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ECB President hints at more stimulus


Financial Markets

European and U.S. equities were rallying on Thursday as oil prices rebounded and the European Central
Bank hinted it may provide more monetary stimulus to bolster the eurozone economy. The Stoxx Europe
600 index gained 1 percent, after jumping as much as 2.5 percent earlier. U.S. equities opened higher as
well, with the S&P 500 index advancing 0.7 percent in morning session. The S&P index has dropped
about 8 percent this month through yesterday.

Russia’s rubble tumbled as much as 5.3 percent to a record 85.999 against the dollar amid a global
slump in oil prices. The currency weakened the most among major emerging-market currencies and set
for the steepest two-day drop in a year. The Russian ruble is trading beyond the lows it touched at the
peak of Russia’s financial turmoil in December 2014.


Advanced Markets

U.S. jobless claims ticked upwards to 293,000 (sa) in the week that ended January 16. While the result
was above expectations, overall levels are near historic lows and indicate steady job growth.

The European Central Bank (ECB) left Euro Area policy interest rates unchanged, with the main
refinancing rate at 0.05 percent and the deposit rate at -0.3 percent. Noting risks mainly on the downside,
ECB President Mario Draghi indicated that rates will “remain at present or lower levels for an extended
period of time,” hinting that additional stimulus may be considered in March.

The unemployment rate in the Netherlands fell further to a three-year low of 6.6 percent (sa) in December
2015. Despite the improving labor market in recent months, household consumption growth decelerated
to 0.3 percent (y/y) in November (the slowest pace since October 2014), and consumer confidence
dipped at the beginning of 2016.


Emerging and Developing Economies

East Asia and Pacific

Bank Negara Malaysia left its overnight policy rate unchanged at 3.25 percent at its January 2016
meeting as widely expected but cut the reserve requirement ratio by 50 bps to 3.5 percent, aiming to
increase liquidity.

Latin America and the Caribbean

The central bank of Paraguay unexpectedly increased its benchmark interest rate by 25 bps to 6.0
percent at its January 2016 meeting, saying the rate hike was needed to guarantee that inflation
converges to the target of 4.5 percent this year.

Sub-Saharan Africa

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Zimbabwe's tobacco export earnings rose 11 percent to $855 million in 2015 on higher prices and
demand from China, an industry official said on Wednesday, but production in 2016 could suffer from a
scorching drought. Tobacco is the nation's single largest export commodity, ahead of platinum and gold.




January 21, 2016



The Global Daily is an informal briefing on global economic and financial developments compiled by the
World Bank’s Development Economics Prospects Group. Recent issues, together with analysis of a
variety of macroeconomic topics, covered by the Group, may be found at:
 http://www.worldbank.org/prospects.

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