October 10, 2023
United States:
New York Fed’s Perli Says Balance-Sheet Runoff Smooth, Eyes Risk
A senior official at the Federal Reserve Bank of New York said the central bank’s balance-sheet runoff has been running smoothly with “no significant” disruptions to markets, but the Fed will continue to monitor for risks.
“Recently, our implementation framework has confronted a number of stress tests and performed quite well,” said Roberto Perli, the manager of the System Open Market Account who oversees the Fed’s portfolio. “This is all encouraging, but we remain cognizant of the risks and uncertainties ahead.”
Europe:
ECB Steps Up Scrutiny of Banks’ Commercial Real Estate Loans
The European Central Bank has asked property valuers to explain the methodologies they use, as concerns grow that banks in the region have been too slow to mark down the value of commercial real estate loans on their books.
The exchanges over the past few months are part of the ECB’s wider efforts to detect potential hits at lenders, according to people with knowledge of the matter, who asked not to be identified as the discussions are private. While banks have made provisions for losses on commercial real estate loans, they’re likely to face further impairments if valuations are shown to be out of date, some of the people said.
Asia:
IMF Lifts Japan’s Growth, Price Outlooks as Recovery Rolls Along
The International Monetary Fund raised its forecasts for Japan’s growth and price gains, projecting that inflation in the world’s third largest economy will run much hotter than the Bank of Japan’s target over the next year.
The economy is forecast to grow 2% this year, an upward revision of 0.6 percentage point from July, thanks to pent-up consumption, a surge in inbound tourism and a rebound in auto exports, according to the World Economic Outlook that the IMF released on Tuesday. The IMF also sees Japan’s consumer prices rising by 3.2% in 2023 and 2.9% in 2024, compared with 2.7% and 2.2%, respectively, forecast in April.
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