BOE Rate Call, ECB Downplays Inflation, Fed Hawks Agree: Eco Day

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Welcome to Thursday, Europe. Here’s the latest news and analysis from Bloomberg Economics to help you start the day:

  • The Bank of England on Thursday may add fuel to investors’ expectations that its next move will be to tighten monetary policy rather than provide fresh stimulus to the economy as the pandemic eases

    • Investors should start preparing for higher U.K. borrowing costs, even if they take a while to materialize
  • The prospect of a Norwegian interest-rate increase as soon as September is likely to be the key focus of the central-bank decision there this week. Whereas, the Czech Republic will probably steer clear of raising rates for now, with investors tuning in for signals on when the long-awaited monetary tightening will start
  • Turkey’s central bank is expected to leave its benchmark rate unchanged for a second meeting on Thursday after forecasting that inflation had reached its peak
  • Elsewhere, Brazil’s central bank lifted its benchmark interest rate by 75 basis points and promised another hike of the same size next month in a renewed push to bring inflation back to target
  • But European Central Bank Chief Economist Philip Lane played down mounting global inflation pressures, saying price gains won’t stage a lasting comeback in the euro zone
  • Federal Reserve hawks joined the chorus in playing down U.S. inflation worries, saying price-growth is unlikely to get out of control despite unprecedented government spending. The biggest uncertainty for investors watching the Fed in coming months may, however, be a churn at the top of the U.S. central bank
  • The U.S. Treasury Department warned that its fiscal tools to keep the national debt from breaching its congressionally mandated limit may fail to last as long as in prior years, adding pressure on lawmakers to raise or suspend the ceiling before it comes back into effect in August
  • China announced that it was suspending a regular economic dialog with Australia, in a largely symbolic move intended to signal Beijing’s growing frustration with Canberra
  • Analysis by Bloomberg Economics suggests emerging markets may not reach critical vaccination thresholds for years
  • The U.S. will support a proposal to waive intellectual-property protections for Covid-19 vaccines, joining an effort to boost supply
  • Working moms in South Korea have suffered far greater job losses than single women during a pandemic that has hit female employment harder than in previous economic crises, according to research by the central bank
  • As soaring commodity prices, shipping costs and chip shortages work their way through the world’s factories, the warnings of supply-side inflation pressures are starting to become a reality

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