The Russian central bank has jacked up rates by a whopping 1.5 percentage points to 9.5 per cent – far more than expected by economists – as policymakers finally act decisively to prop up the wilting rouble.
The rouble has tumbled over the course of the year, weighed down by western sanctions against Moscow, sliding oil prices and oligarchs’ concerns over the safety of stashing their cash in their home country (recently exacerbated by the Sistema saga).
But the Russian currency roared back yesterday, rocketing as much as 5.5 per cent off its low and closing at 41.5 per US dollar after its greatest one-day gain in more than a decade. The recovery was partly triggered by speculation that the Russian central bank would act forcefully at today’s meeting to stem the decline. And policymakers have duly obliged.
Among the Member States, the lowest unemployment rates were recorded in Germany (5.0%) and Austria (5.1%), and the highest in Greece (26.4% in July 2014) and Spain (24.0%).
Compared with a year ago, the unemployment rate fell in twenty-one Member States, increased in six and remained stable in Belgium. The largest decreases were registered in Hungary (10.0% to 7.6% between August 2013 and August 2014), Spain (26.1% to 24.0%) and Portugal (15.7% to 13.6%), and the highest increases were registered in Finland (8.2% to 8.7%) and France (10.3% to 10.5%).
The eurozone’s inflation rate edged up to 0.4 per cent in October, in line with expectations, but remains below the European Central Bank’s target for the 21st month in a row.
Although the widely expected rise is positive, after underwhelming data from Germany earlier this week, the eurozone’s “core” inflation rate – which strips out some volatile components – unexpectedly dipped to 0.7 per cent.
The eurozone’s recovery has hit a sticky patch this year, with Italy formally back in recession – probably followed by Germany – and the rest of the currency bloc still struggling.
That has sent inflation continually downward over the past year, and far below the European Central Bank’s mandate to keep the CPI rate below but close to 2 per cent.
Even merely low inflation makes tackling debt burdens much harder. The situation is particularly acute in the eurozone periphery, where CPI is in many cases in negative territory, but even stronger economies in the “core” have seen price pressures subside dramatically (see chart below).>> Read More
The Bank of Japan has stunned markets by expanding its ultra-aggressive monetary easing programme to stop the country’s businesses and consumers slipping back into what it has called a “deflationary mindset”. Here are some analysts’ views.
In brief, the BoJ is acting after consumer prices in Japan, excluding volatile food prices and the impact of a sales tax hike, rose just 1 per cent in September. The central bank is targeting 2 per cent inflation by next year, as a means of reviving growth by convincing companies to expand and raise wages.
Citi economist Kiichi Murashima remains sceptical that the central bank, which will step up its asset purchases so that the monetary base expands at an annual pace of Y80tn ($724bn), rather than Y60-70tn as in the past, can reach its inflation goal.
The BoJ probably wants to maintain its bullish economic scenario by implementing additional measures. This is a meaningful action, but even with these measures, the 2% inflation target is unlikely to be met in fiscal 2015. Inflation will likely undershoot the BoJ’s projections and that might prompt the BoJ’s further easing.
HSBC’s Paul Mackel, head of Asian currency research, and Dominic Bunning, FX Strategist, focus more on the fact that the Japanese yen will be weakened by the extra monetary stimulus, possibly sparking a “currency war” with other nations by making made-in-Japan products cheaper overseas.>> Read More
Retail sales in Germany tumbled 3.2 per cent month-on-month in September, far worse than expected and the biggest monthly decline since May 2007 – increasing the chances that the eurozone’s biggest economy has slumped into a recession.
Last month’s 2.5 per cent rise in retail sales was also heavily marked down to 1.5 per cent by the German statistics body.
Retail sales were still 2.3 per cent higher in September than the same month last year, better than expected by economists, but the data is still a big disappointment.
Economists had expected retail sales to fall 0.9 per cent in September, after gaining 1.5 per cent in August, for an annualised change of 1.2 per cent.
Germany’s previously resilient economy has suffered a bad wobble this year, contracting in the second quarter and suffering a spate of bad data in the third, sparking concerns that the eurozone’s biggest member has slipped into a recession.>> Read More
Two headlines came across my screen today, which taken together pretty much sum up the effects of policy decisions made by Central Bankers and politicians since the financial crisis. The financial oligarchs got bailed out, and the rich got richer due to decisions made by “leaders” around the globe. As such, the entire planet has now been transformed into a neo-feudal tinderbox. Myself and countless others warned all the way back to 2008 that this is what would happen, and here you have it.
Let’s first examine the results from Oxfam’s report on the billionaire growth spurt. I hope all 1,645 of you have sent thank you notes to the patron saint of oligarchy: Ben Bernanke. From NBC:
The super-rich club has become less exclusive, with the amount of billionaires doubling since the financial crisis, according to a report from global charity Oxfam. There were 1,645 billionaires globally as of March 2014, according to Forbes data cited in the Oxfam report, up from 793 in March 2009.
The report ‘Even it Up: Time to End Extreme Inequality’ noted that the world’s richest 85 people saw their wealth jump by a further $668 million per day collectively between 2013 and 2014, which equates to half a million dollars a minute.