Fed Pause, Europe Looks Sluggish, Trump Trade Talks: Eco Day

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

• Chairman Jerome Powell signaled the Federal Reserve won’t raise interest rates again until inflation accelerates in a dovish pivot that left many investors betting against any further hikes in this economic expansion.
  • The Fed’s shift to a prolonged pause in will lift pressure off its emerging-market peers to hike in tandem.
  • Bloomberg Economics Carl Riccadonna argues the Fed’s guidance strongly implies it’s contemplating the end of the tightening cycle.
• Despite the Fed’s caution, tomorrow’s labor data will probably show the U.S. hit another milestone in January, notching a record 100th month of gains even as the lengthiest U.S. government shutdown weighed on other parts of the economy.
• U.S. President Donald Trump will meet China’s top trade negotiator in the Oval Office on Thursday for high-level talks, with little indication that Beijing will bend to American demands to deepen economic reforms.
  • As those talks continue, the first official gauge of China’s economy in 2019 showed a slowdown in the manufacturing sector eased a little in January
  • Meanwhile, corporate America is taking the gloves off in its campaign to end the trade war.
• The steady drop in Brazil’s unemployment rate that began in the first quarter came to a halt in the final three months of last year as the economy’s slow recovery adds few jobs.
• The euro-area economy looks sluggish heading into 2019 amid a recession in Italy and increasing risks from within and outside the region.
  • Italian’s contraction isn’t a surprise, but there are signs the bad news is spreading. German unemployment fell less than forecast at the start of the year, a possible sign of weakness in what’s been a bright spot for the economy.
• In the U.K., concern about Brexit’s impact on the economy is growing, with consumer worries near crisis-era levels, investment falling and the property market suffering.
• Pakistan’s central bank unexpectedly raised its key rate as the nation looks for aid from friendly nations to shore up its foreign reserves and avoid a balance-of-payment crisis.

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

To contact the editors responsible for this story: Fergal O'Brien at fobrien@bloomberg.net, Zoe Schneeweiss

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