ECB Signals More Stimulus Coming in March

European Central Bank President Mario Draghi reaffirmed the growing concerns of the central bank arising from recent financial market turbulence. At the quarterly hearing before the Committee of Economic and Monetary Affairs, the ECB president reiterated that monetary policy has been one of the key determinants of economic health over the Euro Area in the past few years. The economic bloc will require robust fiscal and monetary policies in order to overcome the recent slowdown in the global economy and also to achieve the inflation target. According to Draghi’s remarks, the ECB will not hesitate to implement additional asset purchases if commodity and energy prices persistently decline, adding to existing deflationary pressures.  Policymakers convene in early March to determine the central bank’s monetary policy trajectory. The Euro showed weakness during the press conference, falling to as low as 1.1128 versus the US dollar during the question and answer session.

The latest industrial production figures released by the Russian Federation Federal State Statistics Service climbed slightly in January in comparison to the prior month. Industrial output fell by -2.70% for the first month of the year, slightly up from December’s -4.50% plunge while also outperforming estimates of a -3.10% slide. Output and new orders were reportedly on the rise but still remained in contractionary territory. With exports in particular decelerating, most of the output produced was for domestic use. The report also highlighted that despite the slight improvement in the measures, job losses in the industrial sector continued to mount. The data in many ways mirrored recent manufacturing readings with the purchasing managers’ index indicating a modest improvement but remaining below the critical 50 threshold that separates contraction and expansion. The Ruble continued to strengthen following the release of the report, with the USDRUB touching an intraday low of 77.3218.