U.S.:
Potential Fed Chairs Suggest They Would Pursue Tighter Policy
Potential candidates to head the Federal Reserve in 2018 suggested that monetary policy would be tighter if they were in charge. Speaking at the annual American Economic Association meeting that ended Sunday, Glenn Hubbard of Columbia University, along with Stanford University’s John Taylor and Kevin Warsh, criticized the central bank for trying to do too much to help an economy struggling with problems that monetary policy can’t solve. Fed watchers see the three, all former officials in George W. Bush’s administration, as among the candidates to take over should President-elect Donald Trump decide not to nominate Janet Yellen for another four-year term as chair when her current one expires in February 2018.
<https://www.bloomberg.com/news/articles/2017-01-08/potential-fed-chairs-suggest-they-would-pursue-tighter-policy>
Europe:
S&P sees ECB staying in support mode until 2018
Rating agency Standard and Poor’s said it did not expect the European Central Bank to switch away from its supportive monetary policy before 2018, despite signs that inflation pressures are beginning to return. A report by S&P’s chief European economist and a colleague said 2017 was likely to mark the return of inflation in the euro zone, though core readings that strip out more volatile goods such as crude oil should remain subdued and give the ECB leeway to maintain support. "The ECB could choose to look through the rise in energy inflation as temporary," the report said. "Monetary policy is likely to remain accommodative until core inflation experiences a sustained adjustment of its path, probably not before 2018."
<http://www.reuters.com/article/us-eurozone-ratings-s-p-idUSKBN14T12C>
Asia:
Bonds lose their shine for India Inc after lending rate cuts
Cuts in bank lending rates may spur some Indian companies to switch their fundraising back to loans, reversing a recent trend towards to the bond market, investment bankers say. Following the surge in bank deposits triggered by demonetisation late last year, State Bank of India, the country’s largest government-owned lender in asset terms, cut its so-called marginal cost of funds-based lending rates (MCLR) by 90bp. Others like Bank of Baroda, Punjab National Bank, Union Bank of India, Kotak Mahindra Bank and Dena Bank have followed with cuts of 45bp-90bp in their rates. Indian lenders have received an estimated 14.9 trillion rupees ($219.3 billion) in deposits after Prime Minister Narendra Modi banned 500 and 1,000 rupee bank notes last November to curb black money.
<http://www.reuters.com/article/india-debt-bonds-idUSL4N1EZ1BT>
South America:
Brazil Worries the ‘China of South America’ Is Eating Its Lunch
Brazilians are starting to have second thoughts about the business El Dorado next door. Low taxes, low wages and low overheads are driving the Paraguayan government’s ambition to become the "China of South America": a low-cost manufacturing hub that attracts investment from across the region. As Brazil struggles through its worst recession on record, dozens of businesses have set up operations across the border, creating thousands of jobs. Broadly welcomed by the Brazilian government at first, the migration of investment is now facing increasing scrutiny as unemployment rises to unprecedented levels.
<https://www.bloomberg.com/news/articles/2017-01-09/brazil-worries-the-china-of-south-america-is-eating-its-lunch>
