Highlights of the week ended February 20

Note: This section contains information in English only.
Source: Dukascopy Bank SA
Euro zone
Last week was all about Greece, as the country's government finally submitted Greece made a formal request to ask for a loan extension following two rounds of negotiation with its European creditors to ensure a financial lifeline to keep the country afloat in the coming months. Also, the ECB agreed to provide extra 3.3 billion euros emergency funds to Greece's struggling banks, despite pressure from Germany that was unwilling to allow any extra funding, as part of efforts to convince Athens to agree to extend its international bailout. The ECB had already increased the amount available to Greek banks to about 65 billion euros last week. The deal will give Athens breathing space to negotiate a loan deal with Eurogroup.
Moreover, last week the ECB released its first ever accounts of the January 22 meeting. The minutes showed that the Governing Council "broadly shared" the opinion that further actions were needed when members were making a decision to launch a controversial quantitative easing. The main concern appeared to be low inflation in the currency bloc. The Governing Council, however, agreed that the Euro zone was not at imminent risk of deflation, even though inflation had fallen into negative territory for the first time since 2009. Annual inflation in the bloc stood at –0.6% in January. Bond purchases worth 60 billion euros will start in March and are intended to last until the end of September 2016.

Japan
Japan has recovered from recession triggered by sales tax hike in April last year. The world's third biggest economy grew 2.2% in the fourth quarter, though weaker than the expected 3.7% expansion, as household and corporate spending disappointed. The Bank of Japan kept its monetary stimulus programme intact in line with expectations, while analysts still predict further moves in the coming months as inflation consistently runs below the bank's goal and economic growth is still fragile. The BoJ held its opinion that the Japanese economy is recovering moderately, and on track to hit 2% inflation target next fiscal year as companies raise wages and spending. Commenting the BoJ's monetary policy decision, Haruhiko Kuroda, the central bank's Governor, said he saw no immediate need to expand monetary stimulus at this stage, but highlighted that the bank stands ready to easy policy further should inflation uptrend was disrupted by risks including a sluggish economy or sharp falls in oil prices.

UK

Although Bank of England policy makers voted unanimously for the second consecutive month to keep monetary policy intact, however, difference in views of central bankers re-emerged. Two officials appeared to expect an increase in Bank Rate later in the year, while one member said that the next move is more likely to be a loosening rather than tightening. Meanwhile, Britain's inflation continued to fall, declining to record low since records began in 1989, driven down by a plunge in food and fuel prices. The annual rate of inflation came in at 0.3% in January.

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