The headline may be a bad pun, but the warning is serious. Many people believe that the trouble with Turkey’s currency is confined to that country, but that is far from the case. Turkey is just the first country that implemented populist policies when the going was good to now pay for these policies. The markets are about to teach populists a lesson, and Turkey is the first instalment.
Speeches and releases from various European Central Bank officials don’t make the best summer reading, that’s for sure. But it might be a good idea to go through a couple of recent ones, which give a hint of what the future might bring.
Central banks are still worried about the danger of deflation, even though they have timidly started to lift interest rates. How else would they explain real negative rates almost everywhere in the developed economies?
What a spectacular lesson the first half of the year delivered for investors. At the beginning of the year, it looked like the UK’s vote to leave the European Union was a great idea: the eurozone seemed on the brink of disintegration.
The “Brexit” referendum is already turning out to be more toxic than many people would have thought, and that’s before we even know the result.
By Mirela Roman
While central bankers are stepping deeper into territory they have never tried before (negative IR, QE), markets and also the public want solid proof that they Walk the Talk.
Well, it was only a matter of time, really.
Central banks’ credibility has been eroding bit by bit for a while now, but the first evidence that the public’s expectations about inflation are disconnecting from those of the policymakers emerged on Thursday.
Many in the markets are looking with apprehension at this coming Wednesday’s decision by the Federal Open Market Committee (FOMC), wondering when will the Fed finally pull the trigger on raising the interest rates – or rather, “normalising” an abnormal situation that has lasted since the financial crisis hit in 2007.
The markets are trying to price in the first interest rate rise by the Federal Reserve in nine years, and as shown by recent volatility, it is not an easy task.
As the Federal Reserve’s Federal Open Market Committee (FOMC) starts talks on what is probably the most watched interest rate hike in history, the importance of getting it right cannot be over-emphasized.