While it was expected that the ECB would leave its key policy rates unchanged, there was quite an amount of interest in the monthly press conference which followed the rate announcement. In recent weeks we have seen a number of Central Banks, most notably the RBA start to raise interest rates. In contrast, the US Federal Reserve Bank repeated its commitment to keep exceptionally low levels of the federal funds rate for an extended period while the Bank of England stepped up its support for the economy by boosting the amount of quantitative easing by a further £25B.
The Bank of England slowed the pace of bond purchases as signs of an economic recovery give policy maker’s scope to wind down their money-printing program next year. The Bank of England is weighing signs that the economy is shaking off the slump against risks the flow of credit isn’t strong enough to underpin a revival. Prime Minister Gordon Brown’s government this week pledged more money to help two of the U.K.’s biggest banks, boosting the scale of the world’s most expensive bailout less than seven months before an election.
UK Asset Purchase Facility figures were out, which measures the amount of money the BOE will create and use to purchase assets in the open market, was lower than expected at 200billion, yet up from a previous of 175billion.
US Unemployment Claims was announced last night with 512k individuals claiming for unemployment insurance in the last week, which lower than an expected 523k and a previous of 532k.
Worker productivity surged in the US at the fastest pace in six years, labor costs fell and unemployment claims were lower than forecast, signaling companies may be preparing to start hiring again after cutting costs to the bone.
European retail sales fell for a 16th month in September, declining more than economists estimated as consumers curbed spending amid rising unemployment. Store revenue in the 16-nation euro region dropped 3.6 percent from a year earlier after falling a revised 2.3 percent in August, the European Union’s statistics office in Luxembourg said today. Economists had predicted a drop of 2.4 percent. From the prior month, September Sales fell 0.7 percent, the biggest drop since October 2008.
Gold has come back from the highs of $1097 USD reached on Wednesday, still tradeing at strong levels of $1090 USD.