Cult of central bank transparency is too powerful

May 26, 2015

Rate-setters around the world are in a bind. The zeitgeist demands they share every twist and turn of their deliberations. But too bright a light can be blinding. Hard talk is often best done in private. While some transparency is good, more is not always better.

Don’t believe predictions of low interest rates

By Edward Hadas
July 9, 2014

Central bankers and economists say the official cost of money in the post-zero rate era will remain cheap by historic standards. Their prognostications rely on a theory which is unsound, unsupported by evidence and impossible to apply. Future rates are as likely to be high as low.

Can sterling hit $2? Only with a perfect storm

June 18, 2014

Having touched $1.70, the pound is on the brink of escaping its five-year range. A return to $2 looks like a fantasy right now. But a more hawkish BoE, a dovish Fed, a Scottish “No” to independence, and a narrowing of the UK’s twin deficits would do a lot to close the reality gap.

Central banks abet the complacency they fret about

June 4, 2014

Monetary policymakers worry that today’s torpid markets carry the seeds of tomorrow’s torrid moves. They’re right to worry, but the problem is of their own making. Cheap money is making investors complacent, so they underestimate the risk of big adverse price swings.

Bank of England can overlook Russia’s problems

May 23, 2014

Rising house prices might encourage the British central bank to increase rates. But the boom is mostly in London, and has been amplified by a surge of flight capital from Russia. When that fades, the economy will look less unbalanced, and a strong pound may be less of a problem.

London gives BoE an emerging economy problem

April 23, 2014

Foreign capital inflows are supporting a housing bubble in London, and have helped push up sterling - even though the UK’s trade position is almost dire. An unbalanced economy is getting worse. As pre-crisis emerging markets learned, this is a problem with no easy solution.

UK will get QE2 – but may need fiscal help too

September 15, 2011

The odds are moving rapidly towards a launch of QE2 in the UK.

Becalmed UK in danger of double dip

November 2, 2011

The UK economy looks dangerously becalmed. While GDP did increase a good-looking 0.5 percent in the third quarter, the number was flattered by a catch up from a royal wedding-distracted spring

Bank of England reaches limits of independence

November 8, 2011

The Bank of England is under the microscope. A UK parliamentary committee has called for the central bank to be better governed and more accountable.

UK banks need government to solve funding squeeze

December 6, 2011

The Bank of England’s new 30-day facility should help keep lenders afloat if the euro crisis causes short-term liquidity to dry up. But banks also need help refinancing 140 billion pounds of term debt in 2012. For that, the state may need to guarantee their debt once more.