China's trade jumps, German industrial production rises

There were some positive economic data out of China and Germany on Wednesday.

In China, the trade balance swung back into surplus in April after exports rose 14.7 percent from a year ago. Imports increased 16.8 percent from the previous year.

However, the trade data may have been too good to be true. From AFP/CNA:

"We believe the strong trade growth is not indicative of a growth recovery," said Zhang Zhiwei, a Hong Kong-based economist with Nomura International, said in a research note.

Importers and exporters may have overstated their business to seek to evade Chinese government controls on capital movements and channel funds into the country, he said...

Royal Bank of Scotland economist Louis Kuijs estimated China's exports rose only 5.7 per cent year-on-year in April after adjusting for discrepancies between data from China and figures from the importing markets.

Elsewhere, Germany reported on Wednesday that industrial production rose 1.2 percent in March. This followed a 0.6 percent increase in February.

US stocks hit new records, Japanese stocks at five-year high

US stock indices rose to new record highs on Tuesday, with the Dow Jones Industrial Average closing above 15,000 for the first time ever after rising 0.6 percent to 15,056.20. The S&P 500 rose 0.5 percent to close at 1,625.96.

In Japan, investors came back from a holiday to push the Nikkei 225 up 3.6 percent on Tuesday to 14,180.24, its highest close since June 2008.

Markets got a lift early in the day after the Reserve Bank of Australia cut its benchmark interest rate by 25 basis points to a record low of 2.75 percent, continuing the worldwide trend towards easier monetary policy.

Easier monetary policy has lifted not just stock prices but house prices as well. US home prices rose 1.9 percent in March, a report from CoreLogic showed on Tuesday. Prices rose 10.5 percent from a year ago, the biggest year-over-year increase in seven years.

Easier monetary conditions have also reduced Europe's sovereign debt concerns. A sale of 10-year Portuguese government bonds on Tuesday attracted demand for more than three times the amount targeted for sale.

However, Europe's economy has shown few signs of a recovery, with Tuesday's data coming out mixed. While German factory orders jumped 2.2 percent in March, the same amount of increase as in February, French industrial orders fell 0.9 percent in March, reversing a 0.8 percent increase in February.

Eurozone economic data show contraction, China services slow

Weak economic data continued to come out of the euro area on Monday.

Markit's services PMI for the euro area rose to 47.0 in April from 46.4 in March, helping to pull the composite index up to 46.9 from 46.5. That still left the composite index below 50, indicating contraction, for the 15th consecutive month.

Another report on Monday showed that retail sales in the euro area fell 0.1 percent in March after having fallen 0.2 percent in February.

With the eurozone economy still looking weak, European Central Bank President Mario Draghi reiterated his readiness to cut interest rates again on Monday, helping to push the euro down against the US dollar.

Meanwhile, China's economy has not been spared the global economic weakness. A report on Monday showed that the HSBC services PMI for China fell to 51.1 in April, the lowest since August 2011, from 54.3 in March.

However, things are looking up again in the US, with the positive Friday employment report being followed on Monday by a report from the Federal Reserve showing that banks eased lending standards to businesses over the last three months.

S&P 500 hits record as investors ride central bank wave

The United States stock market hit a record high last week despite mixed reports on the economy.

The Standard & Poor’s 500 Index rose 2.0 percent to 1,614.42 last week, its highest level on record. Stocks rose 2.0 percent over the last two trading days of the week alone, with a strong employment report on Friday cementing the gains.

The employment report from the Labor Department showed that nonfarm payroll employment rose by 165,000 in April. This was higher than the 140,000 estimated by economists surveyed by Bloomberg. In addition, revisions added a total of 114,000 jobs for February and March. The unemployment rate fell to 7.5 percent, the lowest in four years.

However, another report on Friday on factory orders provided a negative signal on the economy. The Commerce Department reported that new orders for manufactured goods fell 4.0 percent in March. While a plunge in volatile civilian aircraft orders contributed to the fall, even excluding transportation equipment, orders fell 2.0 percent.

Reports from purchasing managers surveys earlier in the week had also indicated slowing manufacturing activity. The Institute for Supply Management's manufacturing PMI fell to 50.7 in April from 51.3 in March and Markit's manufacturing PMI fell to 52.1 from 54.6.

Activity in the services sector may also be slowing. Another report on Friday from the Institute for Supply Management showed that its non-manufacturing index fell to 53.1 in April from 54.4 in March.

US economic growth may also be adversely affected by the continuing weakness in Europe. Data last week showed that the European Commission's economic sentiment indicator for the euro area fell to 88.6 in April from 90.1 in March and Markit's eurozone manufacturing PMI fell to 46.7 in April from 46.8 in March.

The European Central Bank did cut its main policy interest rate by 25 basis points to a record low of 0.50 percent after its monetary policy meeting on Thursday though whereas the Federal Reserve announced no new policy measures after its meeting on Wednesday.

In a presentation at the 10th annual Strategic Investment Conference last week, PIMCO Chief Executive Officer Mohamed El-Erian noted “an enormous contrast between the markets and the real economy”. He said that while markets are rallying, developed economies are seeing lower growth due to ongoing deleveraging.

He said that markets are rallying despite weak economic growth because central banks are providing monetary support. And because the weak economic growth is likely to persist, central banks “have little choice other than to continue on their current trajectory”.

Therefore, El-Erian recommended: “Ride the central bank wave.”

However, he also warned that “all waves eventually break”. When the disconnect between economic fundamentals and the markets revert, it is likely to prove “painful for unhedged investors”.

US stocks rise to another record as employment improves, India cuts interest rates

The S&P 500 rose to another record on Friday, climbing 1.1 percent to close at 1,614.22.

Stocks gained despite mixed economic data on Friday.

US nonfarm payrolls increased by 165,000 in April, better than the 138,000 increase in March. The unemployment rate fell to 7.5 percent, the lowest in four years.

However, US factory orders fell 4.0 percent in March while the Institute for Supply Management's services index fell to 53.1 in April from 54.4 in March.

Elsewhere, a report on Friday showed that China's services sector slowed in April. The non-manufacturing PMI from the National Bureau of Statistics and China Federation of Logistics and Purchasing fell to 54.5 from 55.6 in March.

However, the UK services sector accelerated in April. The services index from Markit Economics and the Chartered Institute of Purchasing and Supply rose to 52.9, the highest in eight months, from 52.4 in March.

Still, the economic weakness in Europe will remain a concern for policy makers, especially after the European Commission lowered its forecast for the eurozone economy on Friday. The Commission now sees the eurozone economy contracting by 0.4 percent this year, worse than its February forecast of 0.3 percent contraction.

Indeed, growth concerns pushed India's central bank to reduce its benchmark repo rate by 25 basis points to 7.25 percent on Friday, its third cut this year.

The ever-expanding monetary stimulus coming from central banks around the world has raised its own concerns though. The Asia Development Bank's managing director Rajat Nag warned on Friday that while quantitative easing out of Japan and other economies will help them grow, “we have to be wary of building asset bubbles”.

ECB cuts rates, S&P 500 rises to record high

As expected, the European Central Bank cut its main interest rate by 25 basis points to a record low of 0.50 percent at its monetary policy meeting on Thursday.

The ECB decision came amid further signs on Thursday of continuing economic deterioration in the eurozone economy. Markit's eurozone manufacturing PMI fell to 46.7 in April from 46.8 in March.

In the US, the trade deficit narrowed in March. Imports decreased 2.8 percent, the most since February 2009, but exports also fell by 0.9 percent.

Investors mostly shrugged off the weak data, with the S&P 500 Index in particular rising 0.9 percent on Thursday to a record high. European stocks also rose on Thursday, the Stoxx Europe 600 Index adding 0.3 percent.

However, the euro fell for the first time in five days against the US dollar after ECB President Mario Draghi said after its monetary policy meeting that it may take the unprecedented step of charging banks to hold excess reserves.

Fed on hold even as economy shows signs of weakening

The Federal Reserve did not increase monetary stimulus at its policy meeting on Wednesday.

Relatively weak economic US data released that day suggest that it may yet do so later.

A report from ADP on Wednesday showed that US private sector employment rose by 119,000 in April, fewer than the 131,000 increase in March.

Another report in the US showed that construction spending fell 1.7 percent in March following the biggest slump in government projects in 11 years.

Other reports showed that US manufacturing slowed in April. Markit's manufacturing PMI fell to 52.1 from 54.6 in March while the Institute for Supply Management's manufacturing PMI fell to 50.7 from 51.3.

Meanwhile, manufacturing also slowed in China in April.

A report from the National Bureau of Statistics and the China Federation of Logistics and Purchasing on Wednesday showed that their manufacturing PMI fell to 50.6 in April from 50.9 in March. A report from HSBC and Markit on Thursday showed that their manufacturing PMI fell to 50.4 in April from 51.6 in March.

There were some signs of recovery in the UK on Wednesday though. The Markit/CIPS manufacturing PMI rose to 49.8 in April from 48.6 in March and house prices rose 0.9 percent in April from a year ago according to Nationwide.

Unemployment falls in Japan, hits record high in euro area

Tuesday's economic reports were mixed.

Japan reported that household spending jumped 5.2 percent in March from a year earlier, the biggest increase since February 2004. The unemployment rate fell to 4.1 percent in March, the lowest since November 2008.

Japanese industrial production rose 0.2 percent in March. Manufacturers surveyed by the government expect output to rise 0.8 percent in April but fall 0.3 percent in May.

The improvement in Japanese manufacturing is also reflected in the latest purchasing managers survey. The Markit/JMMA manufacturing PMI rose to 51.1 in April from 50.4 in March.

Data from Europe were less positive.

The unemployment rate in the euro area rose to a record high of 12.1 percent in March from 12.0 percent in the previous two months.

Meanwhile, inflation in euro area fell to 1.2 percent in April from 1.7 percent in March.

Spain's economy contracted 0.5 percent in the first quarter, the seventh consecutive quarterly contraction.

Even Germany has not avoided economic weakness as retail sales fell 0.3 percent in March. Encouragingly, though, the GfK consumer confidence index for May rose to 6.2, the highest in more than 5½ years, from 6.0 in April.

In contrast, GfK's consumer confidence index for the UK fell to -27 in April from -26 in March. On a more positive note, UK mortgage approvals rose to 53,504 in March from 51,947 in February.

In the US, both consumer confidence and housing provided positive data on Tuesday. The Conference Board's consumer confidence index jumped to 68.1 in April from 61.9 in March while the S&P/Case Shiller index of home prices in 20 cities rose 9.3 percent in February from a year earlier, the biggest increase in almost seven years.

However, the Institute for Supply Management-Chicago business barometer fell below the 50 mark to 49.0 in April from 52.4 in March.

Eurozone confidence falls, US consumer spending rises

Economic data on Monday were mixed.

In the euro area, the economic sentiment indicator fell to 88.6 in April from 90.1 in March.

In Germany, prices fell 0.5 percent in April, pulling the inflation rate down to 1.1 percent, the lowest since August 2010, from 1.8 percent in March.

However, in the US, consumer spending grew 0.2 percent in March, as did personal income, while pending home sales jumped 1.5 percent last month after having fallen 1.0 in February.

Investors appear to be comfortable with the data. Stocks rose on Monday, with the S&P 500 climbing 0.7 percent to a record high and the STOXX Europe 600 gaining 0.5 percent. The euro strengthened 0.5 percent against the dollar.

In Italy, yields on 10-year bonds fell 15 basis points to 3.91 percent as the government sold 6 billion euros of five- and 10-year bonds at the lowest yield since 2010. This came after Italy's new prime minister Enrico Letta formed a new government over the weekend, ending a two-month political stalemate.

First quarter sees rebound in economic growth

Last week's economic data showed rebounds in growth for the United States and the United Kingdom in the first quarter.

In the UK, real gross domestic product grew 0.3 percent in the first quarter, reversing the 0.3 percent decline in the previous quarter.

In the US, the economy grew at an annualised rate of 2.5 percent in the first quarter, rebounding after growth had slowed to a 0.4 percent rate in the final quarter of last year.

Other reports from the US last week indicated that growth has probably weakened since the first quarter though.

Durable goods orders fell 5.7 percent in March, more than reversing the 4.3 percent increase in February.

Further indication of weaker growth in US manufacturing came from Markit's purchasing managers survey. The flash reading of the manufacturing index for April came in at 52.0, down from 54.6 in March.

US consumer spending may also weaken. While the GDP report showed a rebound in consumer spending growth to 3.2 percent in the first quarter from 1.8 percent in the previous quarter, the Thomson Reuters/University of Michigan index of consumer sentiment declined to 76.4 in April from 78.6 in March.

US housing data last week were mixed. Existing home sales fell 0.6 percent but new home sales, a leading indicator of the economy, rose 1.5 percent in March.

Elsewhere in the world, economic data from the euro area last week mostly indicated weakness.

Markit's flash composite index for the euro area based on purchasing managers surveys came in at 46.5 in April, unchanged from March. The services index rose to 46.6 in April from 46.4 in March but the manufacturing index fell to 46.5 from 46.8.

In Germany, the euro area's biggest economy, the Ifo business climate index fell to 104.4 in April from 106.7 in March.

Consumer confidence in the euro area did improve to -22.3 in April from -23.5 in March though.

Meanwhile, China's economy may also be slowing.

Data over the weekend showed that profits from industrial companies in China grew 5.3 percent in March from a year earlier, down from 17.2 percent growth in the first two months.

Earlier last week, a flash reading of HSBC's manufacturing index for China came in at 50.5 in April, down from 51.6 in March.

BoJ sees end to Japan's deflation, US growth rebounds less than expected

Japan reported on Friday that its consumer prices excluding fresh food fell 0.5 percent in March from the previous year, signalling continued deflation.

There was no immediate reaction from the Bank of Japan. Its latest monetary policy meeting ended on Friday without new policy action.

Instead, the BoJ raised its forecasts for growth and inflation. The economy is now expected to grow 2.9 percent for the fiscal year to March, up from an earlier 2.3 percent projection in January. Inflation is expected to hit 0.7 percent, up from an earlier 0.4 percent projection.

In the US, a report on Friday showed that the economy rebounded in the first quarter to grow at a 2.5 percent annualised rate after having grown at a 0.4 percent rate in the previous quarter. However, the first quarter growth was less than the 3 percent growth estimated by economists surveyed by Bloomberg.

Another report from the US on Friday showed that the Thomson Reuters/University of Michigan final index of consumer sentiment declined to 76.4 in April from 78.6 a month earlier. The preliminary April reading had been 72.3.

The weaker-than-expected growth in the US economy helped push the US dollar down 1.2 percent against the yen on Friday. The yen also rose 1.1 percent versus the euro.

Central banks buy gold and equities, UK economy rebounds

It looks like central banks were among the losers from the recent fall in gold prices. From Bloomberg:

Central banks bought the most gold since 1964 last year just before the collapse in prices into a bear market underscored investors’ weakening faith in the world’s traditional store of value...

Central banks are the biggest losers, with about $560 billion of value erased since gold reached a record $1,921.15 an ounce in September 2011...

Some people think central banks are not very good at timing markets.

“They sell at the wrong time and buy at the wrong time,” said Walter “Bucky” Hellwig, who helps manage $17 billion of assets at BB&T Wealth Management in Birmingham, Alabama. “They aren’t traders. They are looking at it as a long-term holding, as an ultimate reserve currency. With the benefit of hindsight, they tend to get it wrong more often than not.”

That may not be good news for stocks as central banks have apparently also been buying or are planning to buy equities. Again from Bloomberg:

Central banks, guardians of the world’s $11 trillion in foreign-exchange reserves, are buying stocks in record amounts as falling bond yields push even risk- averse investors toward equities.

In a survey of 60 central bankers this month by Central Banking Publications and Royal Bank of Scotland Group Plc, 23 percent said they own shares or plan to buy them. The Bank of Japan, holder of the second-biggest reserves, said April 4 it will more than double investments in equity exchange-traded funds to 3.5 trillion yen ($35.2 billion) by 2014. The Bank of Israel bought stocks for the first time last year while the Swiss National Bank and the Czech National Bank have boosted their holdings to at least 10 percent of reserves.

Still, both gold and stocks rose on Thursday, with the STOXX Europe 600 in particular rising 0.8 percent for its fifth consecutive day of gains.

Positive economic reports from Europe helped buoy investor sentiment.

In the UK, the economy grew 0.3 percent in the first quarter, reversing the 0.3 percent decline in the previous quarter and thus avoiding a recession.

In Germany, the government raised its forecast for growth in 2013 to 0.5 percent from 0.4 percent.

US durable goods orders and Ifo index fall

Economic data on Wednesday were weak.

In the US, durable goods orders fell 5.7 percent in March after having risen 4.3 percent in February. Excluding transportation equipment, orders fell 1.4 percent in March after falling 1.7 percent the prior month.

Somewhat more encouragingly, orders for non-defense capital goods excluding aircraft rose 0.2 percent.

In Germany, Ifo's business climate index fell to 104.4 in April from 106.7 in March, its second consecutive decline.

In the UK, mortgage approvals were 1.2 percent lower in March compared to a year ago as net mortgage lending shrank by 328 million pounds last month and retail sales fell in April.

Despite the weak economic data, markets were mostly steady on Wednesday. Copper rebounded 2 percent, its first gain in four days after falling into a bear market on April 19. Gold rose 1 percent and European stocks rallied for a fourth day.

Markets rise as manufacturing slows

Markets ended positively on Tuesday, especially in Europe, where the STOXX Europe 600 Index jumped 2.4 percent, the biggest rise since 3 August. In the US, the S&P 500 rose 1.0 percent.

European government bonds also rose on Tuesday. The yield on Italy's 10-year government bonds in particular fell as much as 17 basis points to 3.89 percent, the lowest since 27 October 2010, while the two-year yield touched 1.125 percent, the lowest since Bloomberg began compiling the data in 1993.

Raised expectations for a rate cut from the European Central Bank may have helped boost markets after Markit's composite index for the euro area remained in contraction territory in April, staying unchanged from March at 46.5 based on a flash reading released on Tuesday. The services index rose to 46.6 in April from 46.4 in March while the manufacturing index fell to 46.5 from 46.8.

Meanwhile, manufacturing activity in China slowed in April. HSBC's flash manufacturing PMI came in at 50.5, down from 51.6 in March.

US manufacturing activity also slowed in April. Markit's flash US manufacturing PMI fell to 52.0 from 54.6 in March.

Another report from the US on Tuesday showed that new home sales increased 1.5 percent in March.

European bonds rise with consumer confidence, US growth slows

Europe's financial and economic problems showed further signs of easing on Monday.

Italy’s government bonds rose, pushing the two-year yield down 10 basis points to a record low of 1.24 percent, after Giorgio Napolitano was re-elected as president over the weekend.

Spanish bonds also rose on Monday, the 10-year yield falling 12 basis points to 4.50 percent, the lowest since November 2010, even as a report from Eurostat showed that the country's budget deficit widened to 10.6 percent of gross domestic product last year.

Another report on Monday showed that consumer confidence in the euro area rose to -22.3 in April from -23.5 in March.

In the US, though, the Chicago Fed's National Activity Index fell to -0.23 in March from +0.76 in February. The three-month average fell to -0.01 from +0.12.

According to the Chicago Fed, the three-month average showed that economic growth “was very near its historical trend” and that inflationary pressure is “subdued”.

Another report from the US on Monday showed that existing home sales fell 0.6 percent in March. The fall was mostly attributed to a decline in the availability of distressed homes though.

G20 and IMF mindful of QE side effects as Fed expected to persist

The G-20 gave qualified support for quantitative easing policies last week. From Bloomberg:

Group of 20 finance chiefs pledged to stay alert to any fallout from easy monetary policies even as they backed the Bank of Japan’s plan to buy more than 7 trillion yen ($70 billion) a month of bonds.

In a nod to concerns that stimulus in one economy often creates challenges elsewhere and could fuel asset bubbles, the G-20 officials meeting in Washington heightened their commitment to being “mindful of unintended negative side effects stemming from extended periods of monetary easing.”

The IMF has also shown concerns about the unintended consequences of QE.

Although the spotlight fell on currencies, the International Monetary Fund, which held its spring meetings alongside the G-20 gathering, last week said loose monetary policy could inflate credit bubbles, threatening a fresh round of financial crises...

The IMF plans a study on how best to unwind stimulus, said Managing Director Christine Lagarde, who called the current support programs “appropriate.”

Quantitative easing is unlikely to be unwound soon though, at least in the US, according to Wall Street analysts. Again from Bloomberg:

Wall Street’s biggest bond dealers see little chance the Federal Reserve will slow the pace of debt purchases designed to boost economic growth before year-end, even as policy makers face calls to curb the buying.

Of the 21 primary dealers that trade with the central bank, 14 said in a Bloomberg News survey that the Fed won’t start to reduce its $85 billion monthly bond buying until the last three months of 2013. Twelve forecast they will end in mid-2014 or later. Fifteen say it will take until at least June 2015 for policy makers to raise the record low benchmark interest rate target of zero to 0.25 percent. Goldman Sachs Group Inc. chief economist Jan Hatzius sees no increase before January 2016.

Fitch cuts UK credit rating

While the financial crisis in the euro area has abated recently, sovereign debt remains an issue for many developed economies, as Fitch's downgrade of the UK on Friday reminds us. From Reuters:

Britain's credit standing took a further blow on Friday when Fitch Ratings became the second major international agency to strip the country of its top-notch credit rating...

Fitch trimmed the rating to AA-plus from AAA, citing a weaker economic and fiscal outlook. But it returned the outlook to "stable", removing the threat of any further rating action, at least in the near term.

The impact on markets is expected to be minimal.

"The downgrade only tells us what was already known: that fiscal consolidation has ground to a halt and that the growth outlook is poor," said Rob Wood, UK economist at Berenberg Bank.

Moody's had been the first rating agency to downgrade the UK in February.

US leading index falls, China home prices rise

US data on Thursday indicate that the economy may be slowing. The Conference Board's index of US leading indicators fell 0.1 percent in March. The Federal Reserve Bank of Philadelphia’s manufacturing index fell to 1.3 in April from 2.0 in March.

Meanwhile, in the UK, cold weather contributed to a 0.7 percent fall in retail sales in March. That left first quarter retail sales just 0.4 percent higher than the previous quarter.

However, in China, foreign direct investment rose 5.7 percent in March from a year earlier and new home prices rose 1.2 percent in March as 68 of 70 major cities monitored by the government saw price increases, up from 66 in February.

Europe also had good news. Spain’s bonds rose on Thursday, its 10-year yield falling two basis points to 4.66 percent after the government sold 10-year debt at the lowest yield since September.

However, Italy's 10-year yield rose one basis point to 4.26 percent on Thursday as two rounds of voting failed to break a deadlock on the selection of the country's next president.

Japanese consumer confidence and exports rise, US maintains expansion

Japan's economy appears to be improving.

A report on Wednesday showed that the Cabinet Office's consumer confidence index rose to 44.8 in March from 44.2 in February. It was the third consecutive increase.

A report on Thursday showed that Japan's exports rose 1.1 percent in March from a year earlier. Imports rose a larger 5.5 percent though, leaving a trade deficit of 362.4 billion yen, the ninth consecutive monthly trade deficit.

Meanwhile, the US economic expansion remained “moderate”, according to the Federal Reserve's latest Beige Book survey. The Fed report on Wednesday noted increases in manufacturing activity, with particular strength in industries tied to residential construction and automobiles, that offset weakness in defense-related industries in some regions.

However, the UK economy appears to be still struggling. A report on Wednesday showed that its unemployment rate rose to 7.9 percent in the three months ending in February, the highest since the three months to August 2012.

Mixed data, low inflation means no Fed tightening soon

Markets rebounded on Tuesday with the S&P 500 rising 1.4 percent and gold rising 1.9 percent.

However, economic data on Tuesday were mixed.

In the US, a report showed that industrial production rose 0.4 percent in March but manufacturing production fell 0.1 percent.

Another report from the US on Tuesday showed that total housing starts rose 7.0 percent in March. However, starts for single-family houses fell 4.8 percent and building permits fell 3.9 percent.

There has been little inflation in the US though. The consumer price index fell 0.2 percent in March after having jumped 0.7 percent in February.

Low inflation means that the Federal Reserve will be in no hurry to remove monetary stimulus.

Indeed, Rich Bernstein thinks that the Fed will be slow to tighten. It will only tighten “when a strong and broad consensus forms that the economy can withstand a tightening cycle”, which is not the case today.

When it eventually does tighten, it will probably “tighten too much . . . and cause a recession”. However, that eventuality “is probably quite far in the future”.

Meanwhile, elsewhere, inflation held steady in the UK at 2.8 percent in March and slowed in the euro area to 1.7 percent from 1.8 percent in February.

The main concern in Europe, rather, has been weak growth. The ZEW index of investor confidence in Germany fell to 36.3 in April from 48.5 in March, its first decline in five months.

Indeed, the International Monetary Fund has urged European policy makers to stimulate the economy as it cut its latest global growth forecast for this year to 3.3 percent from 3.5 percent in January.