Frankfurt Letter, week beginning May 23

Frankfurt Letter, week beginning May 23

-The European Central Bank

The European Central Bank (ECB) published the accounts of the latest monetary policy meeting of the Governing Council last week which was held in Frankfurt on Wednesday and Thursday, April 20-21, 2016.

The accounts revealed that policymakers had “strongly” reiterated the need for other policy areas to contribute much more decisively in assisting economic reform of the euro area.

"In our guidance on interest rates we have said that rates will remain at present or lower levels. So this means that interest rates are still in the tool box," said the ECB Executive Board Member Peter Praet in an interview with Portugal’s Publico newspaper, published on Monday.

"The question is of course the conditions under which we would decide to use that instrument, because it is clear that the negative rates at some point have also side effects that start to become more important, namely on the profitability of banks," he added.

-Economic data

The euro area annual inflation was -0.2 percent in April 2016, down from 0.0 percent in March. In April 2015 the rate was 0.0 percent, according to figures published by Eurostat, the statistical office of the European Union.

Figures also showed that the European Union annual inflation was also -0.2 percent in April 2016, down from 0.0 percent in March.

The first estimate for the euro area’s exports of goods to the rest of the world in March 2016 was €177.8 billion, a decrease of 3 percent compared with March 2015 (€182.8 bln).

Imports from the rest of the world stood at €149.2 billion, a fall of 8 percent compared with March 2015 at €162.9 billion. As a result, the euro area recorded a €28.6 billion surplus in trade in goods with the rest of the world in March 2016, compared with €19.9 billion in March 2015.

-News from Germany

In the first quarter of 2016, the number of people employed in Germany amounted to roughly 43.1 million, according to provisional calculations of the Destatis, the German Federal Statistical Office. Compared with the same period a year earlier, those employed increased by 533,000 or 1.3 percent.

German pharmaceutical and chemical company Bayer AG, offered $62 billion to buy the U.S. agricultural company Monsanto.

“We have long respected Monsanto’s business and shared their vision of an integrated business that we believe is capable of generating substantial value for Bayer, Monsanto and all of our key stakeholders," said Bayer AG CEO Werner Baumann in a statement.

If the agreement goes through, it could result in the formation of the world's biggest supplier of seeds and pesticides

-The week ahead

The European Central Bank’s board members will deliver speeches in different countries.

In Germany, the markets will monitor gross domestic product detailed results for the first quarter of 2016 and construction industry figures for March 2016.

24 May,2016