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Fed Minutes Show Some Participants Preferred Smaller Rate Cut

Minutes from the Federal Reserve’s emergency monetary policy meetings in March showed a few participants preferred a smaller interest rate cut to slashing rates by a full percentage point at the March 15th meeting. The minutes said some meeting participants favored cutting rates by 50 basis points, noting that such a decision would provide support to the economy in the face of coronavirus outbreak while preserving the Fed’s ability to lower rates again in the event the economic outlook deteriorated further. The participants also noted that cutting rates by 100 basis points less than two weeks after an emergency 50 basis point cut ran the risk of sending an overly negative signal about the economic outlook. Nonetheless, the Fed ultimately voted to slash rates by 100 basis points to a range of zero to 0.25 percent, pointing to the likely near-term decline in economic activity due to the coronavirus outbreak and the extremely large degree of uncertainty about the length and severity of the decline. Cleveland Fed President Loretta J. Mester voted against the action, preferring to reduce the target range for the federal funds rate to 0.5 to 0.75 percent. The minutes noted Mester was fully supportive of all…

Thirty-Year Bond Auction Attracts Slightly Above Average Demand

Finishing off this week’s announcements of the results of its long-term securities auctions, the Treasury Department revealed Wednesday that its auction of $17 billion worth of thirty-year bonds attracted slightly above average demand. The thirty-year bond auction drew a high yield of 1.325 percent and a bid-to-cover ratio of 2.35. Last month, the Treasury sold $16 billion worth of thirty-year bonds, drawing a high yield of 1.320 percent and a bid-to-cover ratio of 2.36. The bid-to-cover ratio is a measure of demand that indicates the amount of bids for each dollar worth of securities being sold. The ten previous thirty-year bond auctions had an average bid-to-cover ratio of 2.32. The Treasury revealed earlier this week that its auction of $40 billion worth of three-year notes attracted below average demand, while its auction of $25 billion worth of ten-year notes attracted average demand. The material has been provided by InstaForex Company – www.instaforex.com…

Poland Cuts Key Rate Further On Outlook For Sizable Economic Slump On Covid-19

Poland’s central bank cut its key interest rate for a second policy session in a row as policymakers expect economic activity to fall drastically in the short run due to the containment measures adopted to slow the spread of the coronavirus, or Covid-19, pandemic. The Monetary Policy Council decided to cut the key reference rate by 50 basis points to a fresh record low 0.50 percent, the National Bank of Poland said in a statement on Wednesday. The bank had slashed the rate by 50 basis points in an emergency meeting on March 17. The lombard rate was lowered to 1 percent from 1.50 percent, while the deposit rate was cut to zero. The rediscount rate was slashed to 0.55 percent from 1.05 percent. “In the short run, the scale of activity drop could be very sizable,” the NBP said. “This will be accompanied by a deteriorating situation in the labour market and a fall of disposable income of households.” Policymakers expect the economic activity to gradually recover further ahead, supported by fiscal measures introduced in the country and many other countries as well as strong macroeconomic fundamentals of the Polish economy. They expect inflation to fall below the target…

Swiss Economy Could Shrink 10.4% This Year On Covid-19: Govt

Switzerland’s economy could see a double-digit contraction this year due to the containment measures adopted to slow the spread of the coronavirus, or Covid-19, pandemic, the government said Wednesday. An extended lockdown in the country’s main trading partners such as Germany could lead to GDP shrinkage of as much as 10.4 percent this year, under a negative scenario, the government said. There will be an “L-shaped” recovery under this scenario due to second round effects such as bankruptcies and loan defaults, and the economy log a modest 3.4 percent growth in 2021. In March, the government agency SECO had forecast 1.5 percent contraction this year and 3.3 percent growth next year. In the worst-case scenario, the unemployment rate is seen at 4.5 percent this year and then rise sharply to 6 percent next year. In a “V-shaped” scenario, the shutdown ends by the end of May in Germany. Under this, GDP is forecast to fall 7.1 percent this year and recovery strongly by 8.3 percent next year. The government also decided to extend the lockdown by a week to April 26 and said it will start to ease the shutdown gradually before the end of the month. The material has…

Euro Lower As Eurogroup Meeting Disappoints

The euro depreciated against its major counterparts in the European session on Wednesday, as Eurozone finance ministers failed to resolve impasse and agree on a package of measures to cushion the economic fallout from the coronavirus outbreak. Ministers were deadlocked on the issue of coronabonds – jointly issued bonds as part of the crisis response. While Italy, Spain, France and some other EU states favour common debt issuance, the Netherlands has rejected this idea. The finance ministers will resume negotiations on Thursday. European stocks fell after Spain’s daily toll of coronavirus deaths rose for the first time in five days and the death toll surpassed 10,000 in France. The German economy will shrink by nearly 10 percent in the second quarter as the coronavirus paralyses the country, six leading research institutes warned today. The euro fell to a 2-day low of 1.0551 against the franc, from a high of 1.0568 set at 1:45 am ET. If the euro declines further, 1.02 is likely seen as its next support level. The euro slipped to 1.0830 against the greenback, after touching as high as 1.0902 at 7:30 pm ET. On the downside, 1.06 is likely seen as its next support level….

Croatia Producer Prices Fall For First Time In Five Months

Croatia’s producer prices dropped for the first time in five months in March, figures from the Croatian Bureau of Statistics showed on Wednesday. The producer price index fell 2.7 percent year-on-year in March, after a 0.9 percent increase in February. prices declined for the first time in five months. Prices for domestic market decreased 1.2 percent annually in March and foreign market declined 4.5 percent. On a month-on-month basis, producer prices declined 2.7 percent in March, following 0.1 percent fall in the previous month. Prices decreased for the second straight month. The material has been provided by InstaForex Company – www.instaforex.com…

Sweden Household Consumption Rises In February

Sweden’s household consumption rose in February on an increase in recreation and culture, goods and services, data from Statistics Sweden reported Wednesday. Household spending rose a working day adjusted 2.3 percent year-on-year in February. The largest positive contribution came from the sector recreation and culture, goods and services by 12.3 percent annually in February. Meanwhile, retail trade, clothing and footwear decreased by 0.4 percent. On a seasonally adjusted basis, household consumption increased 0.4 percent monthly in February. During three months to February, consumption increased by 2.3 percent compared with the same period a year ago. The material has been provided by InstaForex Company – www.instaforex.com…

Taiwan Trade Surplus Decreases In March

Taiwan’s trade surplus decreased in March, as exports declined and imports rose, figures from the Ministry of Finance showed on Wednesday. The trade surplus decreased to US$ 2.78 billion in March from 3.09 billion last year. Economists had expected a surplus of US$ 3.2 billion. In January, trade surplus was US$ 3.3 billion. Exports decreased 0.6 percent year-on-year in March, after a 24.9 percent rise in February. Economists had expected a decline of 6.7 percent. Imports rose 0.5 percent annually in March, after a 44.7 percent increase in the preceding month. Economists had forecast a fall of 6.6 percent. Exports of parts of electronic product, information, communication and audio-video products grew in March, while exports of base metals and articles of base metal, machinery, plastics and rubber, and articles declined. Imports of parts of electronic product, base metals and articles of base metal increased from a year ago, while imports of mineral products, machinery, chemicals decreased Exports to Mainland China and Hong Kong, and ASEAN both grew in March, while exports to Japan, U.S.A. and Europe declined. In the January to March period, exports and imports rose by 3.7 percent and 3.5 percent, respectively, from a year ago. The material…