Key highlights of the week ended April 8

Source: Dukascopy Bank SA
US
Fed Chair Janet Yellen said that the US central bank did not make a mistake in hiking interest rates in December, a move that was followed by massive turbulence in financial markets and further weakening of the global economy. Yellen said that as the US economy remains on a solid ground with some signs of inflation. Moreover, seven years after the severe financial crisis, the US labour market was now close to full employment, arguing that inflation would not be held down much longer by a strong US Dollar and low oil prices. Therefore, the Fed remains on track for further interest rate increases. The Fed lifted its benchmark policy rate in December, the first increase in nearly a decade, to between 0.25% to 0.5%. A number of private economists believe the next hike will not occur until June. 

Japan
Bank of Japan Governor Haruhiko Kuroda reiterated the central bank's readiness to take additional monetary easing steps if needed to reach its 2% inflation goal. BoJ Governor Haruhiko Kuroda's comments come more than two months after the central bank adopted a negative interest rate strategy aimed at stemming deflationary expectations and spurring a revival in demand. Kuroda said that the BoJ would take additional easing steps in the form of quantity, quality of asset buying, or interest rates if needed. 

Australia
The Reserve Bank of Australia kept the official cash rate at a record low 2% for a 10th consecutive meeting, but warned that the recent strong rise in the Australian Dollar could "complicate" the economy's transition. Australia's Trade-Weighted Index recently hit the highest level in nine months, with the Aussie Dollar also reaching a June-2015 high versus the US counterpart in March. However, RBA Governor Glenn Stevens said low inflation would facilitate another rate cut if that were necessary. In the final quarter of 2015 Australia's consumer inflation climbed an annualized 1.7%, the sixth straight quarter that headline inflation was below the RBA's 2-3% target range. March-quarter inflation data are due on April 27. Bets on future rate cuts declined slightly, with markets pricing in a 29% possibility of a cut at the May meeting, moving up to a 58% chance in July.

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