Powell Retort, Europe Slow Lane, Australia’s Defense: 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:

  • Federal Reserve Chair Jerome Powell emphasized his view that the economy has a long way to go in the recovery and signs of prices rising won’t necessarily lead to persistently high inflation
  • The unprecedented $9 trillion rescue mission by central banks to haul the world economy from its coronavirus recession is being tested as rising bond yields threaten their ability to keep borrowing costs down. No where is the pressure clearer than in Australia
  • While the U.S. rushes toward a blockbuster fiscal stimulus package to accelerate its recovery from the coronavirus crisis, much of Europe is pootling along in the slow lane
  • Bank of England policy makers are sounding a note of caution about how much excess savings built up during Covid-19 lockdowns will be spent once the economy reopens
  • After an epic collapse last year, oil prices have tripled since April, raising inflationary pressures in emerging markets. Will this prompt a widespread increase in interest rates? Bloomberg Economics’ Ziad Daoud says some will have to respond, but most will be spared
  • The Bank of Japan’s policy review will likely center on flexible stock-fund buying, bond yield movements and the potency of negative rates as it looks for ways to make tools designed for a shorter time span function more effectively over the long haul
  • Reforming the World Trade Organization’s paralyzed dispute-resolution body will be a key priority for the institution, but the process won’t be easy, incoming Director-General Ngozi Okonjo-Iweala said.
  • President Joe Biden’s nominee for trade chief is pledging to work with allies to take on China while also embarking on a pragmatic approach to the Asian nation, saying it’s both a rival and partner
  • New Zealand’s government will require the central bank to take account of rampant house prices when it sets interest rates, a change that may restrict its ability to run loose monetary policy

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