EU Vaccine Problems, Powell on Inflation, China Debt: Eco Day

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

  • European Union vaccine shipments to the rest of the world could face severe disruptions under tougher rules set to be unveiled on Wednesday
  • An international deal to agree new rules on corporate taxation is within reach, U.K. Chancellor of the Exchequer Rishi Sunak said, offering the prospect of fresh clarity for businesses operating digitally across borders
  • Spain’s central bank cut its forecast for economic growth this year, citing a weaker-than-expected first quarter and a slow roll out of the European Union’s recovery funds
  • Chancellor Angela Merkel ordered a five-day lockdown over Easter in one of Germany’s toughest moves since the start of the pandemic, highlighting the sudden deterioration in Europe’s efforts to contain Covid-19
  • Czech central bankers are poised to hold interest rates this week amid a rare spat with the government over their independence and the timing of planned monetary tightening
  • As recently as a month ago, the lira was the best-performing major-emerging-market currency for 2021. But now depreciation is underway, amid rising U.S. yields and remarks from President Recep Tayyip Erdogan on economic policy. The recent ousting of the central bank chief means the currency is unlikely to return to the top of the perch again: Bloomberg Economics’ Ziad Daoud writes
  • Libya’s state oil producer is set to get the biggest portion of development spending in the country’s new budget, potentially aiding plans to raise output as the industry recovers from a decade of civil war
  • Federal Reserve Chairman Jerome Powell said prices would rise this year as the pandemic recedes and Americans are able to go out and spend, but he played down the risk that this would spur unwanted inflation
  • The Bank of Canada provided the greatest guidance yet into how it plans to slow purchases of government bonds as the economic recovery accelerates, fueling expectations it could begin doing so as soon as April
  • China’s local governments had 14.8 trillion yuan ($2.3 trillion) of hidden debt last year, and the figure could climb even further this year, according to a government-linked think tank. Separately, China is well behind on the two-year targets set in its trade deal with the U.S., having purchased only about a third of goods
  • The IMF is considering creating up to $650 billion in additional reserve assets to help developing economies cope with the pandemic
  • Bank of Korea Governor Lee Ju-yeol said he expects faster inflation and economic growth this year, but dismissed the view that the central bank needs to tighten policy early to tackle rising financial risks
  • The combination of rising global yields and the $1.9 trillion U.S. stimulus has divided market views. As emerging-market currencies depreciate, some fear a repeat of the 2013 taper tantrum. With expectations that U.S. growth for the year will touch 7.7%, others see positive spillovers buoying global growth. Björn van Roye and Tom Orlik write

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