Swaha Pattanaik
ReutersBreakingviews
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Past articles by Swaha:
Fed manages to hurt both rich and poor – Breakingviews
Past tardiness in tackling surging inflation means low-income U.S. households face huge increases in the cost of living. Now, Fed Chair Jay Powell may have to hike rates so much that growth falters – a prospect hitting stocks and richer households’ net worth. Misery has company. → Read More
Andrew Bailey unwillingly channels Paul Volcker – Breakingviews
The Bank of England boss raised rates to 1% to curb high inflation and may hike further despite the risk of recession. It’s old-school policymaking as practised by the former Fed chief. The more central banks behave this way, the more likely and severe a global downturn will be. → Read More
ECB forecasting snafus may turn into trust problem – Breakingviews
Christine Lagarde’s central bank underestimated how high inflation would soar and deferred rate hikes. Its own research says rising inequality hurts faith in public institutions. Soaring prices risk undermining such confidence, which is critical in a still-young currency union. → Read More
Central banks pay cost of rear-view-mirror driving – Breakingviews
U.S. consumer prices leapt 8.5% in March from a year ago, the biggest jump since 1981. The Fed is playing catch up as its policy framework was designed for a low, not high, inflation world. That’s the danger of thinking the future will resemble the past. → Read More
Inflation regime shift looks scarily plausible – Breakingviews
Fed boss Jay Powell and other global rate-setters admit surging prices warrant policy action. Where they disagree is how forcefully they need to combat such pressures. The BIS, the umbrella body for central banks, says a new inflationary era may lie ahead. Its case is persuasive. → Read More
Christine Lagarde’s inflation excuses wear thin – Breakingviews
Euro zone prices rose at a record annual rate of 7.5% in March, almost as much as in the United States where the Fed has started hiking rates. There’s more going on than just surging energy costs. It’s getting harder for the European Central Bank boss not to follow Jerome Powell. → Read More
Where odd U.S. yields lead, Europe will follow – Breakingviews
Two-year U.S. Treasuries briefly yielded more than 10-year ones. There’s some way to go before such an inversion happens in the euro zone. But high inflation pushed German two-year bond yields into positive territory for the first time since 2014. A replay may be on the cards. → Read More
UK is in monetary policy vanguard for new reason – Breakingviews
The Bank of England raised rates for a third meeting running. Governor Andrew Bailey started tightening policy sooner than peers at the Fed and ECB, but is now toning down his talk about future hikes because of growth worries. Where he leads, others may once again follow. → Read More
ECB chucks growth ball into governments’ court – Breakingviews
President Christine Lagarde is winding down asset purchases. It’s the opposite of what the central bank did in past crises, but high inflation is forcing her hand. Shielding the euro zone economy from the Ukraine war’s consequences will fall to politicians, who are slower to act. → Read More
Stagflation, like worst of pandemic, is avoidable – Breakingviews
Soaring energy prices amid the Ukraine invasion will stoke inflation, and the hit to consumers will hurt growth. But economic stagnation is not inevitable. The Covid-19 response showed how fiscal policy can mitigate shocks. It will mean accepting yet more Big Government. → Read More
Euro’s Ukraine battering intensifies ECB migraine – Breakingviews
The currency fell broadly, diving below $1.10, because the euro zone is exposed to economic fallout from Russia's invasion of its neighbour. The sliding exchange rate makes imports dearer, aggravating inflation. President Christine Lagarde’s policy predicament is getting worse. → Read More
ECB’s inflation problem has bigger Ukrainian twist – Breakingviews
Christine Lagarde faces the same commodity price surge as her Canadian peer, who just hiked interest rates, and Fed Chair Jerome Powell, who is set to do the same. But a less robust euro zone economy is more exposed to the war on its doorstep. Her least bad option is to dawdle. → Read More
Use dollar’s clout, even if that means losing it – Breakingviews
Efforts by America and its allies to isolate Russia from the international financial system may hasten other countries’ efforts to bypass the greenback and eventually erode its global dominance. But there’s little point in having power that can’t be wielded in dire circumstances. → Read More
Bond market sends flawed signals on U.S. economy – Breakingviews
A dash to safe havens means Treasuries are in big demand. But the yield curve is sending the same messages it was before Russia invaded Ukraine: that Fed rate hikes may trigger recession and that policy rates won’t rise much above 2%. Both presumptions could be wrong. → Read More
Bitcoin’s true colours shine in stampede to safety – Breakingviews
The cryptocurrency fell 5% as conflict in Ukraine flared, undermining the case for it to be a gold-like refuge. Even earlier, it moved too closely in synch with equities to be much use as a hedge. It comes into its own, however, as an amplifier of ups and downs in riskier assets. → Read More
ECB has central banking’s hardest juggling act – Breakingviews
President Christine Lagarde faces a less acute inflation problem than U.S. or UK peers. But she’ll have to raise interest rates to curb price pressures while ensuring bond yield gaps between euro zone nations don’t widen to worrying levels. The two goals may become incompatible. → Read More
Andrew Bailey pay rise clanger has tiny PR upside – Breakingviews
The Bank of England chief’s call for wage restraint has gone down badly with workers facing soaring prices. The ensuing controversy, has, however, done more to inform the public about the central bank’s mission to control inflation than many past communications campaigns. → Read More
ECB shows words matter more than actions – Breakingviews
President Christine Lagarde left interest rates unchanged while the Bank of England raised them. Yet she made the bigger market splash by admitting inflation risks had grown. It was the first clear sign that she may join global peers this year in tightening monetary policy. → Read More
IMF’s economic crystal ball is cracked – Breakingviews
The Washington-based lender slashed global growth forecasts and hiked inflation predictions. The IMF has been too late to admit that Fed policy tightening is needed. That’s damaging for an institution that doles out economic advice and monitors financial stability risks. → Read More
Christine Lagarde will win rate rise timing tussle – Breakingviews
Money markets imply the European Central Bank will hike twice this year, even though its boss says policy tightening is unlikely in 2022. She will have to work hard to convince markets, but reason is on her side. Wage pressures are less evident in the euro zone than in America. → Read More