The minutes of January meeting of the US monetary policy-setting Federal Open Market Committee, which were published last week, showed that Federal Reserve policymakers backed away from their year-old intention to consider raising interest rates if the unemployment rate falls below 6.5 per cent.

As the jobless rate fell faster than expected, other labour market indicators show weakness. Policymakers therefore agreed it would “soon be appropriate” to revise their guidance about how long the era of record-low interest rates will endure.

The minutes also show that, in “the absence of an appreciable change in the economic outlook, there should be a clear presumption in favour” of continuing to reduce the bond purchases by $10 billion at each meeting.

Last week, Markit Economics released the preliminary estimates of the purchasing managers’ index (PMI) for the euro area as whole. The readings for the manufacturing sector registered unexpectedly strong declines. However, these come after even sharper rises one month ago, when the manufacturing PMI reached its highest level since May 2011. The services PMI stagnated, with the sharp increase in Germany offsetting another disappointing reading in France.

Although survey results fell overall short of expectations, subcomponents do not hint at a reversal in the underlying trend as the new orders component, at 54.1, remains in comfortable territory.

Finally, according to data released by the International Labour Organisation (ILO), the UK unemployment rate during the three months to December unexpectedly rose to 7.2 per cent from 7.1 per cent during the three months to November. This exceeded estimates that unemployment would remain steady.

Separately, data published by the Office for National Statistics show that consumer prices in the UK rose below the Bank of England’s benchmark of two per cent for the first time since November 2009, as the consumer price index rose by 1.9 per cent during January.

The minutes of the most recent meeting of the Bank of England’s Monetary Policy Committee show that it unanimously voted to keep interest rates at the their current record low of 0.5 per cent but against more quantitative easing.

This article was compiled by Bank of Valletta for general information purposes only.

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