Monetary Policy

Detractors give central bankers too much credit

26 Aug 2016

Federal Reserve Chair Janet Yellen and other rate-setters stand accused of pursuing policies that only help the rich. Yet the supposed beneficiaries complain that loose money depresses returns and distorts markets. Both sides overestimate central banks’ control over the economy.

Iconoclasts needed to topple central bank targets

25 Aug 2016

A reboot of global monetary policymaking is the best thing that could emerge from rate-setters’ annual Jackson Hole shindig. An overhaul is pressing as reality upends more and more economic orthodoxies. Ditching simplistic and discredited inflation targets would be a good start.

Young-old financial gap calls for mature debate

17 Aug 2016

Stagnant wages, a graying population and unaffordable pensions risk leaving millennials worse off than their parents. That could be toxic for the economy, markets and even democracy. Smart policy can head off inter-generational strife, but barriers to making that happen are high.

Review: India’s new central banker must walk alone

10 Aug 2016

Former governor Duvvuri Subbarao's timely memoir shows how New Delhi pushed for easier policy, blocked hires and meddled with real-world rates. With a major overhaul of monetary policymaking in train, this underlines just how tough-minded the new RBI boss will need to be.

UK’s new bank crutch betrays post-Brexit jitters

4 Aug 2016

The Bank of England's Term Funding Scheme is a reasonable attempt to make UK lenders pass on now-cheaper funding. The bigger their loan book, the cheaper their borrowing. But opting not to restrict cheap funds to specific sectors reveals how concerned the BoE is about a slowdown.

Chancellor: Rates sow seeds for greater inequality

4 Aug 2016

Unorthodox monetary policy may have stopped a depression forming after the Lehman Brothers bust but it has had adverse distributional effects. If central bankers continue pushing the cost of money lower, they risk further undermining the social order on which capitalism rests.

BOJ does bare minimum for Abenomics reboot

29 Jul 2016

Japan's central bank added just $26 billion of equity funds to its annual asset-buying binge. That is about as little as it could do without disappointing markets or Prime Minster Shinzo Abe. The BOJ is running low on options and probably wants to keep some powder dry.

Portugal’s three bad B’s: banks, budget, Brexit

22 Jul 2016

Lisbon’s banks are saddled with bad loans, and need capital. The government is caught between Brussels’ fiscal rules and a weak coalition. And the UK vote to leave the EU may hurt already grim growth. The three B’s may imperil Portugal’s BBB rating, and blow up its bond yields.

India’s shine dims with loss of central bank chief

19 Jun 2016

Raghuram Rajan will leave the Reserve Bank of India in September. Nasty politics may have forced his decision. The governor’s departure raises the risk that key economic and financial reforms he started will not be completed. India’s credibility in global markets will suffer

Chancellor: Helicopter money risks financial chaos

1 Jun 2016

Some investors, including fixed-income supremo Bill Gross, have been advocating a central-bank cash drop. Inflation would burn off the world’s excess debt. But bond markets might collapse and asset values sink. Protecting capital under such circumstances would be nigh impossible.

ECB corporate bond buying is risky experiment

1 Jun 2016

The central bank's pledge to buy company bonds has caused a surge in issuance. As a result, market spreads - the premium investors demand over sovereign debt - are not falling. The unwanted side effects of the programme show why corporate credit markets are best left alone.