Banking’s Miracles Of Lourdes: HSBC Calls For Higher Interest Rates

By Douglas A. McIntyre Published May 27, 4:28AM EDT

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The head of HSBC (HBC) had an epiphany. Unlike most bankers who constantly advocate lower interest rates, the head of Europe’s largest firm thinks rates must go higher.

Michael Geoghegan, CEO of HSBC, told Reuters that "Inflation is a long-term problem because there is no long-term will to solve it." He sees the solution as moving rates back up at central banks.

The issue may be that trying to slow the economies in the US or Europe will not push down inflation. One theory, a theory with some sane adherents, posits that rising demand in Asia and flat or falling supply of food and crude worldwide make bringing down inflation though monetary policy difficult.

The HSBC comments do indicate that banks are beginning to see easy credit as a nice by-product of an economic slowdown. It may allow them to rebuild balance sheets, but fast-moving inflation could crush the entire monetary system. Having low rates does little to offset that.

Inflation, hardly on the radar six months ago, now blots out the Sun.

Douglas A. McIntyre

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.