Fed Cut Bets, ECB’s Easing Groundwork, Trade Talks: Eco Day

(Bloomberg) --

Good morning Americas. Here’s the latest news and analysis from Bloomberg Economics to help get your day started:

• 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 rate cut probably means the Fed’s campaign to shrink its balance sheet is over, leaving the central bank hoarding trillions of dollars more than before the 2008 financial crisis
  • Meanwhile, here’s why tepid manufacturing is at the heart of the case for lower rates
• 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
• 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
  • 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
• 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
• Former Reserve Bank of India Governor Raghuram Rajan didn’t apply to succeed Mark Carney as Bank of England Governor, according to a person familiar with the matter

To contact the reporter on this story: David Goodman in London at dgoodman28@bloomberg.net

To contact the editors responsible for this story: Paul Gordon at pgordon6@bloomberg.net, Zoe Schneeweiss

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