Among Fed Presidents, a FOMC member and the New York Fed President William Dudley spoke on Monday's evening. Being one of the most insistent defenders of the stimulus program and low interest rate policy, Dudley said that changes are possible and they will depend on economic development. Moreover, he noticed that nowadays the monetary policy is working in a different way than it did in the past, meaning that more attention should be paid to the labour market. However, policy makers should find a balance between unemployment and inflation to make any significant changes to the monetary policy stance.
In Europe, economic growth in Ireland jumped to 7.7% in the second quarter of this year on the annual basis, while quarter-on-quarter it added as much as 1.5%. Strong exports and business investment pushed the country's GDP up. On the other hand, ECB President Mario Draghi noted that economy of the whole Eurozone is losing momentum, even though data for July raised some optimism among economists. However, Mr. Draghi assured investors that the ECB will continue implementing new stimulus measures, including the second offering under the TLTRO program in December, as well ABS and covered bonds' purchases. Last week, banks managed to raise 82.6 billion euro from the ECB. These funds are aimed to heat up inflation and economic growth in the region.
Along with its Eurozone's, British and American colleagues, the Bank of Canada's officials pointed out that country's monetary regulator will most likely keep maintaining interest rates at low level for a prolonged period of time, even when economy returns to sustainable growth. The Great Recession left a number of structural problems in the economy, including falling employment, tougher regulation of the financial sector and high level of savings, meaning that consumers are still cautious in their behaviour and are carefully spending free funds.
Some negative sentiment was provides by the U.K., where public finances showed weak performance in August, as budget deficit reached 11.6 billion pounds, up 6.1% from the previous year. Therefore, during first five months of the current financial year the negative budget gap increased 6.2% on the annual basis to hit 45.4 billion pounds.