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U.S. consumer prices rise more than expected.

Financial Markets

U.S. Treasuries advanced for a third day on Tuesday as U.S. inflation in February remained below the
Federal Reserve’s 2% target, increasing bet the U.S. central bank won’t rush to hike interest rates. The
yield on the benchmark 10-year note fell to as low as 1.894%, while the 30-year yield dropped to a six-
week low of 2.49%. U.S. government bond have rallied since the Fed indicated last week it would raise
policy rate at a slower pace than what the market anticipated.

The Ukrainian government urged the country’s international creditors, including Russia, to negotiate a
debt-restructuring deal now or risk facing bigger losses. As part of an International Monetary Fund bailout
package that approved last week, Ukraine is looking to restructure $15 billion of external debt over the
next 4 years. With $7.7 billion of debt-service payments due this year, Ukraine has a limited recourse to
meet its external obligations as the country’s international reserves shrank to a record low of $5.62 billion
in February.



High Income Economies

In line with economist estimates, U.S. consumer prices edged up by 0.2% (m/m) in February after
tumbling by 0.7% in January. A rebound in energy prices contributed to the increase in consumer prices,
as energy prices rose by 1.0% in February after plunging by 9.7% in January. Food prices also
contributed to the headline index increase by rising 0.2% in February after coming in unchanged in
January. The core consumer price index also rose by 0.2% for the second consecutive month.
Economists had expected core prices to inch up by only 0.1%.

After rising 0.3% (y/y) in January, U.K. inflation fell to zero for the first time on record in February on sharp
declines in fuel and food prices and factory-gate prices continued its negative trend. Prices were
expected to rise 0.1%. On a monthly basis, consumer prices rose for the first time in four months gaining
0.3% (m/m), in line with expectations, following a 0.9% drop in January. Core inflation that excludes
energy, food, alcoholic beverages and tobacco, eased to 1.2% from 1.4% in January.



Developing Economies

Europe and Central Asia

Hungary's central bank on Tuesday cut its key interest rate to a new low, after holding it steady for seven
straight months amid falling prices and improving growth. The Monetary Council of the Magyar Nemzeti
Bank reduced the base rate by 15 basis points to 1.95%. Economists had expected a slightly larger cut
to 1.90%.

Tajikistan’s National Bank reported that remittance inflows declined over 8 percent to $3.9 billion in 2014.
This year is expected to be even gloomier, with the International Monetary Fund (IMF) forecasting in
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early March that remittances would drop 30 percent. Cash transfers from migrant laborers totaling the
equivalent of almost half of GDP. But with the slowdown in Russia and tightened regulations for
foreigners wishing to work there, remittances are now falling.


Sub-Saharan Africa

The Zimbabwean government is prepared to take ‘hard’ measures to reduce its crippling wage bill, which
consumes 82 percent of its total revenue. The administration will also amend labor laws to make it easier
for companies to retrench, announced finance minister Patrick Chinamasa. Reduction of the high wage
bill is among key targets under the International Monetary Fund’s staff monitored program (SMP), an
informal and flexible instrument for dialogue between the Fund staff and a member country on its
economic policies.

March 24, 2015



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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