Key highlights of the week ended June 27

Note: This section contains information in English only.
Source: Dukascopy Bank SA
Japan
The Bank of Japan kept intact its massive monetary policy stimulus and its optimistic outlook for the world's third biggest economy, signalling its belief that Japan's economy will gain momentum enough to lift inflation to its 2% goal without extra monetary easing. In a widely expected decision, the central bank said it would proceed with its record 80 trillion yen annual asset-buying programme that is aimed at underpinning prices and kick-starting growth. The BoJ also said it would improve its communication by releasing more frequent and detailed reports on its economic assessment, while cutting the number of policy meetings to eight from the current 14 a year. Japan's economic growth has been robust lately. According to recent official data, the economy grew 1% in the first quarter, compared with the forecast for a 0.7% expansion, and much stronger than the 0.3% economic output growth recorded in the December quarter. The Bank of Japan is hoping that the stronger economy will begin to generate price pressures soon, through a "virtuous cycle" of spending, investment, and income growth. According to the central bank's forecasts, inflation is set to hit the 2% target in the first half of the fiscal 2016 year.

US
The US economy contracted in the first quarter less than previously estimated as it struggled with bad weather, a strong US Dollar, spending cuts in the energy sector and disruptions at West Coast ports. The American gross domestic product declined at a 0.2% annualized rate, compared with the 0.7% drop reported previously, according to revised data from the Commerce Department. The data bolstered Fed's projections that the setback was temporary. The US growth was supported by robust consumer spending, which accounts for more than two thirds of US economic output. Consumer spending increased 2.1% in the reported period, up from 1.8% estimated earlier. Thanks to this upward revision, the GDP growth rate received a boost of 20 basis points. The first estimate of second-quarter GDP is scheduled for July 30. The economy is likely to expand at a 2.5% rate from April through June and average 3% growth in the last half of the year, according to the median projection of economists. 

Euro zone
Following a decline in German business morale in June, consumers also became more cautious for the first time since October, as the Greek debt crisis weighs on the Euro zone's number one economy. The forward-looking GfK consumer sentiment index, based on a survey of 2,000 Germans, declined to 10.1 going into July, down from 10.2 in June. GfK said that Greece's default and exit from the currency bloc, which had seemed a remote possibility, now appears to be quite realistic. 

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