Central Banks Big Call, Steeper BOE Bets, BOJ Slow Lane: Eco Day

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Happy Friday, Europe. Here’s the latest news and analysis from Bloomberg Economics to take you through to the weekend:

• Leading central banks made a big call this week, deciding that the coronavirus is no longer calling the shots in their economies, and inflation is now the bigger threat
• Bank of Russia Governor Elvira Nabiullina is expected to deliver another big increase in the key interest rate today as inflation remains double the central bank’s target
  • Russian inflation has consistently defied forecasts this year that it will begin to slow. But economist Alexander Abramov says he’s found a telltale predictor: gummy bears
• The Bank of England’s surprise rate hike has boosted traders’ and economists’ conviction on a steeper series of increases next year
  • BOE Governor Andrew Bailey said an outlook for “more persistent” inflation was behind a surprise decision to raise interest rates for the first time in three years
• The ECB temporarily boosted its regular monthly bond buying for half a year to smooth the exit from pandemic stimulus
  • The decision, designed to combat market stress, drew pushback from a significant number of policy makers
• The Bank of Japan extended its special aid for small businesses while paring back support for larger firms as it took a cautious stance on winding down pandemic measures that further widens a policy gap with other major central banks
• Chancellor of the Exchequer Rishi Sunak is flying back a day early from a work trip to California to hold crisis talks with U.K. businesses demanding state aid
• Travel firms are braced for thousands of cancellations after France curbed U.K. arrivals in a bid to slow the omicron variant of Covid-19
• The Biden administration is pushing European Union allies to finalize a broad package of sanctions against Russian banks and energy companies that could be imposed jointly with the U.S. if the Kremlin attacked Ukraine
• Will China step up monetary and fiscal stimulus? Will it loosen curbs on the property sector? Bloomberg Economics runs the numbers

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