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Welcome to the Economic Corner – where we update you on all the biggest global economic announcements.
The Fed upgraded US growth forecast and signalled that the interest rates will be kept close to zero until at least 2024. The announcement comes in wake of the massive stimulus and successful vaccine rollout in the United States. The two-day Federal Reserve meeting came to an end on Wednesday with the Fed promising to provide effective support to the economy as long as it takes.
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There were significant forecasts made by the federal reserve with the fed officials predicting that the US economy will expand 6.5% because of the stimulus and vaccine rollout. Meanwhile, the unemployment rate is expected to fall to 4.5% by the end of 2021.
On the other hand, core personal consumption expenditure is expected to rise to 2.2%. The good news is that the Federal Reserve will maintain rock-bottom interest rates till the US economy improves with full employment and lower inflation. The Central bank said it would continue to buy bonds at 120 billion dollar per month until progress is made and set goals are reached by the US economy. Fed Chair Jerome Powell highlighted that it was too early to talk about tapering off measures to aid the battling economy. The US economy is heading for its strongest growth in nearly 40 years, the Federal Reserve said.
Australian employment exceeded all anticipations for consecutive five months while the jobless rate dropped by far more than anticipated in February, in yet another sign that the country's economy was moving in the right direction. Figures from the Australian Bureau of Statistics showed employment rose a net 88,700 in February, on top of a roughly 29,000 gain in January. All of the job gains in February were led by full-time work with women accounting for more than three quarters of the increase. There was a fall seen in the unemployment rate with the rates reaching post-pandemic low of 5.8% in February. The announcements sent the Australian dollar to a two-week high of 0.783 dollars. Three-year bond futures fell to 99.725 implying a yield of 0.275%.
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Prime Minister Scott Morrison held a press conference at 12:45 AEDT. On major statements from the Prime Minister – he said that the jobs lost during the coronavirus pandemic have now been “restored” following unemployment falling to 5.8 per cent in February. The Prime Minister said that Australia has induced 876,400 jobs in the economy since the beginning of that recession. He further added that the wage support program must come to an end. “It has done its job. The job is now taken up of the many other measures that the government has put in place,” the Prime Minister said. Commenting on the vaccine rollout updates, Scott Morrison said that Australia’s vaccination program will hit 250,000 doses in the next 24 hours, a lot less than the four million jab target by the end of March set back in January.
New Zealand’s GDP declined 1 per cent from the third quarter, when it expanded a revised 13.9 per cent, Statistics New Zealand said on Thursday. The contraction in the final three months of last year negatively impacted the hopes of V-shaped recovery from the coronavirus pandemic. The fourth-quarter contraction was led by farm output, manufacturing and construction. Household consumption rose 1.1 per cent as services expenditure offset a drop in purchases of goods. Investment dropped 1.4 per cent, driven by plant and equipment and commercial construction. While exports plunged 1.1 per cent indicating less tourist spending, imports increased 9.1 per cent. New Zealand had bounced out of recession with a revised 13.9 per cent quarter-on-quarter GDP growth in the three months to September-end.
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Russia on Wednesday called back its US ambassador to Moscow over the future of US-Russia ties. The ambassador was summoned back as US President Joe Biden alleged Russia for election meddling, stating Putin would “pay a price”. The comments came after a US intelligence report supported longstanding allegations that Putin was behind Moscow’s election interference in the United States. However, Russia has dismissed these allegations throughout.
Moving on to updates from the pandemic recovery phase, Australia has appealed to the European Union to reject vaccine protectionism and continue exporting 1 million doses of Astrazeneca to Papua New Guinea. In a move that aimed at eliminating the difficulties of its pandemic-battered neighbour, Australia has chosen to deliver 8,000 locally manufactured AstraZeneca Covid jabs to Papua New Guinea next week. Prime Minister Scott Morrison also intends to ask AstraZeneca to deliver one million vaccine doses, which were originally contracted for Australia, to be sent to PNG. The initiative is to help a developing country in desperate need of these vaccines as cases reach 2,351 with 26 deaths, as of March 16, 2021, as per WHO.
Meanwhile, European Commission’s President has issued warning on putting emergency controls on Covid-19 vaccine production and distribution if needed.
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On the economic data front, Euro zone January trade balance; UK Bank of England bank rate; US Philadelphia Fed index and US leading index for February will be closely watched. The Bank of England will hold its interest rate setting meeting today. The governor of Bank of England Andrew Bailey had earlier said that the bank is not expected to raise the rates.
The US- China Alaska summit that starts today is an event that world is looking at as the two sides are expected to deal with concerning issues. Antony Blinken – the US secretary of state and Jake Sullivan – National Security Advisor, are expected to hold five hours of talk with Yang Jiechi – the top Chinese official and Wang Yi- Foreign Minister. In a strong signal right before the meeting, Washington announced imposition of sanctions on 24 Chinese and Hong Kong Officials over the new Chinese law. China, on the other hand, described the move as a vicious attempt by the United States to interfere in its affairs. So, there is heat on both the sides and the meeting would be closely watched by the World.
