ECB's Signal, Half-Point Fed Cut, U.K's 'Rigorous' Test: Eco Day

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(Bloomberg) --

Welcome to Friday, Europe. Here’s the latest news and analysis from Bloomberg Economics to help get your day started:

  • European Central Bank policy makers will give a clear signal next week that interest rates are about to fall even further below zero, economists predict
  • Needs review. The U.K. should expect a “rigorous” assessment of its regulations before financial firms will be allowed to do business in the European Union after Brexit, according to a draft document to be presented by officials in Brussels later this month
  • Ain’t interested. Former Reserve Bank of India Governor Raghuram Rajan did not apply to replace Mark Carney as Bank of England Governor, according to a person familiar with the matter
  • Revisiting goals. European Central Bank staff has begun studying a potential revamp of their inflation goal, according to officials familiar with the matter, in a move that could embolden policy makers to pursue monetary stimulus for longer
  • Still divided. European governments need more time to agree on a single candidate for the International Monetary Fund, as a stalemate between them leaves the role vulnerable to a challenge against the continent’s traditional hold on it
  • Talks on. U.S. and Chinese senior officials spoke by phone on Thursday, the second call since the late June summit at which the two sides agreed to a truce in their ongoing trade conflict
  • Here, there and everywhere. Trade-war jitters and slower growth are prompting more interest-rate cuts by spooked central bankers, who are already feeling under pressure with little help from governments. Read here about Bloomberg Economics’ Tamara Mast Henderson’s take on the latest policy easing in Indonesia
    • The world’s central banks are likely to start following the lead set by their governments, according to the economist who’s become the public face of Modern Monetary Theory -- even if they don’t acknowledge what they’re doing
  • Need for speed. Two senior Fed officials stressed the need to act quickly if the economy looks likely to stumble, reinforcing bets interest rates could be cut by up to half a percentage point later this month. A July cut could also end Jerome Powell’s record-breaking unity at the Fed
  • Brace yourself. G-7 finance chiefs acknowledged gathering threats to the global economy and gave a cautious pledge to provide fiscal support if those dangers materialize

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