In its last monetary policy meeting for this year, the governing council of the European Central Bank (ECB) left its key refinancing rate unchanged at 0.05 per cent. The deposit rate remains at -0.20 per cent and the marginal lending rate at 0.30 per cent.

In the forward guidance given at the press conference after the meeting, ECB president Mario Draghi emphasised that key rates will remain at the current low level for a prolonged period of time. In addition, Mr Draghi stressed that monetary policy could become more expansionary as needed. However, he also declared that the bank’s monetary expansion is an intention and not a target. Some investors seeking faster action were disappointed.

In the meantime, market research firm Markit Economics reported a contraction in German manufacturing, as factories in Germany cannot avoid stagnation in the wider eurozone. Markit’s closely-watched purchasing managers index (PMI) for Germany fell to 49.5 in November from 51.4 in October. The November reading is below an initial PMI estimate of 50, which is the dividing line between expansion and contraction on a monthly basis.

At the same time, manufacturing in the eurozone as a whole was revised to 50.1 from 50.4, while manufacturing in France and Italy also shrank in both countries. The weakness in the currency bloc, coupled with the lowest inflation in five years, is putting pressure on the ECB to use unconventional means to underpin price growth and revive the economy.

Finally, in the US, retail spending in the four days from Thanksgiving Thursday to the following Sunday fell by 11 per cent from a year earlier to $50.9 billion, according to the National Retail Federation, the main industry trade group. This may be a sign that shoppers are losing interest in the four-day shopping bonanza.

The decline, the second consecutive annual drop, was the consequence of retailers offering bargains in the days and even weeks before, giving shoppers ample opportunities to benefit from discounts without having to put up with crowds that characterise Black Friday, as this event is known.

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

Sign up to our free newsletters

Get the best updates straight to your inbox:
Please select at least one mailing list.

You can unsubscribe at any time by clicking the link in the footer of our emails. We use Mailchimp as our marketing platform. By subscribing, you acknowledge that your information will be transferred to Mailchimp for processing.