*Powell Holding Press Conference To Address Emergency Rate Cut

Trading 03 mar 2020 Commentaire »

Powell Holding Press Conference To Address Emergency Rate Cut


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Fed Announces Emergency Rate Cut In Response To Coronavirus Outbreak

Trading 03 mar 2020 Commentaire »

Even with the next monetary policy meeting just two weeks away, the Federal Reserve announced a surprise move to enact an emergency interest rate cut on Tuesday in response to the economic risks posed by the coronavirus outbreak.

The Fed announced that it has decided to lower the target range for the federal funds rate by 50 basis points to 1 to 1-1/4 percent.

In the accompanying statement, the Fed said the fundamentals of the U.S. economy remain strong but noted the coronavirus poses evolving risks to economic activity.

The central bank added that it is closely monitoring developments and their implications for the economic outlook and will use its tools and act as appropriate to support the economy.

The surprise move by the Fed comes shortly after finance chiefs from the world's largest economies released a statement pledging to use "all appropriate policy tools" to address the economic fallout from the deadly coronavirus outbreak.

Treasury Secretary Steven Mnuchin and Federal Reserve Chairman Jerome Powell led a conference call with the G7 Finance Ministers and Central Bank Governors to discuss the coronavirus.

In the statement released following the call, the G7 finance chiefs reaffirmed their commitment to use "all appropriate policy tools to achieve strong, sustainable growth and safeguard against downside risks."

The emergency rate cut, the first since the financial crisis, also came after President Donald Trump ramped up pressure on the Fed to lower rates.

"Our Federal Reserve has us paying higher rates than many others, when we should be paying less," Trump said in a post on Twitter. "Tough on our exporters and puts the USA at a competitive disadvantage."

"Must be the other way around. Should ease and cut rate big," he added. "Jerome Powell led Federal Reserve has called it wrong from day one. Sad!"

The unanimous decision to cut rates was widely expected to be announced after the Fed's next monetary policy meeting on March 17-18.


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*Fed Announces Surprise 50 Basis Point Interest Rate Cut

Trading 03 mar 2020 Commentaire »

Fed Announces Surprise 50 Basis Point Interest Rate Cut


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South Africa Economy Enters Recession In Q4

Trading 03 mar 2020 Commentaire »

South Africa's economy slipped into a recession in the final three months of 2019, mainly due to the weaker performance of the transport and trade sectors. Gross domestic product contracted a seasonally adjusted and annualized 1.4 percent quarter-on-quarter after a 0.8 percent decline in the previous three months, preliminary data from Statistics South Africa showed on Tuesday. Two consecutive quarters of contractions define a technical recession. This is the country's second recession in two years. In the full year 2019, the economy grew 0.2 percent, which was the weakest outcome since 2009, when it shrunk by 1.5 percent. Agriculture was the main drag on growth in 2019, the agency said.


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G7 Finance Chiefs Pledge To Use Appropriate Tools To Address Coronavirus Impact

Trading 03 mar 2020 Commentaire »

Finance chiefs from the world's largest economies have pledged to use "all appropriate policy tools" to address the economic fallout from the deadly coronavirus outbreak.

Treasury Secretary Steven Mnuchin and Federal Reserve Chairman Jerome Powell led a conference call with the G7 Finance Ministers and Central Bank Governors on Tuesday to discuss the coronavirus.

In a statement released following the call, the G7 finance chiefs reaffirmed their commitment to use "all appropriate policy tools to achieve strong, sustainable growth and safeguard against downside risks."

"Alongside strengthening efforts to expand health services, G7 finance ministers are ready to take actions, including fiscal measures where appropriate, to aid in the response to the virus and support the economy during this phase," the statement said.

The statement added, "G7 central banks will continue to fulfill their mandates, thus supporting price stability and economic growth while maintaining the resilience of the financial system."

The G7 finance chiefs noted that the International Monetary Fund, the World Bank, and other international financial institutions also stand ready to help member countries address the human tragedy and economic challenge posed by the outbreak.

"G7 Finance Ministers and Central Bank Governors stand ready to cooperate further on timely and effective measures," the statement concluded.

Earlier in the day, the Reserve Bank of Australia announced its widely expected decision to lower its key interest rate by a quarter point to a new record low of 0.5 percent amid concerns about the coronavirus.

President Donald Trump responded to the news in a post on Twitter, urging the Federal Reserve to follow the Australian central bank's lead and further reduce interest rates.

"Our Federal Reserve has us paying higher rates than many others, when we should be paying less," Trump said. "Tough on our exporters and puts the USA at a competitive disadvantage."

"Must be the other way around. Should ease and cut rate big," he added. "Jerome Powell led Federal Reserve has called it wrong from day one. Sad!"

Trump's tweets come as CME Group's Fed Watch tool currently indicates a 100 percent chance that the Fed will cut rates by 50 points at its next meeting later this month.

Last Friday, Powell said the Fed will "act as appropriate to support the economy" amid the evolving risks posed by the coronavirus outbreak.


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ECB's Holzmann Says Rate Cut Not Needed To Support Economy Amid Virus Spread

Trading 03 mar 2020 Commentaire »

An interest rate cut is not required to support the euro area economy amid the coronavirus outbreak, but policymakers could consider long-term loans at ultra low rates, European Central Bank Governing Council member Robert Holzmann, who heads the Austrian central bank, said Tuesday.

Regarding targeted long-term loans called TLTROs, Holzmann said, "This is definitely an area which will be under consideration, but as of now I don't think there is an urgency to move there."

Late Monday, ECB President Christine Lagarde said in a statement that the bank stands ready to take "appropriate and targeted measures" to support the economy and financial markets amid the spread of the COVID19.

Major central banks such as the Bank of Japan have already announced willingness to act if warranted as economic activity is hurt by the virus outbreak that started in China late last year. The next ECB policy decision announcement is due on March 12.


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BoE Will Take Steps To Support Economy To Tackle Covid-19, Says Carney

Trading 03 mar 2020 Commentaire »

The Bank of England will take all necessary measures to support the economy in facing the challenges posed by the spread of coronavirus, Governor Mark Carney said Tuesday.

In a statement to the Treasury Select Committee, the central banker said the coronavirus could create a "large" but ultimately a "temporary" shock to the economy.

Carney said the bank's role is to help UK businesses and households manage through an economic shock due to the spread of the virus. The bank is closely monitoring the situation and ensures that all necessary contingency plans are in place, the outgoing BoE Governor said.

The Monetary Policy Committee is assessing the economic impacts and considering the policy implications of various possible scenarios, Carney told lawmakers.

The bank closely monitors supply disruptions and its impact on cashflow, cost and availability of finance and economic confidence, he added. On Monday, governors of the Bank of Japan and the European Central Bank released statements ensuring appropriate actions to combat risks emanating from the Covid-19.

Elsewhere on Tuesday, central banks of Australia and Malaysia cut interest rates as they expect economic growth to be hurt by the Covid-19 outbreak.

"The lines of communication globally between central banks are wide open," Carney told MPs. "It is reasonable to expect a response that reflects a combination of fiscal measures and central bank initiatives."

Andrew Bailey will take charge as the BoE Governor after Carney steps down on March 15.


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*G7 On COVID19 Impact: Reaffirms Commitment To Use All Appropriate Policy Tools

Trading 03 mar 2020 Commentaire »

G7 On COVID19 Impact: Reaffirms Commitment To Use All Appropriate Policy Tools


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Eurozone Inflation Slows; Jobless Rate Lowest Since 2008

Trading 03 mar 2020 Commentaire »

Eurozone inflation slowed on falling energy prices in February and the unemployment rate held steady at the lowest level in more than a decade at the start of the year, official data showed Tuesday.

According to the flash estimate from Eurostat, inflation in the currency bloc slowed to 1.2 percent in February from 1.4 percent in January. The rate came in line with expectations.

Headline inflation remained well below the European Central Bank's target of "below, but close to 2 percent."

However, core inflation that excludes energy, food, alcohol and tobacco, edged up to 1.2 percent from 1.1 percent a month ago.

The impact of Covid-19 on the economy will distort inflation figures in the months ahead, but it is too early to tell just yet, Bert Colijn, an ING economist, said.

For the ECB, today's figures will be no more than confirmation of the current modest inflation environment, the economist said. For the March 12 meeting, immediate Covid-19 measures will be much more relevant than the February inflation environment.

Data showed that energy prices dropped 0.3 percent, reversing a 1.9 percent rise in January.

Meanwhile, annual growth in food, alcohol and tobacco prices rose to 2.2 percent from 2.1 percent. Likewise, prices of non-energy industrial goods and services grew at faster rates of 0.5 percent and 1.6 percent, respectively.

On a monthly basis, the harmonized index of consumer prices gained 0.2 percent in February. Final data is due on March 18.

Another report from Eurostat revealed that producer prices dropped at a slower pace of 0.5 percent year-on-year in January, following a 0.6 percent decline in December.

However, excluding energy, producer prices rose at a slightly faster pace of 0.6 percent annually in January.

The jobless rate remained unchanged at 7.4 percent, as expected, in January. This was the lowest since May 2008. In the same period last year, the unemployment rate was 7.8 percent.

The number of people out of work increased by 1,000 from December and declined 593,000 from last year. Unemployment totaled 12.179 million.

The unemployment rate among youth, aged below 25, was stable at 15.6 percent in January.


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Indian Rupee Drops Below 73-mark Against U.S. Dollar

Trading 03 mar 2020 Commentaire »

The Indian rupee lost ground against the U.S. dollar in the evening session on Tuesday amid concerns over the economic threat due to the coronavirus outbreak.

Meanwhile, the Reserve Bank of India said that it is closely monitoring global as well as domestic situation regarding the impact of deadly coronavirus and that it stands ready to take necessary action to ensure orderly functioning of financial markets.

The Indian rupee hit 73.54 against the greenback, its lowest level since October 2018. At yesterday's trading close, the pair was valued at 72.59. Next key downside target for the rupee is likely seen around the 75.00 level.


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