Monetary Policy

Fed’s Jay Powell picks the road less travelled

27 Apr 2021

The American and Canadian economies are both rebounding. Yet the U.S. central bank boss isn’t about to copy Canada’s bond purchase taper. It’s the difference between traditional and new-school monetary policy, which waits to see sustained inflation rather than anticipating it.

India’s pandemic hell could be purgatory

23 Apr 2021

There is hope rising immunity and the country’s massive vaccine industry will bring a rapid end to the misery brought about by a terrifying second wave of contagion. New Delhi has little room to act if the economy follows hospitals into a state of collapse. Cracks are visible.

Viewsroom: Turkish trouble and emerging markets

25 Mar 2021

President Tayyip Erdogan’s abrupt firing of a third central bank governor forced investors to contemplate whether this might precipitate a run on financial assets in other developing markets, including South Africa. Breakingviews columnists discuss the implications.

Turkey’s battered banks face a slow-burn crisis

25 Mar 2021

A plummeting lira creates the risk of a funding squeeze for Garanti BBVA, Akbank, Isbank and others. But they’ve survived past crises without a bank run. The more likely problem for the sector is mounting bad debt, which will drag down returns and capital for years to come.

South Africa offers Erdogan an inflation lesson

23 Mar 2021

A steep plunge in the lira, of the sort seen this week after Turkey’s president fired his central bank boss, usually drags down the rand. Not this time. The South African currency’s resilience shows the value of a credible and independent central bank left free to control prices.

Guest view: Japan’s socialist equity trap

19 Mar 2021

The central bank may tweak its unorthodox ETF buying programme that has put 10% of the Topix index on its balance sheet. Jesper Koll of WisdomTree argues it won’t be enough. The BOJ’s overhang caps the market’s upside, and has infantilised the asset management industry.

Capital Calls: Airline IPO, Turkey’s central bank

18 Mar 2021

Concise views on global finance in the Covid-19 era: U.S. regional air carrier Sun Country Airlines’ IPO pop is justified by positive cash flow; Turkey shows how emerging-market policymakers face trickier choices than their rich-world peers.

Lagarde’s yen for consensus will be stress-tested

11 Mar 2021

The ECB will step up the pace of bond-buying to combat a rise in yields. Moving sooner wouldn’t have allowed President Christine Lagarde to get the governing council’s green light. Fast-moving markets may require speedier reactions than her instinct for forging unity permits.

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.