Wednesday, 17 June 2009

BoJ holds rate amid mixed global economic data

Economic data on Tuesday were mixed.

In Japan, the BoJ left interest rates unchanged as it upgraded its assessment of the economy. AFP/CNA reports:

Japan's central bank on Tuesday left its key interest rate unchanged at 0.1 per cent, while upgrading its assessment of the world's number two economy for the second consecutive month.

"Japan's economic conditions, after deteriorating significantly, have begun to stop worsening," the Bank of Japan said in a statement. "Japan's economy is likely to show clearer evidence of levelling out over time."

Further monetary easing also appears less necessary in Europe.

In Germany, investor sentiment reached a three-year high in June. Bloomberg reports:

The ZEW Center for European Economic Research in Mannheim said its index of investor and analyst expectations, which aims to predict economic developments six months ahead, increased to 44.8 from 31.1 in May. That’s the highest reading since May 2006. Economists expected a gain to 35, according to the median of 35 forecasts in a Bloomberg News survey.

And while inflation has practically disappeared in the euro area, it remains stubbornly persistent in the UK. Reuters reports:

The Office for National Statistics said consumer prices rose 0.6 percent last month, taking the annual rate to 2.2 percent from 2.3 percent in April. That was the lowest since January 2008 but above forecasts of 2.0 percent.

But in the US, signs of a possible upturn in the economy were tempered by further declines in industrial production. Bloomberg reports:

Housing starts jumped more than forecast in May while industrial production tumbled, offering a picture of an American economy still struggling to emerge from the deepest recession in half a century.

Builders broke ground on 532,000 dwellings at an annual rate, with single-family starts posting a third straight gain, Commerce Department figures showed today in Washington. Output at factories, mines and utilities dropped 1.1 percent, and the share of industrial capacity in use slid to a record low, the Federal Reserve said...

Wholesale prices dropped 5 percent in the 12 months to May, the biggest slump in half a century, the Labor Department also reported today. On a monthly basis, the producer-price index rose 0.2 percent, less than forecast.

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