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Global Growth Outlook Cut By OECD

Lower Growth Forecast Across the Globe Amid Deteriorating Conditions

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The Organization for Economic Cooperation and Development slashed its global growth projections even lower than revised estimates produced by the International Monetary Fund in January. Emerging markets in a recession and below trend growth in advanced economies that could lead to a recession that weighs on global economic output.

Swedish Inflation Climbs

Monetary policy introduced by the Swedish Riksbank appears to have had a positive effect on the local headline inflation rate. The annualized consumer price index for the month of January jumped to 0.80% from a 0.10% in the previous month, beating market expectations of 0.50%. The report delivered by Statistics Sweden underlined that inflation was mostly held back by telecommunications and housing but offset by rises in transport, apparel, restaurant and hotels as well as goods and services. On a monthly basis, consumer prices contracted by -0.30% compared to the previous month’s 0.10% but managed to beat expectations of -0.60%. The Swedish Central Bank recently cut interest rates from -0.35% to -0.50% in order to help bolster inflation. The Banks’ decision reflected ongoing weakness in energy prices, global turbulence and further hints of stimulus from European Central Bank officials of to avoid deflation from infiltrating over the year.

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usdsek02192016

OECD Slashes Global Growth Forecasts

The Organization for Economic Cooperation and Development reported that global growth will expand at the same pace 3.00% pace recorded in 2015 during 2016, down from its initial projections of 3.30% from the November 2015 meeting. Emerging markets appear to be at risk, reflected clearly by Brazil being in a recession while large economies such as the United States and Germany are also experiencing tapering growth. Furthermore, concerns also arise from China after it led stock markets to plunge at the outset of the year. The OECD predicts growth in the US to reach 2.00% this year and 2.20% in 2017 whereas for Germany expansion is estimated to hit 1.30% and 1.70% respectively. The announcement follows forecasts issued by the International Monetary Fund in January estimating the global economy will grow 3.40% this year and increase by 3.60% in 2017.

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ftse-mar1602192016

ECB Recognizes European Risks

Meeting minutes from the last European Central Bank monetary policy decision highlighted persistent concerns about the future of the whole Euro Area economy. Policymakers appear worried about ongoing uncertainty emerging market economies, turmoil in commodities, financial market turbulence as well as rising geopolitical risks. Economic data in 2015 indicated a modest recovery in Euro Area economic fundamentals, helped in large part by the stimulus provided by the ECB, but risks on the horizon continue to unnerve the Central Bank. Officials clearly stated that at the next monetary meeting in March, the Board will review and reconsider its policy stance with the Committee willing to adjust monetary policy further to accommodate conditions. The ECB President reiterated in an earlier statement that the Central Bank has more instruments in hand and there are no limits to the actions it can undertake to restore price stability and growth.

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eurjpy02192016

US Jobless Claims Hit Multi-Month Lows

The week ending February 13th saw initial claims for unemployment benefits in the United States drop by 7,000. The Department of Labor reported declines in Americans filing for unemployment to 262,000 compared to prior week’s 269,000 while also missing expectations of 275,000. The 4-week average in unemployment fell to 273,250 from 281,250 reported in the previous week. The Department of Labor stressed in its report that claims have been below the healthy level of 300,000 for the 50th consecutive week. The labor market continues to be robust despite the strength of the US dollar that is holding back exports with domestic demand proving the main driver of the economy. The Federal Reserve monitors the health of the labor market before moving to adjust policy but recent financial markets stresses saw officials make clear that a March hike is off the table.

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sp-mar1602192016

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