Lagarde Bids for ECB to Defy History With Third-Time-Lucky Hik
Comment of the Day

July 21 2022

Commentary by Eoin Treacy

Lagarde Bids for ECB to Defy History With Third-Time-Lucky Hik

This article from Bloomberg may be of interest to subscribers. Here is a section:

The European Central Bank reckons it can defy a record of aborted interest-rate hikes as it raises borrowing costs while confronting a recession threat and Italian political turmoil.

The half-point increase delivered on Thursday allows President Christine Lagarde and her colleagues to join the global fight against inflation with a larger-than-expected initial salvo -- carrying the risk of doubling down on another policy error.

This is the third time in the near quarter-century of the ECB’s history that it’s raised rates with a crisis of some sort blazing in the background. On each occasion it did so in July -- and both prior hikes were reversed within months.

Eoin Treacy's view

The big background question for bond markets is whether countries with a high median age population can also have high bond yields. Until now there has been a clear correlation between the aging populations of Japan, Germany and Switzerland and their low yields. The USA has a higher median age but that is not a permanent condition. The reluctance to increase immigration is not going to improve that trend.

Click HERE to subscribe to Fuller Treacy Money Back to top