Fed Puts Pressure, Chinese Activity, World Bank Help: 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:

• The Federal Reserve’s decision to slash U.S. interest rates to contain the economic damage from the coronavirus leaves policy makers in Europe and Japan under more pressure from investors to follow suit even though they have less scope to do so
  • While the U.S. central bank took the emergency measure of cutting rates by 50 basis points, traders think there’s more to come, based on overnight index swaps and futures pricing
• A growing cohort of elderly and fewer young people is a big factor pushing down inflation rates across the globe and policies need to be adapted in response, European Central Bank policy maker Pablo Hernandez de Cos said
• U.K. Prime Minister Boris Johnson should look beyond large transport projects to ensure the billions of pounds of planned extra spending boosts the whole U.K. economy, according to the Resolution Foundation
• The scare to supply chains and economic growth caused by the outbreak of the coronavirus is set to trump Poland’s inflation concerns and help the central bank keep official borrowing costs on hold for longer
• Rising Chinese pollution levels measured from space are showing a gradual but uneven industrial pickup after the economic slowdown caused by the nation’s fight to contain the deadly novel coronavirus
• The People’s Bank of China is on a steady course to ease policy in incremental steps, according to Bloomberg Economics. The Fed’s cut gives it more flexibility but BE doesn’t think it will change the policy trajectory, David Qu writes
• G-7 finance chiefs said they’re ready to act to shelter their economies from the epidemic, yet did not spell out specific measures. Tom Orlik sees space for monetary and fiscal support, but not as much as investors would hope for
• The World Bank announced a $12 billion immediate support package to help poorer countries confront the health and economic impacts from the spread of coronavirus
• The Bank of Canada is poised to follow the U.S. and cut rates, while policy makers in the Gulf have followed the Fed’s move
• India’s central bank governor said he’s ready to act to shield the economy from the coronavirus and reiterated there’s room to cut interest rates if needed

To contact the reporter on this story: Anirban Nag in Mumbai at anag8@bloomberg.net

To contact the editors responsible for this story: Nasreen Seria at nseria@bloomberg.net, Karthikeyan Sundaram, Pradeep Kurup

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