Fed Taper Split, ECB Defends Outlook, World Bank Worry: Eco Day

(Bloomberg) -- Welcome to Wednesday, Americas. Here’s the latest news and analysis from Bloomberg Economics to help you start your day:

  • 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
  • ECB President Christine Lagarde is defending the central bank’s economic outlook even as banks cut their forecasts
  • World Bank Chief Economist Carmen Reinhart is worried that the protracted nature of the Covid-19 pandemic may overwhelm household and business balance sheets and develop into a financial crisis
  • China’s credit growth moderated in December, suggesting that the massive increase in credit since last year may have peaked as the central bank seeks to normalize policy
    • Bloomberg Economics expect the People’s Bank of China and other authorities will use a varied approach to drive changes in the credit structure -- pushing more credit to priority areas and restricting it to some others
  • 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