Cleveland Federal Reserve bank president Loretta Mester said Tuesday that the extended low interest rates, ongoing bond purchases, and loose-policy promises that central banks have used during the coronavirus crisis could pose financial stability risks over time. Mester, in advocating central banks adopt "escape clauses" so they can exit from loose policy if financial risks mount, did not say explicitly that she felt the Federal Reserve's current approach was running such risks now or say she was ready to tighten monetary policy. The Fed's current strategy does say that policy is contingent on officials' "assessments of the balance of risks, including risks to the financial system," a phrase some have interpreted as letting the Fed shape policy as needed around financial stability considerations.
Brazil's real erased early losses to trade up 0.2%, as central bank minutes showed a 100 basis point hike could be coming at the next meeting to keep inflation in check. Liam Spillane, head of EM debt at Aviva Investors, said in an interview he sees an upside in Brazil's real and said its recent outperformance can continue at this level as central bank policy should support the currency in coming months. The dollar stayed supported ahead of U.S. Federal Reserve Chairman Jerome Powell's speech at 2 p.m. ET, which will be closely watched for clues to the central bank's monetary policy after differing stances by some members following its last meeting.
The German lender can avoid a higher bar for equity requirements if it can effectively reduce its risk exposure, the report said, before the ECB sets targets for 2022 by the end of the year. "We have a strong track record in the (leveraged loan) business and we follow a prudent risk management approach in line with regulatory requirements," Deutsche Bank said. The ECB declined to respond to a Reuters request for comment.