The US Federal Reserve lifted its benchmark interest rate, as expected, in response to growth in the economy. The target rate was raised by 0.25 percentage points to a range of 0.75 to 1.0 per cent.
Recent data has revealed that the US jobless rate has declined to 4.7 per cent last month while core consumer prices surged by 2.2 per cent from last year. The Fed said “the labour market has continued to strengthen and economic activity has continued to expand at a moderate pace”. As long as the economy continues to recover, further gradual rate hikes will be appropriate to meet the Fed’s long-run neutral rate of three per cent.
In the meantime, data from Eurostat showed that eurozone industrial production grew less than expected in January amid weaker gains in almost all sectors. The production of capital goods rose by 0.6 per cent in the eurozone compared to January 2016.
Non-durable consumer goods production fell by 2.6 per cent and capital goods production fell by 0.8 per cent. The production of energy grew by 6.9 per cent, durable consumer goods by 1.5 per cent and intermediate goods by 0.8 per cent.
On a monthly basis, industrial production grew 0.9 per cent in January, improving from a 1.2 per cent decline in December against economists’ expectations of 1.4 per cent increase. This suggest that the economy made a slower start to 2017.
Finally in the UK, British Prime Minister Theresa May has been given the power by lawmakers to trigger Article 50 of the EU Treaty, allowing formal negotiations to start between the UK government and the other 27 EU Member States on the terms of the UK’s exit from the EU. May is expected to trigger Article 50 by the end of the month.
Donald Tusk, President of the European Council, said in a statement to the European Parliament: “It is our wish to make this process constructive and conducted in an orderly manner”.
An EU official said that Britain should stop threatening the EU before starting negotiations.
Tusk said that the EU would not be “intimidated” by such threats and would prefer to walk away from talks if it did not get its way.
This report was compiled by Bank of Valletta for general information purposes only.