Overseas Headlines – April 20, 2017


Fed could ease regulatory burden on bank boards of directors: Powell
The Federal Reserve could ease the regulatory burden it puts on the boards of directors of banks, Fed Governor Jerome Powell said on Thursday. Powell said the possible changes would be aimed at allowing boards of directors to focus on banking strategy rather than an "overly detailed checklist of supervisory process requirements." "We are currently reassessing whether our supervisory expectations for boards need to change," Powell said prepared remarks for an event with financial firms. Powell, who besides banking regulatory policy also has a vote on the Fed’s interest rate decisions, said the U.S. economy appeared to be "at or close to full employment."


Forget about early-2018 ECB rate hike, investors now say
Investors are no longer expecting a rate rise from the European Central Bank by March 2018, money market pricing suggests, marking a sharp reversal in expectations for higher interest rates from just a month ago. ECB policymakers’ comments playing down the scope for near-term changes to monetary policy, along with falling inflation expectations, explain the reassessment. Money market rates tell the tale. Forward Eonia bank-to-bank rates — the best gauge — dated for the ECB meeting on March 8 next year stand at around minus 0.34 percent, two basis points above the Eonia spot rate of minus 0.36 percent. Such a gap indicates markets are pricing in just a 20 percent chance of a 10 basis point hike in the ECB’s minus 0.40 percent deposit rate by next March. That’s a sharp contrast to last month, when investors ratcheted up rate-hike expectations after the ECB at its March 9 meeting signalled a diminishing urgency for more policy action. Soon after, some policymakers even raised the prospect of raising rates before quantitative easing ends.


Stung by debt, China’s economic growth to slow to 6.5 percent in 2017
China’s economic growth is expected to slow to 6.5 percent in 2017, as the government seeks to cool the property sector and temper credit growth to contain risks from a dangerous build-up of debt, a Reuters poll showed. Growth is then expected to weaken further to 6.2 percent in 2018, the Reuters poll of over 75 economists showed, extending a slowing trajectory for the world’s second-biggest economy, which grew 6.7 percent in 2016, for its worst performance in 26 years. The polling was conducted April 10 to 19. More than 70 forecasts were collected before the release of first-quarter gross domestic product data on April 17. The forecasts for this year and in 2018 were unchanged from a January poll, underscoring the drag on the economy from property controls and tighter credit to contain risks from a dangerous build-up of debt. China’s economy is expected to grow 6.7 percent in the second quarter from a year earlier, 6.6 percent in the third and 6.5 percent in fourth quarter, the poll showed. The government is targeting annual growth of around 6.5 percent this year.