Breakingviews

Believe bonds not stocks on Brexit damage

June 30, 2016

Stocks have rebounded after the referendum, suggesting Britain’s prospects aren’t too grim. Yet falling gilt yields point to bleaker outcomes. In the absence of hard economic data, a post-vote slump in consumer morale supports the pessimistic thesis.

Review: Stop blaming the world’s central bankers

April 8, 2016

That’s the message of a new book, “The End of Alchemy”, from the former governor of the Bank of England, Mervyn King. It doesn’t completely wash. Low rates bear much responsibility for seeding the financial crisis - and it was central banks, after all, that set them.

Cash is far from meeting its Waterloo

December 2, 2015

Banknote printer De La Rue is cutting its output by a quarter amid a global glut. Denmark, Nigeria, Ireland and Swedish supergroup Abba are all chipping away at the status of cash. Yet growth in currency remains positive. The case for ditching it is compelling but impractical.

Bank rule zealots will be forced to back down

December 2, 2015

Basel-based standard setters are finalising capital adequacy reforms that banks call “Basel IV”. But they clash with European policymakers’ growth plans and their Anglo-Saxon counterparts’ push for regulatory easing. The Bank of England’s newfound leniency will embolden others.

Dixon: EU membership can help UK stability

October 26, 2015

Bank of England Governor Mark Carney has argued that EU membership is good for Britain’s dynamism but creates challenges for financial stability. While he is right, it also presents opportunities to make the economy steadier. If the UK grasps these, the EU can act as a shock absorber.

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

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.