US Inflation: Accelerated in March Due to Strengthening Economy, Rising Energy Prices

U.S. consumer prices rose sharply in March as the economic recovery gained momentum, marking the start of an expected monthslong pickup in inflation pressures.

Some of the price increases reflected temporary factors, but others showed how demand for many goods and services is reviving a year after the coronavirus pandemic shut down large swaths of the economy, analysts said.

Read more at: Inflation Accelerated in March Due to Strengthening Economy, Rising Energy Prices - WSJ

European Commission Report - Economy: Recovery plan for Europe - the largest ever

The EU’s long-term budget, coupled with the NextGenerationEU initiative, which is a temporary instrument designed to boost the recovery, will be the largest stimulus package ever financed through the EU budget. A total of €1.8 trillion will help rebuild a post-COVID-19 Europe. It will be a greener, more digital and more resilient Europe.

The new long-term budget will increase flexibility mechanisms to guarantee it has the capacity to address unforeseen needs. It is a budget fit not only for today's realities but also for tomorrow's uncertainties.

On 10 November 2020, an agreement was reached between the European Parliament and EU countries in the Council on the next long-term EU budget and NextGenerationEU. This agreement will reinforce specific programmes under the long-term budget for 2021-2027 by a total of €15 billion.

Read more at: Recovery plan for Europe | European Commission

USA Unemployment: US unemployment skyrockets as coronavirus crashes economy

However, the figures were recorded before Congress signed off on a $2 trillion stimulus package that seeks to help businesses and workers as coronavirus ravages the economy.

Yet it is unlikely that even the biggest government stimulus package in history can stop unemployment from soaring to record highs and the US entering a deep recession.

Commerzbank economist Christoph Bolz said: “The lockdown of the economy is likely to cost more jobs in the coming weeks. We fear that the US unemployment rate will reach a post-war record by mid-year.”

Bolz predicted the US unemployment rate could rise from 3.5 per cent to 11.5 per cent, putting roughly 19m Americans out of a job. That would be higher than the previous post-war record of 10.8 per cent at the end of 1982.

Read more at: US unemployment skyrockets as coronavirus crashes economy : CityAM

Britain: BOE cuts its key interest rate to historic low

The Bank of England has announced that it has reduced its benchmark interest rate to as low as 0.25 percent – the lowest level in its history of 322 years.  The rate had been at 0.5 percent since March 2009, the media reported on Thursday.

The Bank has also announced measures to bolster Britain’s economy to address concerns that the country’s decision to leave the European Union could weigh on growth in the coming months.

Two key measures include one to buy £10 billion of high-grade corporate bonds and another - potentially worth up to £100 billion - to ensure banks keep lending even after the cut in interest rates.

A further injection of £60 billion in electronic cash into the economy has also been devised – a measure which is meant to buy government bonds, extending the existing quantitative easing (QE) program to £435bn in total.

These are parts of a four-point plan to mitigate the impact of leaving the EU.

The BoE has also added that it expects little growth in the second half of this year and that economic growth would decline sharply next year compared with its earlier forecast for 2017.

In 2017, the Bank said, there will be a sharp downgrade to growth of just 0.8 percent from a previous estimate of 2.3 percent.  This will be the biggest downgrade in growth from one Inflation Report to the next, exceeding what was seen in the financial crisis, Reuters reported. The growth outlook for 2018 was cut to 1.8 percent. 

Read more: PressTV-BoE cuts its key interest rate to historic low

ECB stimulus surprise sends stock markets sliding

European stock markets have fallen and the euro has soared following the economic stimulus measures announced by the European Central Bank.

After initially rising following the broader than expected package, Frankfurt closed down 2.3%, Paris ended 1.7% lower and the FTSE 100 slid 1.8%.

The euro initially fell 1.6% against the US dollar to $1.0822 before jumping as high as $1.1218.
It was one of the biggest one-day swings in the currency's history.
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Sharp rises for European banks were also largely wiped out.

The ECB cut its main interest rate from 0.05% to 0% and cut its bank deposit rate, from minus 0.3% to minus 0.4%.

The bank will also expand its quantitative easing programme from €60bn to €80bn a month.
Stimulus,

Jasper Lawler, of CMC Markets, said: "Stocks came off highs of the day when some of the initial euphoria was nullified by the suggestion by ECB president Mario Draghi that rates would not be cut any further."

Simon Derrick, chief currency strategist at BNY Mellon: "If the intention of the ECB board was to help weaken the euro then their work was entirely undone by Mr Draghi's comments about the future path of rates."

John Hardy, head of currency strategy at Saxo Bank, said: "This was a much bigger bazooka than the market was expecting and shows the ECB trying to get ahead of the confidence curve after learning its lesson in December."

The stimulus measures announced three months ago have largely failed to drive economic growth higher or boost inflation.

Read more: ECB stimulus surprise sends stock markets sliding - BBC News

China - Economy Chinese central bank chief hints at more stimulus for slowing economy - by Martin Farrer

China still has more room and tools in its monetary policy to tackle the slowdown, People’s Bank governor Zhou Xiaochuan tells G20 finance meeting

The head of China’s central bank has dropped a strong hint that Beijing is preparing to launch another round of stimulus as he sought to reassure the financial markets about the country’s flagging economy.

China had more room and tools in its monetary policy to tackle downward pressure in the economy, and its fiscal policy would be more proactive, central bank governor Zhou Xiaochuan said on Friday.

Zhou, speaking at a conference held by the Institute of International Finance in Shanghai in conjunction with a G20 meeting of central bank governors and finance ministers, also said that the direction of China’s reforms would not change, but that the pace might change.

“While the reform direction is clear, managing the reform pace will need windows (of opportunity) and conditions ... The pace will vary, but the reform will be set to continue and the direction is not changed,” Zhou said in English.

At the same time, policy makers need to strike a balance between growth, restructuring and managing risks to the economy.

Read more: Chinese central bank chief hints at more stimulus for slowing economy | Business | The Guardian