Bank of Japan’s new currency salvo could backfire

January 29, 2016

The central bank has responded to turmoil in global financial markets by cutting interest rates below zero. The shock move weakens the yen and opens a new front in Japan’s battle against deflation. But it also risks adding to the international tumult that prompted the BOJ to act.

India GDP growth is one-third statistical illusion

June 5, 2015

Official data have become utterly unreliable. A Breakingviews analysis of corporate and consumer behaviour suggests growth is now closer to 5 percent than the 7.5 percent claimed by the authorities. Investors are quite right to be upset by half-hearted monetary easing.

China’s new monetary tool: quantitative teasing

May 11, 2015

Cutting interest rates, as the central bank just did, can ease pressure on some borrowers, but won’t do much more. Making money more abundant, rather than just cheaper, would be a more decisive move. For now the government is wisely keeping its powder dry.

Japan index: BOJ plays a risky waiting game

April 8, 2015

The Bank of Japan refused to heed growing calls to further ease its ultra-loose monetary policy. Inaction could be risky. Stock prices are the lone bright spot in a gloomy Breakingviews Abenomics Index reading for February. A return of deflation could hurt the BOJ’s credibility.

Guest view: The RBI does need its wings clipped

By Guest Contributor
April 2, 2015

The Reserve Bank of India’s repressive influence is stunting the growth of finance. Governor Raghuram Rajan is fighting attempts to shrink the RBI’s role because of pushback from his officers, says Percy Mistry, author of a 2007 report on making Mumbai a global financial centre.

Japan’s inflation test: Mapping the road to 2 pct

February 23, 2015

The central bank may yet hit its elusive goal, provided consumers spend, workers are productive and bond investors stay calm. A new Breakingviews calculator shows how much inflation Japan can expect after money-printing has ended. A 2017 sales tax hike would make the road harder.

India’s rate cut is first of several this year

January 15, 2015

With inflation tame and output growing below potential, Governor Raghuram Rajan’s policy of high interest rates was beginning to look ill-advised. A quarter-point decrease alone won’t perk up a sluggish economy. Investors will expect a further loosening of the monetary noose.

China’s deposit guarantee is really the opposite

December 1, 2014

A long-awaited plan to protect bank savings could have strange effects in a system where citizens believe the state stands behind almost everything. Those with wealth above the guaranteed limit may abandon small banks. The benefits will only kick when assurances are tested.

Japan’s banks may swap old nemesis for new foe

November 7, 2014

The central bank’s bond-buying spree will relieve lenders of the burden of financing an overextended government. But if companies don’t invest, lenders may use cheap cash to stoke bubbles in stocks and property. Japanese banks may start living more dangerously than before.

China’s capital defences have sprung a major leak

October 22, 2014

Strict controls should shield China from flighty foreign capital. In practice, investors have snuck in at least $725 billion of short-term money since 2008. That makes the economy vulnerable to outflows. Central bankers are saddled with preventing a trickle becoming a flood.