Draghi Unveils Revamped QE Program as ECB Downgrades Outlook

Posted by Forexsq 37 days ago (http://www.bloomberg.com)
img Mario Draghi unveiled a revamp of quantitative easing to allow for more purchases of each euro member’s debt as the weaker global outlook prompted a wholesale reduction of officials’ economic forecasts through 2017.

The European Central Bank president said in Frankfurt on Thursday that the Governing Council has now set a potential purchase limit of 33 percent of any given bond, from 25 percent previously. The euro slid to a two-week low as Draghi said the emerging-market rout threatened global expansion and that consumer prices may barely grow this year.

“The information available indicates a continued, though somewhat weaker, economic recovery and a slower increase in inflation rates compared with earlier expectations,” Draghi told reporters. “Taking into account the most recent developments in oil prices and recent exchange rates, there are downside risks” to the inflation forecast, he said.

The move to reset the ECB’s stimulus program after a six-month review, which will b

BOE Says Global Turmoil Hasn’t Shaken Its Economic Outlook

Posted by Forexsq 30 days ago (http://www.bloomberg.com)
img Bank of England policy makers said the U.K. economic outlook remains healthy and market turmoil related to China’s slowdown hasn’t shaken their view that the time for a rate increase is approaching.

At their September meeting, the nine-member Monetary Policy Committee said it’s too early to draw clear conclusions about developments overseas, a sign they remain focused on withdrawing emergency stimulus that’s been in place since 2009. While the panel voted 8-1 to keep the key interest rate at 0.5 percent, with only Ian McCafferty dissenting, there were still some members who saw potential upside inflation risks.

The MPC’s view echoes Governor Mark Carney’s comments last month, when he said officials could look past events in China, where growth is cooling and a currency devaluation has rippled through global markets. With economists forecasting a BOE rate increase in the first quarter of next year, Carney has said the decision will come into “sharper” focus at the start of 2016.

Fed leave rates unchanged, FOMC Statement

Posted by Forexsq 23 days ago (http://www.reuters.com)
img The U.S. Federal Reserve kept interest rates unchanged on Thursday in a nod to concerns about a weak world economy, but left open the possibility of a modest policy tightening later this year.

In what amounted to a tactical retreat, the U.S. central bank said an array of global risks and other factors had convinced it to delay what would have been the first rate hike in nearly a decade.

"Recent global economic and financial developments may restrain economic activity somewhat and are likely to put further downward pressure on inflation in the near term," the Fed said in its policy statement following the end of a two-day meeting. It added the risks to the U.S. economy remained nearly balanced but that it was "monitoring developments abroad."

However, the central bank maintained its bias towards a rate hike sometime this year, while lowering its long-term outlook for the economy. Fresh economic projections showed 13 of 17 Fed policymakers still foresee raising rates at least o

BOE Signals Rate Can Stay Low as Inflation Weakness Persists

Posted by Forexsq 2 days ago (http://www.bloomberg.com)
img Bank of England policy makers said the U.K. economy is withstanding international pressures, while also signaling they have room to keep the benchmark rate at a record low as inflation weakness persists.

In the minutes of its October meeting, the Monetary Policy Committee weighed risks of a further global slowdown against resilient domestic demand and consumer spending. It said the near-term outlook for inflation had weakened since August and price growth will probably stay below 1 percent until spring 2016. Officials voted 8-1 to keep the key rate at 0.5 percent, with Ian McCafferty maintaining his call for an increase.

Inflation at zero, combined with an “easing in the pace of activity,” may keep the MPC on a cautious footing as it judges when to begin removing the emergency stimulus it put in place during the financial crisis. Investors haven’t priced in a rate increase until late 2016 and short-sterling futures rose after the minutes were released, indicating traders were ta

Fed awaiting evidence global chill not knocking U.S. off track: minutes

Posted by Forexsq 2 days ago (http://www.reuters.com)
img The U.S. Federal Reserve thought the economy was close to warranting an interest rate hike in September but policymakers decided it was prudent to wait for evidence a global economic slowdown was not knocking America off course.

The minutes from the Sept. 16-17 meeting released on Thursday showed the Fed's policymaking committee was unsettled by signs of turmoil abroad but didn't think this had "materially altered" the outlook for the economy.

"Nevertheless, in part because of the risks to the outlook for economic activity and inflation, the committee decided that it was prudent to wait for additional information," the Fed said in the minutes.

The Fed surprised much of Wall Street by keeping interest rates unchanged at the September meeting.

Some policymakers have since said the decision was a close call, and the minutes showed that most of them still thought it would be appropriate to raise rates "by the end of the year."

But in discussing how close the economy was to

Minutes Show Fed Leaders Delayed Rate Hike Over Global Risks

Posted by Forexsq 2 days ago (http://www.bloomberg.com)
img Federal Reserve officials put off an interest-rate increase in September because of growing risks to their outlook for economic growth and inflation, mainly from China, even as they continued to say they were on track to raise the target later this year.

Policy makers “agreed that developments over the inter-meeting period had not materially altered the committee’s economic outlook,” according to minutes of the Sept. 16-17 session of the Federal Open Market Committee, released Thursday in Washington. Nonetheless, ’’the committee decided that it was prudent to wait for additional information confirming that the economic outlook had not deteriorated.’’

The FOMC noted that domestic economic conditions, including data on consumer spending and housing, had continued to improve, and the labor market had reached or was close to the committee’s long-run estimates for unemployment.

Still, concerns over China and its potential spillover to other economies “were likely to depress U.S. n

FOMC - Minutes of the Federal Open Market Committee

Posted by Forexsq 51 days ago (http://www.federalreserve.gov)
img In a joint session of the Federal Open Market Committee (FOMC) and the Board of Governors of the Federal Reserve System, the manager of the System Open Market Account (SOMA) reported on developments in domestic and foreign financial markets. The deputy manager followed with a discussion of System open market operations conducted by the Open Market Desk during the period since the Committee met on June 16-17. The Desk's overnight reverse repurchase agreement (ON RRP) operations continued to provide a soft floor for money market interest rates. The deputy manager also updated the Committee on plans for tests of the Term Deposit Facility in August and of term RRPs at the end of the third quarter.

The staff next summarized some of the recent steps the System had taken to prepare further for the process of normalization of monetary policy. The staff also proposed that future changes in the FOMC's target federal funds rate range as well as associated changes in related administered inter

RBA Minutes of Monetary Policy Meeting August 2015

Posted by Forexsq 53 days ago (http://www.rba.gov.au)
img Members noted that economic growth in Australia's major trading partners had remained close to its long-run average, although growth had eased a little in the June quarter. The forecast for growth in 2015 and 2016 had been revised down slightly, but growth was expected to remain around its long-run average. The increase in global industrial production had slowed over the past year or so, particularly in the Asian region, and this had contributed to lower commodity prices. Members noted that, as a result, the forecast for Australia's terms of trade had been revised down since that presented at the May meeting. Globally, core inflation had been stable in year-ended terms over recent months at rates below the targets of most central banks. Monetary conditions had remained very accommodative.

In China, GDP growth had picked up in the June quarter to be 7 per cent in year-ended terms. However, growth in a range of other indicators of activity had moderated in the first half of 2015. The

Bank of England maintains Bank Rate at 0.5%

Posted by Forexsq 65 days ago (http://www.bankofengland.co.uk)
img The Bank of England’s Monetary Policy Committee (MPC) sets monetary policy in order to meet the 2% inflation target and in a way that helps to sustain growth and employment. At its meeting ending on 5 August 2015, the MPC voted by a majority of 8-1 to maintain Bank Rate at 0.5%. The Committee voted unanimously to maintain the stock of purchased assets financed by the issuance of central bank reserves at £375 billion, and so to reinvest the £16.9 billion of cash flows associated with the redemption of the September 2015 gilt held in the Asset Purchase Facility.

CPI inflation fell back to zero in June. As set out in the Governor’s open letter to the Chancellor, around three quarters of the deviation of inflation from the 2% target, or 1½ percentage points, reflects unusually low contributions from energy, food, and other imported goods prices. The remaining quarter of the deviation of inflation from target, or ½ a percentage point, reflects the past weakness of domestic cost gro

Federal Reserve issues FOMC statement

Posted by Forexsq 73 days ago (http://www.federalreserve.gov)
img Press Release

Release Date: July 29, 2015
For immediate release

Information received since the Federal Open Market Committee met in June indicates that economic activity has been expanding moderately in recent months. Growth in household spending has been moderate and the housing sector has shown additional improvement; however, business fixed investment and net exports stayed soft. The labor market continued to improve, with solid job gains and declining unemployment. On balance, a range of labor market indicators suggests that underutilization of labor resources has diminished since early this year. Inflation continued to run below the Committee's longer-run objective, partly reflecting earlier declines in energy prices and decreasing prices of non-energy imports. Market-based measures of inflation compensation remain low; survey‑based measures of longer-term inflation expectations have remained stable.

Consistent with its statutory mandate, the Committee seeks to foster m

ECB monetary policy decisions

Posted by Forexsq 86 days ago (http://www.ecb.europa.eu)
img Ladies and gentlemen, the Vice-President and I are very pleased to welcome you to our press conference. We will now report on the outcome of today’s meeting of the Governing Council, which was also attended by the Commission Vice-President, Mr Dombrovskis.

Based on our regular economic and monetary analyses, and in line with our forward guidance, we decided to keep the key ECB interest rates unchanged.

Regarding non-standard monetary policy measures, the asset purchase programmes continue to proceed smoothly. As explained on previous occasions, our monthly asset purchases of €60 billion are intended to run until the end of September 2016 and, in any case, until we see a sustained adjustment in the path of inflation that is consistent with our aim of achieving inflation rates below, but close to, 2% over the medium term. When carrying out its assessment, the Governing Council will follow its monetary policy strategy and concentrate on trends in inflation and the medium-term outlo

Bank of England says UK economy to grow by 2.5% in 2015

Posted by Forexsq 150 days ago (http://www.bbc.co.uk)
img The Bank of England has cut its 2015 growth forecast from 2.9% to 2.5%, and for next year from 2.9% to 2.6%, as governor Mark Carney unveiled his quarterly inflation report.

And it backed expectations interest rates may rise in about a year's time.

Mr Carney also said deflation could emerge during the year, but that inflation was expected to pick up notably towards the end of the year.

Inflation was 0% in March for a second month, well below the Bank's 2% target.

The figure marks the lowest rate of Consumer Prices Index inflation since estimates of the measure began in 1988.

The Bank's base rate has been at a record low of 0.5% for more than six years.
Wage growth

Mr Carney blamed falling inflation on a sharp fall in energy prices, lower food prices and strong sterling. He said these factors explained about three-quarters of the fall in inflation.

However, the Bank's governor said he was relaxed about the low inflation rate and said the factors which had driven i

RBA Monetary Policy Decision by Glenn Stevens

Posted by Forexsq 186 days ago (http://www.rba.gov.au)
img At its meeting today, the Board decided to leave the cash rate unchanged at 2.25 per cent.

Moderate growth in the global economy is expected in 2015, with the US economy continuing to strengthen, even as China's growth slows a little from last year's outcome.

Commodity prices have declined over the past year, in some cases sharply. The price of oil in particular is much lower than it was a year ago. These trends appear to reflect a combination of lower growth in demand and, more importantly, significant increases in supply. The much lower levels of energy prices will act to strengthen global output and temporarily to lower CPI inflation rates. Prices for key Australian exports have also been falling and therefore Australia's terms of trade are continuing to decline.

Financial conditions are very accommodative globally, with long-term borrowing rates for several major sovereigns at all-time lows. Financing costs for creditworthy borrowers remain remarkably low.

In Australia

BOE to stress test banks for financial crisis

Posted by Forexsq 194 days ago (http://www.topforexbrokers.com)
img Britain's seven biggest lenders will have to show they can cope with a global economic slump triggered by a sharp slowdown in China and a crash in the euro zone in this year's round of stress tests conducted by the Bank of England.

Britain decided to introduce annual stress tests for its banks after the 2007-09 financial crisis which required taxpayers to pump 66 billion pounds into Royal Bank of Scotland and Lloyds Banking Group .

"By assessing the resilience of the UK banking system against a major external shock we will improve further our ability to identify vulnerabilities and we will ensure that banks have plans in place to address a wider range of possible stresses," BoE Governor Mark Carney said on Monday.

The Bank also said the Co-operative Bank, which failed last year's tests and is deep in a restructuring programme, would not be assessed as it is now too small.

That leaves six banks and one mutual lender to face this year's tests -- Barclays , HSBC , Standard Ch

BOJ Keeps Record Stimulus With Inflation Set to Stall

Posted by Forexsq 207 days ago (http://www.bloomberg.com)
img The Bank of Japan kept its record stimulus unchanged, even as it warned that cheaper energy prices will bring inflation to a halt in the world’s third-largest economy.

The BOJ maintained a pledge to expand the monetary base at an annual pace of 80 trillion yen ($660 billion), as forecast by all 34 economists in a Bloomberg News survey. While it said consumer price gains will slow to about zero percent “for the time being,” the central bank stuck to its view that the economy will continue a moderate recovery.

Governor Haruhiko Kuroda is counting on the benefits of lower oil prices to wash through the economy, spurring growth and inflation in the longer term. The immediate focus is on the outcome of wages talks between companies and their unions that will indicate whether businesses are passing along more of their record cash holdings and profits to workers.

“The BOJ is admitting that consumer prices could fall, while indicating that it’s not planning steps to counter that,” sa

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