Greece repaid 3.4 billion euros to the ECB last week, as Euro zone finance ministers disbursed 13 billion euros to Athens and set aside another 10 billion euros to recapitalize the Greek cash-deprived banks. Jeroen Dijsselbloem, who heads the Eurogroup, said the reform-for-aid deal formally approved on Wednesday would hopefully provide Greece with a new lease on life. At the same time, Daniele Nouy, the head of the ECB's banking supervisory arm, was confident that Greek banks will recover when the crisis is over, as they were relatively strong before turmoil started. Meanwhile, the Greek Prime Minister Alexis Tsipras announced he had resigned, sparking another political drama in the country. Greece now heads for its fourth parliamentary election since 2012, which is reported to take place on September 20.
US
While Fed officials were satisfied with the progress in the US economy this year, they appeared concerned over the persistent sluggishness of price inflation. Minutes of the Fed's most recent meeting showed that policy makers were almost ready to hike rates as they expected the US economy's steady upward trajectory to eventually push prices up. Yet, inflation continues to defy those predictions. Thus, Fed voting members remained divided on whether long-anticipated September rate hike was justified. Some officials were worried about moving prematurely and lacking tools to respond if unanticipated events led the US economy to falter, and also about threats from developments overseas, particularly slowing growth in China. As a result, some experts said the uncertain tone of the meeting minutes suggested the central bank was less likely to begin normalizing monetary policy at its next meeting, while investors reduced their bets on a September lift-off.
Australia
The RBA said recent weakening of the Aussie Dollar is supporting economic growth and helping the economy to adjust from a decade-long period of mining investment toward stronger growth in exports. For the first time in almost two years the central bank said the Australian Dollar was not overvalued, reinforcing the view that further interest rate cuts are unlikely to be needed. In recent months, the local Dollar has fallen to its lowest level in six years. Policy makers are becoming more confident that post-mining boom growth is gaining steam, citing recent stronger data including hiring. The RBA is also relying on the Fed to hike rates later this year, which could fuel a further drops in a local currency that has already lost 8% in the past three months. The RBA was a little more upbeat on its key trading partner China, suggesting threats to growth in the world's second biggest economy had "receded somewhat".
Japan
Japan's economy shrank in the second quarter as overseas demand for Japanese goods weakened, while households' spending dropped, fuelling speculation the government would act to support the world's third biggest economy. Japan's GDP declined 1.6% on an annualized basis in the June quarter. The Bank of Japan is currently expecting the nation's economy to grow 1.7% in fiscal 2015 and 1.5% in fiscal 2016. However, the data means the central bank's estimates are unlikely to materialize. There has been little sign the BoJ is considering easing its monetary policy further; however, last October the central bank expanded its QQE programme unexpectedly.
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