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A alta inflación supón unha situación difícil para os principais bancos centrais

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As the European bond market falls, European Central Bank (ECB) President Christine Lagarde (pictured) said on 28 June that the central bank will start a bond-buying program on Friday to curb possible debt crises. The ECB is considering maintaining “flexibility” in its reinvestment allocation to its massive EUR 1.7 trillion bond-buying portfolio while launching a new program to stabilize the markets. It is also working on a new bond-buying tool to address so-called “fragmentation”. Lagarde said the tool would allow rates to rise “as far as necessary” to complement stabilizing inflation at the 2% target. The ECB’s position as the “buyer of last resort” has eased the sell-off of European bonds to a certain extent, and the yields of sovereign bonds of some highly leveraged countries have fallen, escribe Wei Hongxu.

Under the ECB’s decision to raise interest rates in July to counter inflation, its proposed bond-buying program, while easing a possible bond market crisis, is effectively contradicting its imminent monetary tightening. Researchers at ANBOUND pointed out that similar to those implemented by the Federal Reserve and the Bank of Japan (BOJ), the ECB’s monetary policy also faces challenges ahead. With high global inflation narrowing down the monetary policy space, the dilemma between inflation and employment is becoming increasingly more common. This is not good news for the global economy and capital markets, as the contradiction between economic growth and inflation will plague major central banks for a long time.

Lagarde said the ECB would remain “flexible” on reinvestment of the PEPP portfolio due on July 1. “We will ensure that the orderly transmission of our policy stance throughout the euro area is preserved,” she said. “We will address every obstacle that may pose a threat to our price-stability mandate”.

The ECB’s insistence on playing the role of the “buyer of last resort” has actually drawn lessons from the European sovereign debt crisis triggered by the 2008 financial crisis. Due to the slow decision-making of the ECB at that time and its reluctance to promote easing, the economies and financial systems of highly leveraged countries such as Greece, Italy, and Spain suffered huge losses from the debt crisis. ECB then finally launched quantitative easing in 2014 to deal with the dual threats of deflation and the sovereign debt crisis at that time, which stabilized the economic and financial systems of the relevant countries. In total, the ECB currently buys more than EUR 49 trillion of bonds, equivalent to more than one-third of the eurozone’s GDP. In the past two years, the ECB has bought more bonds than all the additional bonds issued by the 19 eurozone national governments, giving it huge leverage over the region’s borrowing costs.

As the European market is about to bid farewell to negative interest rates, after the ECB starts hiking interest rates, the increase in borrowing costs will inevitably bring new risk factors to its bond market. The consequences of rising interest rates will not only cause the economic growth of various countries facing decline, it is also likely to lead to a new round of debt defaults. Such is the price that the central bank has to pay for its measures against inflation. However, as with the Fed, market investors are equally skeptical that the ECB’s tightening policy will be effective in tackling inflation. At present, the inflation level in the eurozone has reached more than 8%, which is more than four times the 2% target of the ECB. The latest CPI data in the eurozone in June is expected to reach a record high of 8.5%. High inflation is not only the energy distortion brought about by the conflict between Russia and Ukraine, but also the constraints of supply chain adjustment.

These factors mean that the inflation level will be difficult to contain in the short term and will fall back quickly. ECB Chief Economist Philip Lane said the central bank must remain vigilant in the coming months as inflation could keep climbing and the region’s economy could slow due to consumption. Meanwhile, Morgan Stanley stated that the eurozone’s economy is expected to slip into a mild recession in the fourth quarter of this year as measures of consumer and business confidence slump due to reduced energy supplies in Russia, while inflation remains high. The eurozone’s economy is expected to contract for two quarters before returning to growth in the second quarter of next year, driven by rising investment. Despite the risks of an economic slowdown, the ECB is still expected to raise rates at every meeting for the remainder of the year, culminating in a hike to 0.75% in December, given the persistently high inflation. However, if the economic outlook deteriorates significantly, the ECB may stop raising interest rates after September. This actually shows that the central bank does not have many effective means in the face of high inflation. It can only adopt the take-one-step-at-a-time approach and adjust between inflation and recession.

Tal situación está a suceder tamén nos Estados Unidos e Xapón. A Fed tamén se enfronta á elección conflitiva de inflación e recesión, mentres que o BOJ debe considerar unha serie de efectos de cambiar a súa política de flexibilización. A situación en Xapón é algo semellante á do BCE, xa que é difícil que o banco central endureza a súa moeda reducindo o seu balance. Despois de que o ien xaponés seguise depreciándose, o nivel de inflación superou o obxectivo do 2% por fila, poñendo ao BOJ nunha posición difícil. Se se pon fin á política de flexibilización que defende Abenomics para facer fronte á inflación, provocará un aumento do rendemento dos bonos do goberno xaponés, ademais do colapso da burbulla bolsista xaponesa. Con Xapón no seu conxunto enfrontándose a un nivel de alavancagem sen precedentes, non é optimista que as empresas xaponesas poidan permitirse o aumento dos tipos de interese. Ao mesmo tempo, o BOJ acumulou un gran número de bonos soberanos e activos de risco. Unha vez que o balance é reducido e vendido, intensificará a venda no mercado de capitais, provocando así unha crise do mercado de capitais que afecte tanto a accións como a débeda. Esta crise, especialmente a crise da débeda, causará un choque fatal e un impacto na economía.

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Esta perspectiva tamén é a razón pola que o BCE segue loitando para deter a compra de bonos aínda que estea decidido a aumentar os tipos de interese. Relativamente, debido ao especial papel do dólar estadounidense na moeda internacional, a Fed non se enfronta a maiores riscos cando sube os tipos de interese mentres reduce o seu balance, senón que se atopa nunha posición relativamente activa. Non obstante, a Fed tamén se enfronta ao risco dunha recesión provocada polo endurecemento acelerado da política. Isto é similar á situación do BCE e do BOJ. Equilibrar a inflación e o estancamento económico sería o principal desafío ao que se enfrontan as grandes economías, e tamén é un dilema ao que teñen que enfrontarse os principais bancos centrais do mundo.

Conclusión da análise final

Dado o alto nivel de inflación global, os principais bancos centrais do mundo tenden a adoptar políticas de endurecemento. Porén, a contradición entre inflación e crecemento económico, así como o problema da débeda resultante, está a ser cada vez máis destacada. Baixo estas contradicións, os bancos centrais enfróntanse xeralmente ao dilema de que, aínda que se reduce o espazo para a política monetaria, a dificultade da política aumentou. Isto tamén significa que estes bancos centrais están nunha situación vergonzosa de fracaso da política monetaria e que a economía global ten que facer fronte á ameaza de estanflación durante moito tempo.

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