International Markets Update

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The FOMC statement showed the Committee will base future monetary policy decisions to include “international developments”. The Feder.....

Executive summary

  1. The FOMC statement showed the Committee will base future monetary policy decisions to include “international developments”.
  2. The Federal Reserve held its key rate at 0-0.25% in its first meeting of 2015 and said the US economy was expanding at a “solid” pace with strong gains in employment.
  3. Q4 advanced estimate of US real GDP disappointed, coming in at 2.6% annualized – much lower than the consensus forecast of 3.0%.
  4. The ECB announced a large-scale asset purchase plan, pledging to buy €60bn in assets per month including sovereign bonds until the end of September 2016 or even longer until there’s a “sustained adjustment” in inflation.
  5. Inflation in the Eurozone turned negative with prices in December 0.2% lower compared to the same period last year, thus adding pressure on the ECB.
  6. The euro hit a fresh nine-year low against the US dollar falling below US $1.176, before recovering slightly.
  7. The Swiss National Bank unexpectedly scrapped its three-year policy of capping the Swiss Franc against the Euro. The Bank ended its cap of 1.20 Franc/Euro and cut the rate on sight deposits by 0.5% to -0.75%
  8. The anti-austerity Syriza party led by Alexis Tsipras secured a momentous victory in Greek elections. The win resurfaced longstanding fears of a potential default on Greece’s debt obligations, sending yields on Greece’s short-term borrowing costs to their highest level since late 2012.
  9. China's economic growth slowed to its weakest in 24 years, expanding 7.4% last year from 7.7% in 2013.

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International Markets Update

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