The ECB’s decision to leave interest rates unchanged at a level of 0.75% matched prior expectations.
However, we mention that some members of the committee voted for an interest cut.
For the first time since December, the decision to leave interest rate “as is” was not unanimous.
We further note that the ECB has slightly decreased its forecast for the growth in European economy in 2013.
In addition, the mid-point for 2014 growth rate went from 1.2% to 1.0% and the 2014 inflation forecast was revised downwards from 1.4% to 1.3%.
Mixed data from last week:
We negatively mention that the final estimate for the growth of the Eurozone’s economy during the last quarter of 2012 confirmed initial estimation for a sharp quarterly shrinkage, and that a drop was registered in the Eurozone composite PMI (Final estimate).
On the other hand, an improvement was recorded in the volume of private consumption in January.
During a meeting to finalize its leadership transition, China set a moderate growth target of around 7.5% for this year (similar to 2012’s growth rate target).
The relatively moderate target is aimed to promote more harmonized growth, as China’s Premier Wen Jiabao notes:
“We should unswervingly take expanding domestic demand as our long-term strategy for domestic development”
He added that the key to change is to enhance people’s ability to consume.
China set the inflation rate to 2013 at 3.5%, lower than the inflation target of 4%, set to 2012.
China is expected to promote a relatively expansionary fiscal policy.
The government’s trade deficit target for 2013 is set to 1.2 trillion Yuan, higher than the 2012 deficit.
Deficit-to-GDP ratio was set to 2%, versus 1.5% last year.
We recall that public expense aided to stabilize Chinese economy last year, partially by infrastructure developments.