INTEREST RATES

China interest rate reform

China: interest rate reform to improve transmission

Magdalene Teo, Fixed Income Research Asia, Eric Mak, Equity Research Analyst Asia, Julius Baer │China has opted for interest rate reform (to be more market-oriented) instead of announcing a benchmark rate cut, so liquidity flow is more targeted to the segments that need it.



Are there limits to the monetary policy

Rethinking the limits of monetary policy

José Ramón Díez Guijarro (Bankia Estudios) | In recent years there has been a debate in academic circles about the limits of monetary policy, once the barrier of negative interest rates has been crossed. With the additional problem that not even in Japan, where the natural interest rate has spent practically two decades in negative territory, has the central bank dared to dive deep into the zone of below zero interest rates, even though the economy has been stuck in a deflationary stagnation which has given birth to new economic jargon (japanisation) to refer to this type of economic process. The doubt is whether the Bank of Spain got is wrong by not using monetary policy more intensively or got it right be assessing the risks of traveling in this unknown territory as greater than the possible benefits.


Interest rates

Interest Rates As Indicators Of A Change Of Cycle

Miguel Navascués | For some months we have been looking with concern at the spread of interest rates of US 10 minus 2 year bonds as an indicator of an ever closer recession. Indeed, this indicator has been moving towards zero, and if it goes negative – which seems to be the trend- it would signal the threshold of a recession. But I don’t think it is such a precise indicator.


normalisation of interest rates

Is it time to normalise interest rates?

There’s an idea circulating amongst the central banks or, more accurately, amongst pressure groups in the central banks. The crux of this idea is: “the central banks should normalise interest rates”.

 




Fixed Income: A Search For A Safe Haven Or A Question Of Yields?

J.L.M. Campuzano (Spanish Banking Association) | At the end of the day, we have zero or negative real long-term interest rates. Why? The most simple answer has to do with the relation between supply and demand. And everything leads us to think that there is more demand than supply in the fixed income markets.


monetary normalisation

Preparing For The Start Of Monetary Normalisation In Europe

J.L Campuzano (Spanish Banking Association) | What is clear from ECB President Mario Draghi’s speech last Thursday is that investors consider we are closer than farther away from the start of monetary normalisation against a backdrop of economic optimism.


Secular stagnation

What’s happened to the Secular Stagnation thesis?

As the global outlook improves, many people ask what’s happened to Larry Summer’s hypothesis of Secular Stagnation, which says there are clear signs that the economic world has been “cooling down” for decades. And currently, everything seems to make us think that the recovery we have on our doorstep is not going to be strong or long-lasting.