German unemployment fell to its lowest level in over two decades in February, data from the German Labour Office showed last week.
The number of people out of work in Europe’s largest economy fell by 20,000 on a seasonally-adjusted basis to 2.812 million, double the 10,000 drop that economists in a Bloomberg News survey were expecting.
The unemployment rate remained at 6.5 per cent for the third month in a row and the lowest since December 1991, just over a year after German reunification.
Meanwhile, a deal between Greece and its international creditors was reached last week, which removes the immediate threat of a run on Greece’s banks, following several weeks of big withdrawals by depositors.
The extension of the €240 billion rescue package until the end of June staves off the need for controls to stem the flight of money from the country that, in a worst case, could have signalled Greece’s expulsion from Europe’s currency bloc.
Greek Prime Minister Alexis Tsipras was, however, forced to undertake that his pre-election promises to reverse painful austerity cuts imposed over the past six years would be done in close consultation with Greece’s creditors.
To secure the breathing space, the new left-wing government published a list of proposed reforms focused on tackling tax evasion and corruption and greater government efficiencies.
Lastly, during a two-day testimony to Congress, Federal Reserve (Fed) chairperson Janet Yellen, said that the central bank could raise interest rates before inflation picks up as long as it foresees price increases accelerating and the job market continues to advance. She also signalled that the Fed is preparing for a rate hike this year, even as she essentially ruled out the move until June at the earliest.
Yellen said the US labour market still showed cyclical weakness and inflation continued to fall, necessitating significant policy accommodation. Since Yellen’s previous testimony on the economy last July, domestic inflation has weakened even as the US employment picture improved in the second half of 2014.
This report was compiled by Bank of Valletta plc for general information purposes only.