Monetary Policy

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.

Hadas: Fresh thinking can soften next downturn

12 Jun 2019

As the Federal Reserve and ECB get ready to loosen policy, their armouries look depleted. Modern monetary theory suggests the cost and quantity of money matter less than putting it in productive hands. How? With targeted financial regulation and fruitful government spending.

Fed could do worse than mimic Donald Rumsfeld

5 Jun 2019

George W. Bush’s defense secretary famously talked of known knowns, known unknowns, and unknown unknowns. The U.S. central bank, seeking better communication, could borrow the categories. They help explain why markets now expect interest-rate cuts while Fed rate-setters don’t.

Imagine choosing Mario Draghi’s successor on merit

29 May 2019

The race to replace the European Central Bank boss is underway. Finland’s Olli Rehn says competence, rather than nationality, should decide the choice. Breakingviews ranks the candidates on policy experience, open-mindedness, and their ability to cajole investors and citizens.

Central banks’ plain talking has perils

28 May 2019

Monetary policymakers increasingly want to speak directly to the public, partly to defend and justify their independence. A conference in Ukraine showcased this desire – but also the resulting imperative to speak more simply. Stripping away nuances and caveats may backfire.

The Exchange: John Taylor

13 May 2019

The economist and leading proponent of a rules-based strategy for monetary policy recently convened a powwow at Stanford’s Hoover Institution at which top policymakers brought diverse views on the Fed’s conduct to the fore. He fillets some of the choicest bits with Rob Cox.

Picking the next Bank of England chief

24 Apr 2019

The hunt is on for a replacement for Governor Mark Carney, who leaves in early 2020. Breakingviews’ interactive yardstick helps sift through the runners and riders.

How to pick the next Bank of England chief

24 Apr 2019

The hunt is on for a replacement for Governor Mark Carney, who leaves in early 2020. Only talented economists with top-notch central bank experience need apply. Creativity and grit are also required. Breakingviews’ interactive yardstick helps sift through the runners and riders.

Climate risk gets the right kind of oversight

18 Apr 2019

Central banks presiding over almost half the planet’s GDP plan to treat global warming as a threat to financial stability. It’ll add heft to existing pressure from investors and make it harder for companies and their lenders to ignore the longer-term impacts of climate change.

ECB sop to banks will only help at the margin

10 Apr 2019

President Mario Draghi is considering ways to ease the pain that negative policy rates inflict on banks, such as tiered deposits in Japan and Sweden. Savings-rich German lenders would benefit most. But any earnings boost would be modest and does nothing to remedy high costs.

Hadas: Biased central bankers beat foolish ones

10 Apr 2019

President Trump’s pick of loyal supporter Herman Cain as a U.S. Fed governor is a bad idea. Not because of his partisan bias, since central banks are inherently political. But monetary policy is too poorly understood and unpredictable to be entrusted to amateur ideologues.

Italy’s debt conundrum will again rear its head

10 Apr 2019

Rome has admitted its economy will barely grow in 2019, a climbdown from forecasts. That makes it harder to keep debt in check, cut income tax, and avoid sales tax rises. EU Brexit distractions only delay the eventual choice between popular support and a new financial storm.

Fed waves white flag on normalization

20 Mar 2019

The U.S. central bank held interest rates steady, cut its forecast for hikes and will stop shrinking its balance sheet in September. There are signs of slowing global and domestic growth, but the package looks more like a market wish list than the result of data-driven analysis.