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Fed Doubles Taper, China’s Growth Floor, Rate Reviews: Eco Day

Fed Doubles Taper, China’s Growth Floor, Rate Reviews: 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:

  • Fed officials intensified their battle against the hottest inflation in a generation by shifting to end their asset-buying program earlier and signaling they favor raising interest rates in 2022 at a faster pace
    • Bloomberg Economics says FOMC participants have sent a loud and clear message to markets
    • Jerome Powell rejected the idea he held off on a hawkish policy tilt until he was nominated for a second term
    • Investors are parking more money at a major Fed facility
  • Six central banks across Europe are holding monetary policy meetings today
    • The European Central Bank will try to exit emergency stimulus without tightening
    • The Bank of England will decide whether to pull the trigger on its first interest rate increase since the pandemic began, weighing a surge in inflation against a surge in coronavirus infections
    • Turkey is likely to cut rates
    • Norway and Hungary are predicted to hike
    • The Swiss National Bank may emerge least ruffled by inflation, shielded by a strengthening currency
  • China is likely to set a floor for economic growth of 5% next year as it tries to balance a desire to rein in the real-estate sector with the need for stability in a year of crucial political change
    • Economists see the PBOC cutting reserve requirement ratios again in the first half of next year as the economy takes a knock from an ongoing property market slump and sporadic Covid outbreaks
  • South Korea’s central bank sees more risk of inflation overshooting forecasts as global supply bottle necks persist, consumption recovers and price expectations rise
  • Japan’s key auto shipments recovered in November and global trade showed signs of regaining traction before the omicron variant of the coronavirus began its spread. Meanwhile, the BOJ is set to weigh an extension to its Covid aid program at a meeting tomorrow, while it will keep all the main stimulus measures unchanged
  • Australian employment soared by a record 366,100 jobs last month as Covid restrictions were lifted, increasing pressure on the Reserve Bank to unwind its vast stimulus program and delivering a tailwind to the government in its bid for a come-from-behind election win
  • Central banks in Indonesia and the Philippines will likely keep their interest rates at record lows Thursday, even as they keep one eye on potential volatility in the wake of the Fed’s hawkish shift
  • Singapore has introduced a new round of property curbs for its private and public residential markets
  • U.S. retail sales rose by less than forecast in November, suggesting that consumers are tempering purchases
  • Canadian inflation held at the highest level in nearly two decades in November, maintaining pressure on the Bank of Canada

©2021 Bloomberg L.P.

With assistance from Bloomberg