The US jobless claims depicted resilience in the job markets as the least number of individuals filled for jobless benefits in 15 years. This signals further confirmation of strength in employment, even as some other sectors show weakness, therefore creating a confusing scenario for policy makers. The results showed 264k individuals submitted for jobless claims,a positive reading following the impressive NFP reports last week and unemployment rate close to full employment levels. This shows that the Feds may have one piece of the puzzle as they seem close to their full-employment mandate. On the other hand, their price-stability mandate still seems far fetched, but that can improve in months to come. These are the determining factors as to when the Feds will decide to start raising rates. The producer price index fell to -0.4%, showing a negative change in the price of finished goods and services sold by producers.
ECB President Draghi spoke at the 2015 Michel Camdessus Central Banking Lecture held by the International Monetary Fund, in Washington DC. At least this time no confetti drama. Speaking of the Eurozone condition, he reiterated the general aim of existing policies, to “maintain price stability over the medium-term”. On this basis, he posed two challenges to policy decisions:
- First, as interest rates have reached their effective lower bound in the euro area, we have become more constrained in our ability to deploy conventional monetary policy tools. This has required us to develop new instruments to achieve the same results.
- Second, because the use of these new instruments can have different consequences than conventional monetary policy, in particular with respect to the distribution of wealth and the allocation of resources, it has become more important that those consequences are identified, weighed and where necessary mitigated.
In conclusion, he stated that: Policymakers in the euro area are independent, but the effects of their policies are interdependent. This is why it is ultimately only a combination of policies, that are complementary and mutually consistent, that will allow our policy to reap its full effects – and to bring about a lasting return of both prosperity and stability for the whole euro area.
On the calendar for today, the high impact news are:
– 12:30 p.m GMT- Canada Manufacturing Sales m/m
– 3:00 P.M GMT- Prelim UoM Consumer Sentiment