In its first policy session since the end of its four-year-long, €2.6-trillion asset purchase programme in December, the European Central Bank (ECB) left its key interest rates and forward guidance unchanged last week.
While noting that data have continued to surprise on the downside, the ECB’s January meeting stopped short of suggesting action. The Governing Council appears to be in assessment mode, with the March projections the next key focus.
The bank reiterated its pledge to keep the key interest rates at their present levels through the summer of 2019 and “longer, if necessary”. Last week’s decision comes amid a lack of growth in Germany, France and Italy in the fourth quarter of 2018, prompting fears of recession.
Meanwhile, in the UK, the Office for National Statistics reported last week that the number of people in employment continued to rise following an increase of 141,000 to a record high of 32.54 million in the three months to November.
The employment rate, which measures the proportion of working age people with a job, rose to 75.8 per cent, up from 75.3 per cent a year earlier, its highest level since the data series began in 1971. During the same period, the unemployment rate fell back down to four per cent in the three months to November, the lowest level since February 1975.
On the other hand, the unadjusted average weekly earnings, excluding bonuses, grew by 3.3 per cent year-on-year, unchanged from October.
Finally, in Germany, investor confidence growth outlook improved in January amid hopes that growth will stabilise after a turbulent 2018.
A gauge measuring investor expectations for the next six months rose to -15.0 in January, beating expectations for a drop to -18.5. This was the highest reading since September, when the score was 10.6.
However, the negative reading means that pessimists still outnumber optimists among the survey participants.
ZEW president Achim Wambach said investor expectations improved partly because “potentially negative factors” such as the UK’s rejection of the Brexit deal and relatively weak growth in China were already anticipated last year.
This report was compiled by Bank of Valletta for general information purposes only.