Monetary Policy

Capital Calls: BoE, Soros, Infrastructure, Pay

3 Mar 2021

Concise views on global finance in the Covid-19 era: The Bank of England starts to embrace the green transition; George Soros has some advice for France; Joe Biden gets a timely reminder of the importance of infrastructure; climate laggards risk getting hit in their wallets.

Chancellor: A bear market in bonds is beckoning

2 Mar 2021

Bond bull runs tend to last for decades, making it nearly impossible to accurately predict a turning point. But recent fixed-income extremes, together with the complacent attitude of central bankers and investors, suggest history’s greatest bond boom has passed its sell-by date.

The Exchange: The post-pandemic global economy

2 Mar 2021

Policymakers will face tricky choices about when to withdraw massive policy support as economic recovery kicks in. BNP Paribas’ group chief economist, William De Vijlder, joins Swaha Pattanaik to discuss their options, the focus on inclusive growth and the outlook for inflation.

Central banks will have to fight reflation tantrum

26 Feb 2021

Improving economic prospects have boosted bond yields. Fed boss Jerome Powell and his global peers will welcome the cause but not the effect. If their rhetoric can’t halt the sharp rise in borrowing costs, they will be forced to ramp up asset purchases to safeguard the recovery.

Fed musical chairs takes away Wall Street’s seat

22 Feb 2021

Chair Jay Powell’s views on jobs make it easy for President Biden to rehire him when his term ends. The same isn’t true of the Fed’s top cop, Randal Quarles. His exit would make space for a more progressive candidate, potentially saddling banks with sterner capital requirements.

Precision is ECB’s enemy when picking compass

18 Feb 2021

President Christine Lagarde has stressed the need for favourable borrowing conditions to justify her 1.85 trillion euro crisis response. Rate-setters will in March discuss how to measure this concept. Being too specific may backfire and limit the central bank’s wiggle room.

BoE preps negative rate gun it doesn’t want to use

4 Feb 2021

Bank of England boss Andrew Bailey told lenders to be ready to cope with sub-zero interest rates at any point from six months’ time. The weapon will be a handy addition to his arsenal. Covid-19 variants or post-Brexit trade frictions may yet derail the growth rebound he expects.

The Exchange: Too much stimulus stores up big risk

26 Jan 2021

That’s the view of Oliver Baete, CEO of Allianz. Markets are pricing in vaccination perfection, as they’ve grown dependent on central bank and government largesse, he tells Rob Cox. But for the $97 billion German insurer, there’s still opportunity to be had in the year ahead.

Corona Capital: Icahn, Productivity, Natixis

4 Jan 2021

Concise views on the pandemic’s corporate and financial fallout: Carl Icahn sells half his Herbalife Nutrition stake; an ECB survey suggests Covid-19 will make big firms more productive, but that may not be all good news; and Natixis fast-tracks its overhaul.

Christine Lagarde’s baby bazooka needs backup

10 Dec 2020

The ECB boss will deploy emergency stimulus measures, such as asset buying and ultra-cheap loans to banks, for longer but came up with no new tricks to boost Europe’s economy. Central bankers have been innovative in the crisis. It’s now governments’ turn to do more of the work.

Chatty ECB has a communications problem

2 Dec 2020

Chief Economist Philip Lane has since March spoken with a series of financiers after policy meetings, his diary shows. A perception that a select few have privileged access is best avoided. The even bigger issue is why the central bank has to work so hard to land its message.

Kiwis test limits of overburdened rate setters

26 Nov 2020

New Zealand Finance Minister Grant Robertson has suggested the central bank, which targets inflation and employment, might consider taking house prices into account when setting monetary policy. Interest rates are a blunt instrument that can’t hit too many goals at once.

Mnuchin and Powell create dangerous guessing game

20 Nov 2020

The U.S. Treasury secretary and Fed chief’s spat over unused bailout funds is a Rorschach test. Fiscal hawks may see an attempt to coax Congress into spending elsewhere. Others may see a petty gesture by an outgoing administration. The uncertainty is what poses the greatest risk.

Turkey gives investors early Thanksgiving treat

19 Nov 2020

The new central bank chief hiked a key interest rate to 15% from 10.25%, the biggest tightening in more than two years. He vowed to bear down on inflation and improved transparency by reducing the number of policy rates that matter. It’s a good start at rebuilding market trust.

The Exchange: Investing in a new macroeconomic era

17 Nov 2020

The U.S. faces a paradigm shift, as the era of monetary policy dominance ends and fiscal action becomes the major driver of growth. So argues Greg Jensen, co-chief investment officer at Bridgewater Associates. He says this means rethinking one’s approach to asset classes.

Republicans try packing the Fed before Trump exits

13 Nov 2020

The U.S. Senate will vote on Judy Shelton’s nomination to the central bank’s board. She was in limbo partly due to fringe ideas, like a return to the gold standard, and has shown her partisan colors. Installing her before the White House changes hands is bad monetary policy.

ECB has chance to avoid Fed’s strategy revamp flaw

12 Nov 2020

Christine Lagarde’s central bank is examining basics, like how it defines its price goal. Its U.S. peer earlier this year switched to aiming for inflation that averages 2% over time. But leaving things as vague as Jerome Powell did undermines efforts to lift price expectations.

Turkey’s new economy team will face fresh problems

9 Nov 2020

President Tayyip Erdogan installed a new central bank boss while his son-in-law quit as finance minister. Credible policymakers are more likely to hike rates. Just as well: without President Donald Trump, Ankara’s foreign policy – and the lira – are more vulnerable to sanctions.

Bank of England offers plaster for Covid-19 wound

5 Nov 2020

Governor Andrew Bailey will buy an extra 150 bln pounds of government debt, allowing finance minister Rishi Sunak to keep spending during a new lockdown. But the pandemic’s structural shifts may leave behind workers who lack the right skills. Only the state can fix that problem.

Powell is Fed boss any U.S. president would keep

4 Nov 2020

The central bank chair will keep monetary policy easy and could get a second term from either Donald Trump or Joe Biden. He’ll have to live with heavy spending and borrowing either way. If the Democrat wins, there is one area that will be a better fit: a focus on racial equity.