Economic Update – ECB Hold Interest Rates, Dutch Inflation Rises, Trump and More…

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CNBC: ECB holds interest rates at zero percent; Draghi says sense of urgency easing

  • The European Central Bank (ECB) left its benchmark interest rate unchanged on Thursday and said it would continue with its generous asset-buying program until at least the end of the year.
  • ECB President Mario Draghi declared that a very substantial degree of stimulus was still required for the euro zone on the day which marked the two-year anniversary since the central bank introduced quantitative easing (QE).
  • Typically, the central bank chief has vowed in his introductory statements that the ECB is prepared to use “all the instruments available within its mandate”, however this had been removed on Thursday. “That’s been removed, basically to signal that there is no longer that sense of urgency in taking further actions … that was prompted by the risks of deflation,” Draghi explained.

RTT News: Dutch Inflation Highest Since July 2013

  • Dutch consumer price inflation accelerated further in February to the highest level in nearly three-and-a-half years, figures from the Central Bureau of Statistics showed Thursday.
  • The consumer price index climbed 1.8 percent year-over-year in February, faster than the 1.7 percent increase in January.
  • Moreover, this was the highest inflation since September 2013, when prices had grown 2.4 percent.
  • Core inflation that excludes energy, food, alcohol and tobacco eased to 1.3 percent in February from 1.4 percent a month ago.

Market Watch: 5 ways the Fed rate hikes will hit global markets

  • One interest-rate hike was a tweak. A second is normalization. And a third? That is going to look like a whole raising cycle.
  • It now looks almost certain that next week the Federal Reserve will raise interest rates for the third time, and that will be the first step on a clear path toward getting the price of money back to the 3% to 4% range.
  • That is a decision that will be taken for the United States. But American interest rates are also a key variable for the entire global economy.

Market Watch: Trump wants to fast-track $1 trillion infrastructure plan

  • President Donald Trump pushed his White House team on Wednesday to craft a plan for $1 trillion in infrastructure spending that would pressure states to streamline local permitting, favor renovation of existing roads and highways over new construction and prioritize projects that can quickly begin construction.
  • “We’re not going to give the money to states unless they can prove that they can be ready, willing and able to start the project,” Trump said at a private meeting with aides and executives that The Wall Street Journal was invited to observe. “We don’t want to give them money if they’re all tied up for seven years with state bureaucracy.”
  • Trump said he would was inclined to give states 90 days to start projects.

FT: US share buybacks punch below their weight

  • There have been many critics of the recent corporate buyback bonanza, with figures from former US vice-president Joe Biden to BlackRock founder Larry Fink contending companies have eschewed growth-boosting investments in favour of short-term share repurchases, increasingly financing them with cheap debt rather than earnings.
  • But perhaps the most notable thing about the buyback spree — more than $2tn of shares have been repurchased in the past five years — is how it has arguably provided only a modest boost to equity prices, at least compared to the scale of the purchases.
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