Wind of change at ECB as Fed tightens, inflation stance shifts, European sovereigns expect to ride out inflation spike, and more
THE WEEKEND REVIEW
Latest opinion and analysis from OMFIF around the world
24-28 January 2022, Vol.13 Ed.4
Most-Read Commentary
Wind of change at ECB as Fed tightens, inflation stance shifts: A wind of change is blowing at the ECB as the world braces for higher US interest rates. Six years of low inflation, followed by Covid-19, have allowed the ECB to maintain negative interest rates and near-continuous asset purchases, promoting policies to dampen the sovereign debt crisis. Now that both these factors are receding, some of the underlying problems are resurfacing – confronting the ECB with near insoluble dilemmas, write David Marsh and Taylor Pearce.
Commentary European sovereigns expect to ride out inflation spike: The German Bund’s flirtation with a positive yield in January was short lived. But it was the first time since May 2019 that the 10-year yield had climbed above zero. Yet panellists at OMFIF’s 20 January meeting on the outlook for European sovereign borrowing were relaxed about rising yields, writes Philip Moore. Read more.
Video Reflections on the Fed and risks to financial stability: Randal Quarles, former member of the board of governors of the Federal Reserve System, joins Mark Sobel, US chair, OMFIF, for a discussion on the outlook of the Federal Reserve. Their discussion covers the economic outlook, financial stability and Quarles’ reflections on his time at the Fed and as chair of the FSB. Watch.
Outlook 2022 UK versus euro area performance: On the face of things, the UK’s decision to avoid fully locking down the economy over Christmas appears to be paying dividends. In contrast, EU countries introduced restrictions relatively early, so markets are starting to price in greater underperformance. This is particularly clear in the euro/sterling exchange rate, but the UK’s growth foundations remain fragile, writes Geoffrey Yu. Read more.
Commentary CBDC must preserve defining features of physical money: As sovereign issuers around the world contemplate the introduction of retail CBDC, stakeholders face a once-in-a-lifetime opportunity to steward this evolution. Digital cash should not only embody the fundamental attributes of its physical counterpart but also offer additional enhancements that can serve the emerging needs of society, writes Andrew Slack. Read more.
