rate of 7.5% in March, almost as much as in the United States where the Fed has started hiking rates. There’s more going on than just surging energy costs. It’s getting harder for the European Central Bank boss not to follow Jerome Powell.

Chancellor: The battle for investment survival

31 Mar 2022

Despite Russia’s invasion of Ukraine, U.S. stocks still trade at sky-high levels. Meanwhile, the return of inflation means more market volatility. Passive investment strategies that have thrived for years won’t work in this new environment. A more nimble approach is required.

Bank of Japan stumbles into defensive minefield

29 Mar 2022

War, Covid-19 and an aggressive-looking Fed are conspiring against Governor Kuroda’s ultra-loose policy. The yen is plunging and government bond yields are up despite BOJ efforts. There’s no easy solution, but doing nothing is risky too.

Britain’s limp economic fix leaves need to do more

23 Mar 2022

Finance minister Rishi Sunak cut taxes on fuel and incomes to ease a cost-of-living squeeze. Still, the measures are blunt and less generous than countries like France. With energy bills set to soar, he’ll soon need to dip into the 30 bln pounds of wiggle room he has left over.

UK is in monetary policy vanguard for new reason

17 Mar 2022

The Bank of England raised rates for a third meeting running. Governor Andrew Bailey started tightening policy sooner than peers at the Fed and ECB, but is now toning down his talk about future hikes because of growth worries. Where he leads, others may once again follow.

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.