Overseas Headlines – January 13, 2021

United States:

Fed Talk of Taper Rekindles Specter of Wrenching 2013 Tantrum

“Federal Reserve officials are beginning to split over when they may need to start pulling back on their massive monetary stimulus, drawing nervous glances from investors who remember how markets were roiled during the 2013 taper tantrum. In the past week, four of the Fed’s 18 policy makers have publicly raised the prospect they may discuss reducing bond buying — currently running at $120 billion a month — by year’s end. In contrast, several others have called the debate premature and Fed Vice Chairman Richard Clarida, the most senior central banker to weigh in, has said he doesn’t expect any changes before 2022.”



Lagarde Defends ECB Economic Outlook Even as Banks Cut Forecasts

“The European Central Bank’s latest projections for economic growth in the euro area are still “very clearly plausible” despite the resurgent coronavirus and renewed lockdowns, President Christine Lagarde said. The ECB chief said that many of the uncertainties that previously clouded the outlook have now cleared, including U.S. elections, the Brexit trade deal with the U.K., and the start of vaccinations. At the same time, she warned that monetary and fiscal support must continue.”



BOJ Is Said to Mull Downgrading View of Economy Amid Emergency

“The Bank of Japan is likely to consider downgrading its economic assessment at a policy meeting next week following the declaration of a partial state of emergency to combat the latest virus wave, according to people familiar with the matter. BOJ officials say the bank needs to discuss its assessment as there is little doubt the latest emergency declaration will take a heavy toll on the economy, the people said.”




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