Honor for Draghi, Fed to Keep Rates Steady, China PMIs: Eco Day

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

• Former European Central Bank President Mario Draghi will get Germany’s highest honor this week, though probably not its undying love
• The ECB must adopt a flexible approach to price stability or risk losing its credibility, according to Ewald Nowotny, the former head of the Austrian central bank
• Sterling traders are sounding confident on the currency’s prospects as they head into one of the most uncertain U.K. interest-rate decisions in years
• The Federal Reserve is all but certain to keep interest rates steady following December forecasts that showed no change in 2020, and is expected to reinforce the signal that policy is on hold
• The outbreak of coronavirus threatens to derail a fragile stabilization in the world economy, which appeared poised to benefit from the phase one U.S.-China trade deal, and signs of a tech turnaround. What’s more, the early impact of the pandemic is likely to weigh on China’s January PMIs, writes Bloomberg Economics’ Chang Shu
• Australia’s headline inflation outpaced economists estimates in the final three months of 2019, advancing at the fastest quarterly pace in three years as oil gained and drought bumped up food prices
• Concern at the Bank of Japan over the effectiveness of prolonged low interest rates appears to be growing, with one board member indicating that a policy review may be needed, a summary of views from the central bank’s January meeting signaled
• The lesson from the past week in the world of trade is really quite simple: Tariffs are contagious. Oh, and they don’t always work as planned, writes Shawn Donnan in Terms of Trade

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, Devidutta Tripathy

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