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ECB Would Need ‘Forceful’ Response if Inflation Surges, Says Lagarde
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- European Central Bank President Christine Lagarde said the bank would respond forcefully if inflation rises significantly due to the Middle East conflict.
- ECB economists forecast inflation peaking at 4.8% in 2027 in a severe scenario, or 3.5% this year in an adverse one.
- Lagarde cautioned European governments against broad-based household support and noted a more benign economic backdrop than in 2022.
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BOE Should Be Prepared to Act Despite Uncertainty, Says Pill
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- Bank of England Chief Economist Huw Pill said the bank should not delay efforts to contain inflation amid surging energy prices.
- The Bank of England left its key rate unchanged at 3.75% last week, having been expected to cut rates.
- The bank expects annual inflation to rise to 3%-3.5% over coming quarters, exceeding its 2% target.
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Asian Economies Walking Tight Rope Between Solid Momentum, Emerging Risk
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- S&P Global Ratings raised its 2026 GDP growth forecast for Asia-Pacific to 4.5% from 4.2%, despite the Mideast war.
- Growth in the Asia-Pacific region is supported by tech-oriented economies, an artificial-intelligence boom, and easing U.S. tariffs.
- The Mideast war and higher energy prices pose a drag, potentially leading to currency depreciation and modest policy tightening.
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U.K. Inflation Unchanged in February, But Iran War Clouds Outlook
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- The U.K.’s annual inflation rate was 3.0% in February, but is set to rise in coming months due to the U.S.-Israel conflict.
- The Bank of England kept interest rates unchanged last week, while markets now expect three or four rate hikes this year.
- The energy shock from the conflict is expected to hit U.K. economic growth, which was already subdued before the attacks.
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U.K. Will Stick to Budget Rules In Tackling Energy Crisis, Treasury Chief Says
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- The U.K. government will stick to its budget rules responding to higher energy costs from U.S. and Israeli attacks on Iran.
- Treasury chief Rachel Reeves said the government will avoid “untargeted and unfunded” support provided in 2022 and 2023.
- The government will grant the Competition and Markets Authority additional powers to prevent businesses from making windfall profits.
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Australia’s Inflation Cooled Slightly in February
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- Australia’s headline inflation eased to 3.7% on-year in February, remaining above the central bank’s 2% to 3% target range.
- The Reserve Bank of Australia has already raised interest rates in February and March to cool inflation.
- Rising fuel prices and consumer expectations are expected to push inflation higher, despite a strong job market.
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Egan-Jones Heads to an SEC Hearing Over Credit Ratings Capabilities
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- The SEC questioned Egan-Jones Ratings’ resources and integrity, requiring a formal review of its application to restore certain securities ratings authority.
- The SEC revoked Egan-Jones’s authority for rating asset-backed and government securities in 2013, citing inaccurate document filings.
- Egan-Jones expects its re-entry to enhance competition in the expanding asset-backed lending market, and criticized current dominant providers.
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WSJ Pro Central Banking brings you news and analysis from a global team of reporters and editors at The Wall Street Journal and Dow Jones Newswires. Send your tips, suggestions and feedback to service@dowjones.com. An artificial-intelligence tool created these summaries, which are based on the text of the article and checked by an editor. Read more about how we use artificial intelligence in our journalism.
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