ECB, BoE rates left unchanged
In the eurozone, the main focus last week was the European Central Bank (ECB) meeting last Thursday. As expected, the bank kept its main interest rate at the record low of 1% for the 13th consecutive month. The ECB also raised inflation forecasts due...
In the eurozone, the main focus last week was the European Central Bank (ECB) meeting last Thursday. As expected, the bank kept its main interest rate at the record low of 1% for the 13th consecutive month. The ECB also raised inflation forecasts due to higher commodity prices. However, it predicts price pressures will be kept below the 2% ceiling, both this year and next. The ECB did not give further details regarding its bond purchasing programme.
Meanwhile, the Sentix index, which measures European investor confidence, unexpectedly rose to - 4.1 in June from -6.4 in May, when it slumped 8.9 points.
In the UK, the main focus was also the Bank of England meeting. As expected, the bank's monetary policy committee kept interest rates at 0.5%, and made no change to the size of the quantitative easing programme since the country's recovery is still muted and fragile. In addition, the major fiscal tightening expected in the coming budget on June 22 and the problems in the eurozone are threats to UK's growth.
The UK failed to narrow its trade deficit in April as exports fell for first time in three months, by 0.6%, outpacing the 0.4% drop in imports. In fact, the visible trade balance remained broadly the same as in March, at £7.3 billion. In manufacturing, production fell 0.4% in April from a 2.2% rise the previous month, due to a drop in car production. Inflation as measured by the Producer Price Index, increased 0.3% in May after rising 1.6% the previous month.
In the US, the trade deficit widened to $40.3bn in April. This was the highest monthly level in over a year and was also higher than the revised estimate of $40bn deficit the previous month. Exports fell 0.7% in April to $148.8bn after rising in March, while imports fell 0.4% to $189.1bn.
In the labour market, initial jobless claims fell by 3,000, less than expected, to 456,000 in the week ended June 5.
Retail sales in May fell for the first time in eight months - by 1.2%. Excluding vehicles, retail sales fell 1.1%, the biggest fall since March 2009.
This article has been prepared by Bank of Valletta p.l.c., which is licensed to conduct investment services business by the MFSA, for your general information only.