Money Talks: The rate shock

Economist Podcasts

The Economist

News & Politics, News

4.4 • 4.9K Ratings

🗓️ 28 September 2022

⏱️ 37 minutes

🔗️ Recording | iTunes | RSS

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Summary

The world’s financial markets are going through their most painful adjustment since the global financial crisis. Global stock markets have sold off sharply and bond markets are on course for their worst year since 1949. The British pound briefly fell to its lowest level ever against the dollar. And the Japanese government has intervened to prop up the value of the yen for the first time since 1998. What’s underlying this shift?

On this week’s episode, hosts Alice Fulwood, Mike Bird and Soumaya Keynes are joined by our business affairs editor Patrick Foulis to parse the fallout from this month’s synchronous decision by the majority of the world’s central banks to raise interest rates. They’ll look at the idiosyncrasies of two outliers: Britain, where the government’s tax cuts are at odds with the Bank of England’s desire to reign in prices, and Japan, where the central bank recently decided to keep rates negative. Plus, Blue Bay Asset Management’s chief investment officer Mark Dowding explains why he’s decided to bet against sterling. And former Bank of Japan policy committee member Goushi Kataoka outlines why he thinks a weak yen could spell opportunity for Japan’s ailing economy.

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Transcript

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0:38.4	Did you know last year UKF issued more than £7.4 billion worth of finance and insurance
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0:50.7	helped British businesses during the pandemic and supported export as facing challenges with global
0:55.9	supply chains to get the exporters edge such UK export finance or call all 850-538-511.
1:13.8	September has been a shall we say memorable month in monetary history.
1:19.6	Central bankers have been raising rates all year in a bid to combat inflation.
1:23.6	But this was the month they all got serious at once.
1:26.9	The European Central Bank kicked things off by increasing its target interest rate on September 8th.
1:32.5	The governing council today decided to raise the three key ECB interest rates by 75 basis points.
1:41.6	Then on September 22nd it was America's turn.
1:45.2	Today the FOMC raised its policy interest rate by three-quarters of a percentage point.
1:50.4	The next day almost every other central bank seemed to join the party.
1:54.7	Switzerland,
2:02.9	Sweden,
	...

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