Monetary Policy

Capital Calls: Exxon, US regional banks

28 Apr 2023

Concise views on global finance: Exxon’s two golden eggs are the Permian and Guyana; market composure gives time for a First Republic fix.

China distrusts its retail recovery

25 Apr 2023

Officials are pushing banks to cut deposit rates after citizens stuffed $1.4 trln into accounts last quarter. Cash hoarding could sabotage a nascent shopping revival, but punishing savers with low returns is a clumsy way to boost consumption. It could backfire too.

Central bank pilots risk leaving cockpit too soon

14 Apr 2023

Western policymakers at the IMF Spring Meetings hinted that their mission to slay inflation without a recession is nearly accomplished. Investors agree, and hope for rate cuts. That’s overdone. A soft landing is in sight, but so too is the danger of complacency.

Capital Calls: UnitedHealth, ETFs, Animal drugs

14 Apr 2023

Concise views global finance: Health insurer UnitedHealth continues to flex its muscles; Canada traps investors inside exchange-traded funds; private equity firm EQT buys into medicine for pets.

A top tip for central banks: talk less, smile more

11 Apr 2023

Investors’ obsession with policymakers’ hints about future interest rate movements is fueling market volatility. As bank failures and inflation upend forecasts, officials can take a more muted approach. It will help them steer the economy without disturbing financial stability.

Capital Calls: Reserve Bank of India

6 Apr 2023

Concise views on global finance: The central bank surprised by keeping its key borrowing cost at 6.5%, citing concern about global financial stability.

Capital Calls: Bank of England, Wonder drugs

23 Mar 2023

Concise views on global finance: The UK central bank has joined peers in raising rates, but there’s not much room to keep hiking. Meanwhile, a drug that might help smokers’ lung is could be good for makers Regeneron and Sanofi, but even better for society.

BoE’s inflation pickle can taste sweet in Britain

22 Mar 2023

A surprise jump in consumer prices will force the Bank of England to hike interest rates by 25 basis points, rather than pausing. Governor Andrew Bailey can now focus on helping a shaky UK economy by freezing borrowing costs for the rest of 2023 and start cutting them next year.

Fed can follow ECB, BoE on monetary tightrope

21 Mar 2023

Bank failures and high inflation complicate the US Federal Reserve’s interest rate decision on March 22. Its Western peers have shown how to fight rising prices while aiding financial stability. Taking the road more traveled would also ease traders' fears of new crises.

Lagarde is not for turning; the ECB might have to

16 Mar 2023

The head of the European Central Bank ignored a transatlantic financial rout and hiked rates by 50 basis points. For her, inflation, not banks’ health, is the real problem. She may soon have to worry about the damage her aggressive policy is inflicting on the euro zone economy.

Bank runs don’t change Fed’s focus on high prices

14 Mar 2023

Recent financial turmoil raised market fears over borrowing costs and led some economists to forecast rate cuts as soon as next week. Yet the Federal Reserve cannot tolerate inflation at 6%. The central bank’s next move will probably echo the quarter-point hike that preceded it.

Banking turmoil could help euro doves cry victory

14 Mar 2023

With inflation running hot, the European Central Bank looked set to raise rates by 50 basis points on March 16. The collapse of two US banks flipped the script. As investors fear financial instability, the ECB might go easier and rely on previous hikes to curb consumer prices.

US jobs data can spare Fed rate ratchet

10 Mar 2023

A larger-than-expected gain of 311,000 jobs might stoke inflation-fighters’ fears, but slowing wage growth and returning workers show a labor market in the sweet spot. That gives policymakers weighing further hikes in borrowing costs the opportunity to take a patient approach.

“No landing” talk leaves stocks in no man’s land

6 Mar 2023

Bond investors worry that strong economic data will keep borrowing costs high. That’s pushed yields on 10-year German debt to an 11-year high. Yet buoyant equity markets are pricing in a dream scenario of faster growth and falling interest rates. They are in for a rude awakening.

Why the dollar keeps winning in the global economy

28 Feb 2023

The greenback’s share of foreign exchange reserves is at 59%, a two-decade low. Challengers to its role as the world’s means of exchange abound. Yet the globalised financial system bolsters its lynchpin status. Absent major shifts in capital flows, the U.S. currency will thrive.

A post-Erdogan Turkey could come in from the cold

27 Feb 2023

Investors shunned the country as the president let inflation rip. He strained relations with the West by cosying up to Putin and did too little on climate change. An opposition win in coming elections, more likely after the recent earthquake, may change all that, says Hugo Dixon.

ECB’s inflation-fighting hose may have a blockage

20 Feb 2023

The central bank has hiked rates by 3 percentage points since July, pushing up corporate borrowing costs and squeezing demand for credit. Yet firms and households have longer-term debt than in the past. That means tighter monetary policy will take a while to cool the economy.

How central banks got the inflation crisis wrong

14 Feb 2023

Western policymakers have hiked interest rates by more than 10 percentage points since 2021. Yet prices remain high. In this Exchange podcast, Paul Donovan, chief economist at UBS Global Wealth Management, explains how rate-setters failed and what they should do next.

How investors can profit from Fed-ECB divergence

7 Feb 2023

As America flirts with a recession, the U.S. central bank is set to stop tightening as interest rates near 5%. That will leave ECB President Christine Lagarde as the West’s most hawkish policymaker. The transatlantic split is an opportunity for traders who bet on European assets.

Markets gulp down central banks’ half-full glass

2 Feb 2023

Three of the world’s most prominent central banks raised interest rates to multi-year highs this week. Investors loved it, reading the decisions as the beginning of the end for monetary tightening. Policymakers, and stubborn inflation, might prove them wrong.