Key highlights of the week ended May 20

Note: This section contains information in English only.
Source: Dukascopy Bank SA
US
The minutes of the April Fed meeting, when the US central bank left interest rates on hold in line with economists' expectations, showed that officials believed the US economy could be ready for another interest rates hike in June. Most members of the policy-setting committee's said they looked forward to seeing signs that economic growth was gaining steam in the second quarter and that employment and inflation were firming, the minutes showed. Fed officials said recent economic data made them more confident inflation was climbing toward the 2% target and that they were less concerned about a global economic downturn. However, some policymakers were worried about a slowdown in US economic growth during the first quarter, when gross domestic product increase slowed to a two-year low of 0.5%. Yet others argued that ongoing strong job growth indicated the economy was still on track and the growth data could be flawed. Data since the end of April pointed to an increase in consumer spending and manufacturing output, supporting the view that economic growth was gaining momentum after stalling in the first quarter.  

Japan
Japan's economy grew at the fastest pace in a year in the first quarter, led by a leap year consumption boost. Nevertheless, analysts said the rebound was not strong enough to fan concerns over a contraction in this quarter. The world's third biggest economy expanded 0.4% in the first quarter, according to Japan's Cabinet Office, coming in above economists' forecast for a 0.1% expansion and marking the strongest rate of growth since the March 2015 quarter. Measured on an annual basis, Japan's economy grew at a rate of 1.7% in the reported period, easily overshooting expectations of a 0.3% gain. Increasing gross domestic product reverses a contraction in the fourth quarter of 2015 and means Japan has escaped another technical recession, defined as two quarters of negative growth in a row. 

Australia
Reserve Bank of Australia policy makers discussed keeping interest rates on hold at the May 3 meeting so they could await more information, but decided on balance that a cut then would help bring inflation to target over time. A "broad-based" cooling of inflation pressures persuaded the central bank that the economy would be supported by an interest-rate cut even as the growth outlook remained steady. RBA board members decided to cut the official cash rate by a quarter point to 1.75%, according to the minutes of its latest policy meeting. Governor Glenn Stevens's first interest-rate cut in a year came after a report last month showed that some of the ill disinflationary winds blowing in economies from Japan to Europe have reached Australia.


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