Central Banks Pivot as Inflation Fight Ends

Central banks around the world have almost tamed the pandemic-ignited surge of inflation, with the European Central Bank embarking on its second interest-rate cut as growth slows. The US Federal Reserve next week is poised to begin cutting rates as it weighs the lingering vestiges of inflation with data indicating the economy is cooling. Traders boosted bets on a larger, half-point cut—a move that champions say will ensure the Fed won’t get behind the curve as it tries to manage a soft landing and avoid a hit to the labor market. Others say a half-point cut would be an overreaction and that the economy isn’t in urgent need of looser monetary policy. And while global central banks have used all the tools in their toolboxes these past few years to battle inflation this time, supply shocks, geopolitics and climate change are showing the limitations of their approach. In the future, their power may be further constrained.

After a widely-panned performance against Vice President Kamala Harris, Donald Trump declined her offer of a second debate. Harris, 59, who methodically went after Trump, 78, baiting him and belittling him while tying him tightly to the end of federal abortion rights, was even declared the winner by some Republicans. She pointed out that he is a convicted felon, argued that his campaign rallies were small affairs and reminded viewers of his often warm references to a fictional serial killer and cannibal. Trump meanwhile moved on to pet consumption, repeating a falsehood about Haitian migrants seen as part of his campaign’s racially-tinged anti-immigrant agenda. But a debate victory for Harris, Timothy O’Brien writes in Bloomberg Opinion, “doesn’t pave her path to the White House. That avenue runs through seven swing states where Trump retains strong support,” though a new poll shows Harris ahead of Trump nationally. Each candidate returned immediately to those battlegrounds. Missing from the debate were many meaningful discussions on policy, particular the US’s fiscal future, Bloomberg’s editors argue. “If Washington refuses to change course,” they wrote about America’s finances, “financial markets will eventually force its hand, and the crunch that follows will be brutal.”