Monetary Policy

Fed chair pick shows mastery of central-bank arts

28 Nov 2017

Jerome Powell breezed through his Senate confirmation hearing with Zen-like confidence. He dodged the tax-reform debate, kept rate-hike comments predictable, backed Fed independence and defended its bank-rules review. The prospect of post-Yellen stability will please markets.

Powell’s mystery Fed board poses continuity risk

20 Nov 2017

As expected, Janet Yellen will leave the U.S. central bank when her successor takes over. Jay Powell will inherit a skeleton board in need of four more Trump appointees. The lack of holdovers, amid a pivotal shift away from crisis-era policies, could make for a bumpy transition.

Japan’s growth streak starts to look shakier

15 Nov 2017

GDP grew an annualised 1.4 pct last quarter, marking the longest unbroken growth run in 16 years. The data is volatile, and often revised, but a global boom appears to be offsetting weaker domestic demand. That underscores the need for further structural reform.

Central bankers go self-referential on rhetoric

14 Nov 2017

Fed Chair Janet Yellen and other top rate-setters took the stage in Frankfurt to discuss how they communicate. It’s a slightly meta admission of the role speechifying has come to play in monetary policy in an era of ultra-low interest rates. But wordiness brings its own perils.

New York Fed needs a new boss with teeth

6 Nov 2017

William Dudley is set to retire as president of the regional watchdog, which has day-to-day oversight of large lenders like Deutsche Bank and Goldman Sachs. As Washington leans toward deregulation, Dudley’s successor will be the first line of defense in ensuring banks behave.

Bank of England rate hike has dismal logic

2 Nov 2017

The first increase in UK interest rates for a decade is no grounds for celebration. Rather, it’s an admission that Brexit has permanently lowered the country’s growth prospects. Governor Mark Carney must worry about inflation and a weak currency. The rest is up to politicians.

Bank of Italy chief’s new term faces uphill start

27 Oct 2017

Ignazio Visco has been reappointed as central bank governor despite political opposition. His first challenge is to quell critics of his handling of Italy’s banking crisis. EU rules are also getting tougher and Mario Draghi’s departure from the ECB in 2019 will remove an ally.

Hadas: Greed is best indicator of financial crisis

26 Oct 2017

New research casts small-time property investors as the secret villains in the 2007 U.S. house price collapse. As usual, the love of leverage was the root of financial distress. Balance sheets are stronger today, but investors still haven’t learned the virtue of moderation.

Banks draw short straw from ECB

26 Oct 2017

The central bank will trim its monthly bond purchases but promised to keep buying for longer. That balances the demands of those who oppose money printing with the wishes of rate-setters who fear growth is still fragile. The losers are banks, whose negative rate pain will endure.

PBOC’s Zhou seeks lasting sway with debt warning

19 Oct 2017

The central bank governor is suddenly ramping up calls for reform and warning of a possible “Minsky moment.” With the 19th Party Congress in full swing, the soon-to-depart 69-year-old no doubt hopes to burnish his legacy, and ensure a like-minded successor fills his shoes.

Taylor-led Fed would be dangerous in manifold ways

19 Oct 2017

In addition to the Stanford economist's dogmatic bent for a programmatic monetary policy, John Taylor backs bigger regulatory changes than others in the running to be the next U.S. central bank chief. His laissez-faire ideas about policing Wall Street are loaded with risk.

Indonesia’s slowdown belies Jakarta’s reform spin

18 Oct 2017

Eight interest-rate cuts by Indonesia’s central bank since January 2016 are getting little traction with investors or consumers. As growth slows, the urgency is rising for President Joko Widodo to accelerate infrastructure projects, attack corruption and create well paid jobs.

Heads or tails, Mark Carney loses

17 Oct 2017

British inflation has hit 3 percent, the highest level since 2012. No wonder the Bank of England chief is hinting policy rates may soon rise. Carney’s problem is that he will be criticised for hurting a slow-growing economy if he hikes and accused of inconsistency if he delays.

Cox: Next Fed chair will need unusually thick skin

16 Oct 2017

The debate over who will lead the central bank is narrowly about hawks and doves. Policy matters, but the broader economic benefits of the Fed’s relative independence may count for more. Whoever gets the job will have to resist Trump's bullying – and stop doing Congress's job.

Companies WACC central bankers on yields

10 Oct 2017

Rate-setters have engineered ultra-low borrowing costs and the risk premium on stocks is down. In theory, that lowers the bar for business investments. In practice, corporate hurdle rates have barely budged for decades. It’s a reality check for policymakers trying to fan growth.

Hadas: Road to calm finance is unsafe at any speed

4 Oct 2017

A decade after the last financial crisis began, central banks are finally moving to normalise interest rates and money supply. With governments weak and banks and businesses hooked on easy credit, risks are high. There’s a better way to run this system, but few seem interested.

India will miss its top banking chief

4 Oct 2017

Arundhati Bhattacharya’s four years atop the country’s largest lender have seen bad debt rise and the shares underperform. But she has made State Bank of India the best of an ailing bunch and stood up to errant tycoons. She sets a high bar for any successor.

Jerome Powell makes for a Goldilocks Fed choice

3 Oct 2017

The central bank governor is less hawkish than other candidates on President Trump's shortlist, including Kevin Warsh. Powell also aligns with the White House on regulatory reform. And his confirmation would be easier. Those factors could make him a Fed chair who is just right.

Italy’s 5-Star puts respectable face on radicalism

25 Sep 2017

The protest movement, doing well in opinion polls, has named a 31-year-old lawmaker as its leader. Luigi Di Maio’s cool appeal contrasts with founder Beppe Grillo’s vitriolic style and may win over moderate voters in 2018. But going mainstream could undermine its basic appeal.

What Carney can learn from Yellen

21 Sep 2017

Fed Chair Janet Yellen showed rate-setters can shock markets even when they stick to the script. That’s a lesson for the Bank of England’s Mark Carney, who has talked up a rate rise this year. Like her, he may have to hike without having solved a host of economic puzzles.