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Welcome to Tuesday, Europe. Here’s the latest news and analysis from Bloomberg Economics to help you start the day.
- The European Union is considering the issuance of joint debt to finance Ukraine’s long-term reconstruction, which may end up costing hundreds of billions of euros, according to an EU official familiar with the plan
- ECB President Christine Lagarde rejected calls by staff to link salary increases to inflation, which has hit a record in the euro area
- The Federal Reserve warned of deteriorating liquidity conditions across key financial markets amid rising risks from the war in Ukraine, monetary tightening and high inflation in a new report Monday
- The Fed also reiterated concerns over financial risks of stablecoins, saying the increasing use of them to meet margin requirements in leveraged trades involving other cryptocurrencies may heighten redemption risks, according to the report
- Separately, Federal Reserve Bank of Atlanta President Raphael Bostic said he favors policy makers continuing to raise rates by half-point increments rather than doing anything larger
- The ECB has flagged measures to cope with a future sovereign bond crisis, but they would almost certainly come up short, Bloomberg Economics says
- Romania will probably lift borrowing costs for a sixth meeting as the central bank faces the deepening conundrum of tackling the fastest inflation in almost two decades while the war in neighboring Ukraine exacerbates risks to economic growth
- U.K. retail sales are falling on an annual basis for the first time since the start of last year as the cost of living crisis crushes consumer confidence and puts the brakes on spending
- U.S. Treasury Secretary Janet Yellen will travel to Europe next week for meetings with counterparts from top industrial economies, aiming to keep up sanctions pressure on Russia
- Northern Ireland’s Democratic Unionist Party said it won’t join a new government with the nationalists Sinn Fein until the U.K. and European Union make changes to trading arrangements in their Brexit deal
- Soaring fuel costs amid dwindling supplies look set to further squeeze U.S. consumers and businesses alike this summer
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