According to the minutes of the US Federal Reserve (Fed) June policy meeting published last week, officials agreed to end their bond-buying programme by October, putting a definitive end-date on the programme and closing a controversial chapter in central-banking history whose results are still the subject of intense debate.

The Fed also reduced its bond purchases in $10 billion increments this year, to $35 billion a month from a peak of $85 billion. The plan, as outlined in the minutes, is to reduce bond purchases in increments at its next three policy meetings, including a $15 billion reduction in October, leaving it to buy no bonds in November.

In the meantime, according to the German statistics agency, German industrial production dropped by 1.8 per cent in May on a seasonally-adjusted basis. Economists polled by The Wall Street Journal had predicted a flat reading. The figure for April was also revised downwards, to a decline of 0.3 per cent from a previous estimated rise of 0.2 per cent. This decline in industrial production suggests that Europe’s largest economy struggled to expand in the spring after a robust first quarter.

Economists at Barclays now expect German GDP to have increased by just 0.4 per cent on an annualised basis, significantly weaker than the first quarter’s 3.3 per cent annualised rate. With slower growth in Germany, the 18-nation euro area will find it difficult to expand.

Finally, UK industrial and manufacturing production unexpectedly dropped in May, down 0.7 per cent and 1.3 per cent respectively, according to the Office for National Statistics.

Forecasts were for respective gains of 0.3 per cent and 0.5 per cent. Both recorded gains of 0.4 per cent in April. The decline in manufacturing was the most since January 2013 and the first decline in six months.

The drop in industrial production was the biggest decline since August 2013.

The decline in production indicates that the economy may have struggled to maintain momentum in the second quarter.

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