Monetary Policy

Trump’s chaos theory of negotiation is a dead end

26 Aug 2019

The U.S. president says trade talks are back on with Beijing three days after escalating tariffs and calling Chinese leader Xi Jinping an “enemy.” Yet his erratic aims and tenor make it hard for counterparties to engage, as the G7 demonstrated. It’s no way to strike a good deal.

Fed chief crafts central banker’s serenity prayer

23 Aug 2019

Jay Powell hopes to control what he can and rise above what he can’t. His speech at Jackson Hole highlighted trade battles, which he can’t influence, as a new challenge for rate-setters. But his tone suggests more willingness to weigh policy threats when shaping monetary policy.

Viewsroom: How to read the recession runes

22 Aug 2019

A U.S. downturn is near, judging by past early warning signals from yield curves to bank valuations. But fallout from the 2008 crisis has sapped them of some predictive power. Plus: what the exit of Cathay Pacific’s CEO says about Beijing’s response to the Hong Kong protests.

China’s rate reform inches along the market path

19 Aug 2019

The central bank is shaking up loan pricing, pushing aside a long-standing benchmark set by officials. It’s an overdue step designed to ease credit conditions and help companies borrow. Transmission problems remain, but a move closer to a more responsive system is welcome.

Wall Street adds $125 bln to recession conundrum

16 Aug 2019

That’s the market value lost by the top five U.S. investment banks in just three weeks, leaving only JPMorgan trading above book value. History suggests it’s an early investor bet on a downturn. But as with the yield curve, the fallout from the last crisis distorts the message.

U.S. recession signal bears clear fingerprints

14 Aug 2019

A key bond-market metric flashed a downturn warning last seen in 2007, hammering stocks. Business confidence and investment are dropping, China is slowing and Germany’s output just fell. The common thread linking these is Donald Trump’s trade war. At least he’ll win lower rates.

German weakness gives ECB carte blanche to be bold

14 Aug 2019

Europe’s biggest economy shrank in the second quarter as global trade tensions hurt export-orientated manufacturers. The problems will filter through to other sectors. That will lessen any Teutonic resistance to European Central Bank boss Mario Draghi’s planned monetary easing.

IMF stitch-up would set at least one good example

5 Aug 2019

Kristalina Georgieva, Europe’s pick to lead the lender, is a technocrat who lacks former Managing Director Christine Lagarde’s stature and clout. But the IMF would have to raise its age ceiling for her – about time for a body that prods countries to raise retirement ages.

Jerome Powell finds another way to please nobody

31 Jul 2019

The Fed chief presided over a quarter-point interest-rate cut on Wednesday, disappointing investors, presumably the president, and even some colleagues. Most people have enough worries, real or not, to want lower borrowing costs. Most economic statistics, though, say not yet.

Aussie monetary future is everyone else’s past

31 Jul 2019

Australia managed to avoid the ultra-low rates other countries have shouldered for years. Now growth is slowing, and it is up against the limits of conventional policy. An improvement in second-quarter inflation and a cheerier end to 2019 won't change the need for new tools.

Undoing Trump’s tax cuts harder than it looks

30 Jul 2019

Democratic presidential contenders want to scrap the White House’s signature legislative win. The measure helped companies and the wealthy but also provided some breaks for the middle class, making it tricky to roll back. And a corporate tax hike could trigger a market downturn.

Hong Kong fills best worst job in central banking

26 Jul 2019

As the new head of the HKMA, Eddie Yue is on track to get a salary that puts U.S. Fed chief Jay Powell in the shade. A pegged currency means he needn’t fret much about rate-setting or attacks on his independence. The catch: if problems really escalate, he has fewer tools.

Markets want to see colour of Mario Draghi’s money

25 Jul 2019

The European Central Bank chief opened the door to even looser monetary policy. The dearth of decisions or details meant the euro reversed initial losses while bond and stock prices gave up brief gains. He will have to deliver on his big promises before investors give him credit.

Swiss currency ticks towards new showdown

22 Jul 2019

The franc hit a two-year high against the euro. Policy interest rates are already negative so cutting them further may fail to dent its strength. A return to major intervention risks U.S. ire. Traders will take advantage of central bank boss Thomas Jordan’s bind.

Seoul rate-setters bat for trade accord with Tokyo

18 Jul 2019

A surprise cut to borrowing costs underscores growth concerns as South Korea faces export curbs from its neighbour. The central bank has little more space to ease. That puts the onus on President Moon Jae-in to pass a stimulus package and to de-escalate regional tension.

China’s awkward rate-setting status quo to persist

12 Jul 2019

The central bank may want to half-follow a U.S. rate cut expected later this month. Yet officials have been looking to scrap the benchmark rate that offers the most direct way to do so. With so much at stake, however, the current half-reformed setup could prove tough to shake.

New breed of central bankers is harder to read

11 Jul 2019

Jerome Powell at the Fed and Christine Lagarde, nominated to be the next ECB chief, are lawyers by training. Their thinking is more fluid than predecessors whose economic tenets informed a world view. That has benefits, but also means it’s harder to predict how they will react.

Global central bank assault claims Turkish victim

7 Jul 2019

Desperate to boost growth, President Tayyip Erdogan has fired the country’s central bank chief. He’s the latest casualty of a worldwide attack on independent monetary authorities. The blow to confidence makes any cut in the main rate, held at 24% since September, more damaging.

Review: The conundrum of no good jobs

5 Jul 2019

Low unemployment in the U.S. and UK hides a grimmer reality, economist David Blanchflower argues in his new book. Weak wage growth and widespread despair have prompted people to turn to populist leaders. He makes a compelling case for why policymakers can still rev up growth.

Trump’s latest Fed picks at least clear the bar

3 Jul 2019

Christopher Waller is a U.S. central bank insider. Judy Shelton is more of a maverick with her liking for the gold standard. Yet her business background might usefully add to debate at the Fed. They’re an improvement on the partisan hacks Trump offered up last time around.