Money‚ Markets & Macroeconomics

ECB has almost vanquished its final inflation foe

30 May 2024

Steeper bills for hotels, transport and other experiences are the European Central Bank’s key remaining enemy. Last month, services accounted for 68% of the rise in consumer prices. But those pressures, and wage growth, are waning, freeing rate-setters to start a series of cuts.

Technocrat PM will save Dutch voice inside the EU

29 May 2024

By choosing civil servant Dick Schoof, The Hague put pragmatism before politics in the premier’s slot. Far-right Geert Wilders won at the polls but elected to pass on the job. This will help the Netherlands keep its sway over key issues like EU debt and the green transition.

Fed should be independent, not untouchable

28 May 2024

Allies of Donald Trump want to blunt the Federal Reserve’s autonomy if the former US president wins a second term. That would be economically disastrous. But a mighty central bank with a $7 trln balance sheet requires better scrutiny, especially outside monetary policy.

Macron’s Draghi sales pitch is a long shot

24 May 2024

The French leader wants to install former ECB head and Italian PM Mario Draghi in a top EU job. The two men agree on economic policy and how to reform Europe. But anointing a political heavyweight may alarm other member states, and parties’ bickering could scupper Macron’s bid.

Japan’s new widowmaker trade may have shorter life

23 May 2024

For more than two decades, investors who bet against Japanese government bonds lost their shirts. Taking a long position in the yen has been similarly painful recently as the currency dropped by 50% against the dollar. Yet there are several reasons why the slide could reverse.

Ethereum set to stress test US crypto deregulation

22 May 2024

Congress wants to dilute the SEC’s power over digital currencies. Its proposal could pave the way for new ETF products, which have turbocharged bitcoin. Financial wreckage from past laxity, and the industry’s own sketchy history, justify agency boss Gary Gensler’s resistance.

UK’s election gamble ends messy stalemate

22 May 2024

Prime Minister Rishi Sunak has called a national vote on July 4, much earlier than expected. His Conservative party trails Labour by 21 percentage points. The PM will point to a better economy but won’t offer more tax cuts. Still, a summer poll will provide much-needed clarity.

Original Davos Man unveils half a succession plan

22 May 2024

World Economic Forum founder Klaus Schwab will give up executive duties at the group which hosts the annual Swiss conflab. The 86-year-old chairman will doubtless remain its public face. But the shift should make it easier for the WEF to eventually identify his replacement.

German consumer is poor substitute for China trade

21 May 2024

Consumption is up but won’t be enough to lift the country out of its funk, with growth of just 0.2% this year. Exports to the People’s Republic are threatened by worsening relations between Brussels and Beijing. Meanwhile a split Berlin government looks unable to launch reforms.

President’s death makes Iran even less predictable

20 May 2024

The demise of Ebrahim Raisi removes an obvious replacement for the ageing Ali Khamenei as Supreme Leader. Despite a recent attack on Israel, the Islamic Republic’s top figure is a known quantity. The risk is that Iran’s role in a febrile Middle East becomes even harder to gauge.

Pricey stocks overlook the world’s troubles

19 May 2024

Trade tension between the US and China will dampen growth, while rising defence spending means higher taxes and lower profits. Equity markets, now at record highs on both sides of the Atlantic, aren’t cheap. Add in these headwinds and investors have more downside than upside.

Private credit wonder drug works in limited dose

17 May 2024

The quantity of loans channelled directly to companies by funds has exploded to more than $2 trln. The economic benefits of diversified lending just about make up for the risks. The challenge is making sure financial innovation does not starve banks to death.

The dollar and the yuan are polar opposites

16 May 2024

The strong greenback and questions over a Chinese devaluation reflect the contrasting outlooks for the two economies. In this Viewsroom podcast, Breakingviews columnists debate why Beijing is unlikely to push down its currency and why the dollar will remain elevated.

Inflation saps Inflation Reduction Act mini-me

16 May 2024

Australia is following the US with long-term support for greening the economy. But it's peanuts by comparison with just $15 bln for industry and nothing to boost sales of EVs and heat pumps. Fear of price rises and rate hikes ahead of an election has deflated ambition.

China tests EU resolve on export trade fight

14 May 2024

France’s Emmanuel Macron got little to show from President Xi Jinping’s European tour this month. In this Exchange podcast, MERICS expert Grzegorz Stec explains the difficulty of managing ties with Beijing and why balancing risk and business opportunity is so tricky.

ECB risks tripping over euro zone’s green shoots

14 May 2024

Europe’s economy is showing signs of life. Services are expanding faster than in the US. If consumers start spending, GDP could grow by more than the 0.6% forecast by the European Central Bank. That, though, would make it hard for policymakers to embark on a series of rate cuts.

Yuan devaluation isn’t worth the trouble

14 May 2024

A weaker currency would boost exports and prices, but speculation China could engineer a fall underestimates Beijing’s desire for a stable exchange rate. Aggressive US tariffs could change the calculus. For now, official signals point to a slow grind lower against the dollar.

Putin war economy plans require a reality check

13 May 2024

The Russian president named an economist as defence minister after setting multi-year targets to boost industrial production in a state of near autarchy. Vladimir Putin’s view of a country that would become the world’s fourth richest while mired in a long conflict is far-fetched.

The world can survive a strong dollar – for now

13 May 2024

The greenback has gained 17% against major currencies in three years. Other countries avoided repeating past crises through better fiscal policies and less foreign borrowing. But in the long run a mighty buck will put economies under stress, especially in emerging markets.

Economic hard landing is delayed but not cancelled

10 May 2024

It’s two years since the Federal Reserve started hiking interest rates, yet economic growth has picked up and stocks have hit new highs. There are several reasons why the US economy is less responsive to tighter monetary policy. But it cannot avoid the effects indefinitely.