The European Central Bank can hopefully reduce emergency stimulus soon and should not transfer the extraordinary flexibility of its crisis-fighting measures to its more standard tools, German central bank chief Jens Weidmann told. The ECB last week decided to maintain an elevated pace of bond buys over the coming quarter, despite a stronger-than-expected rebound in growth, fearing that higher borrowing costs could choke off the recovery. But some policymakers are already making the case for a discussion in September on how and when to phase out the 1.85 trillion euro ($2.2 trillion) Pandemic Emergency Purchase Programme as the bloc is quickly recovering. He said that by next year there should be no unusual capacity underutilisation and such a situation could no longer be classified a crisis, meaning the justification for the emergency measures would be gone.
Bank of England to look through temporary inflation rise: Reuters poll
British inflation can rise above 3% before the Bank of England feels discomfort, according to a Reuters poll of economists who also said the economy would expand faster than previously thought this quarter as more pandemic restrictions are lifted. The central bank has a 2% inflation target, but the rate unexpectedly jumped above that in May for the first time in almost two years and hit 2.1%, part of a post-lockdown climb in prices that is expected to gather pace. Inflation will peak at 2.4% in the final quarter of this year before gradually scaling down, the June 14-17 poll found. The Bank will tolerate it at 3.0-3.5% before feeling discomfort, medians showed.
BOJ may extend pandemic-relief scheme, keep stimulus intact
The Bank of Japan is expected to maintain its massive stimulus and may extend a deadline for its pandemic-relief programme on Friday, in a sign that a fragile economy and tepid inflation will keep any exit from its ultra-easy policy a long way off. "The BOJ will have to stick to the current framework for the remainder of Kuroda's term (until 2023), as Japan's economy won't recover that quickly," former BOJ board member Makoto Sakurai told Reuters. In a two-day meeting ending on Friday, the BOJ is set to keep its yield curve control target at -0.1% for short-term rates and 0% for 10-year bond yields. The central bank may also decide to extend the September deadline for an asset-buying and loan programmes introduced last year to channel funds to pandemic-hit firms,
sources have told Reuters.
Vicious post-Fed bounce has dollar headed for year's best week
The 10-year government bond yield (interpolated) on the previous trading day was 1.87, +4.00 bps. The benchmark government bond yield (LB31DA, 10.5 years) was 1.865, +5.50 bps. LB31DA could be between 1.83-1.88. Meantime, the latest closed US 10-year bond yields was 1.52%, -5.00bps. USDTHB on the previous trading day closed around 31.39 Moving in a range from 31.26-31.33 this morning. USDTHB could be closed between 31.36-31.45 today. Meantime, The dollar was headed for its best week in nearly nine months on Friday as investors have scrambled to price in a sooner-than-expected ending to extraordinary U.S. monetary
stimulus in the days after a surprise shift in tone from the Federal Reserve.
Sources : Bloomberg, CNBC, Investing, CEIC
