Tommy Stubbington

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How long can Japan’s central bank defy global market forces?

There’s a Chinese proverb that holds it is better to plan one’s means of retreat than 36 different ways to win the battle.

The axiom has cropped up on Tokyo trading floors this autumn, after Japan lavished a record $62bn to fight the yen’s collapse below a three-decade low, in as many as four separate interventions since September.

That is only one front in its war against global market forces. By the end of June, after months fighting to control the yield curve, the Bank of Japan had raised its holdings of Japanese government bonds (JGBs) to over half a quadrillion yen ($3.6tn).…  Seguir leyendo »

Time for strong medicine: How central banks got tough on inflation

The world’s most-watched central banks are finally stamping down on a surge in inflation. But this week it became clear that they know this comes at a cost.

From the UK, where the Bank of England raised interest rates for the fifth time in as many meetings, to Switzerland, which bumped up rates for the first time since 2007, policymakers in almost every major economy are turning off the stimulus taps, spooked by inflation that many initially dismissed as fleeting.

But for the big two in particular — the US Federal Reserve and the European Central Bank — the prospect of sharply higher rates brings awkward trade-offs.…  Seguir leyendo »