Highlights of the week ended March 13

Source: Dukascopy Bank SA
Euro zone
The European Central Bank began buying government bonds under its QE programme designed to underpin inflation in the Euro zone. The plan calls for the 19 central banks in the Euro bloc to purchase around €60 billion of public and private bonds each month until at least September 2016. Jens Weidmann, Bundesbank chief and a member of the Governing Council, once again criticized the bond-buying scheme. Weidmann said the plan blurred the lines between monetary and fiscal policy. Bundesbank President reiterated that threat of deflation was too low and did not justify a more expansive monetary policy as deployed by the ECB. The European Central Bank Executive Board member Benoit Coeure said that the Eurosystem banks purchased €9.8 billion worth of sovereign debt in just three days of the programme last week. Coeure added the asset-buying program might last even after its scheduled conclusion in September 2016.

US
Job openings rose in January to the highest level since 2001, according to the US Bureau of Labor Statistics. The number of job openings climbed to 5 million, up from 4.88 million openings reported in December. A gradual increase in job listings is reinforcing view of labour-market strength, as payroll growth have helped push the unemployment rate down to the lowest level in almost seven years.  In contrast, the Fed's composite gauge of conditions in the US labour market dropped in February. The labour market conditions index declined to 4 points, the worst result since August and following a downwardly revised 4.8 points in December.

Japan
While Japan managed to recover from recession, it grew lass than previously estimated in the final quarter of 2014. Annualized economy growth for the three months through December was downgraded to 1.5% from a preliminary figure of 2.2%. Measured on a quarterly basis, the world's third biggest economy expanded at a 0.4% pace, compared with a preliminary reading of a 0.6% gain. Even though GDP appeared to be weaker than expected, a return to growth is a sigh of relief to Japanese policy makers, particularly after the effect of a sales tax hike in April 2015 was more devastating than anticipated, severely impacting demand and crippling investment. 

UK
In a testimony before the House of Lords Economic Affairs Committee, Mark Carney, the BoE Governor, said UK inflation has declined to the lowest level since the Inflation Targeting introduction two decades ago. Consumer prices are likely to slid further to around zero in the foreseeable future and hover around that levels for much of the year. Carney highlighted that it is inappropriate to use additional monetary stimulus in an attempt to reverse falling inflation triggered by falling oil prices.

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