- ECB keeps rates unchanged, ready to extend stimulus
The European Central Bank (ECB) left all its three interest rates unchanged for a sixth session in a row in its final monetary meeting for this calendar year held last Thursday.
Regarding non-standard monetary policy measures, the governing council decided to continue its purchases under the asset purchase program (APP) at the current monthly pace of €80 billion until the end of March 2017. From April 2017, the net asset purchases are intended to continue at a monthly pace of €60 billion until the end of December 2017, or beyond, if necessary, and in any case until the governing council sees a sustained adjustment in the path of inflation consistent with its inflation aim.
If, in the meantime, the outlook becomes less favorable or if financial conditions become inconsistent with further progress towards a sustained adjustment of the path of inflation, the governing council intends to adjust the program in terms of size and/or duration.
Speaking after the rate decision in Frankfurt, ECB president Mario Draghi stated that the option of scaling back bond purchases gradually to zero, or ‘tapering’, was not discussed at the meeting, but said the bank was ready to extend the stimulus when necessary.
-GDP rose by 0.3% in euro area
Seasonally-adjusted GDP rose by 0.3 percent in the euro area and by 0.4 percent in the European Union during the third quarter of 2016, compared with the previous quarter, according to an estimate published by Eurostat, the statistical office of the European Union.
In the second quarter of 2016, GDP also grew by 0.3 percent and 0.4 percent, respectively.
Seasonally-adjusted GDP rose by 1.7 percent in the euro area and by 1.9 percent in the EU in the third quarter of 2016 compared with the same quarter of the previous year.
-German exports under expectation
Germany exported goods to the value of €101.5 billion and imported goods to the value of €82.2 billion in October 2016.
Based on provisional data, the Federal Statistical Office (Destatis) also reported that German exports decreased by 4.1 percent in October 2016 year-on-year while imports were down by 2.2 percent.
After calendar and seasonal adjustment, exports increased by 0.5 percent and imports by 1.3 percent compared with September 2016. It was expected that exports would increase by 0.9 percent per month and imports by 1.1 percent.
The foreign trade balance showed a surplus of €19.3 billion in October 2016 compared to €21.7 billion in October 2015.
In calendar and seasonally-adjusted terms, the foreign trade balance recorded a surplus of €20.5 billion in October 2016.
-The week ahead
This week, markets will continue to monitor the developments on global markets and focus on the European Central Bank’s statements.
On the data side, final inflation, employment, international trade in goods and industrial production data will be released.