Fed sees rates near zero through 2023 to boost jobs, prices. The US Federal Reserve (Fed) left interest rates unchanged in its last meeting before the 2020 presidential election in November. After ending its two-day policy meeting last Wednesday, the rate-setting Federal Open Market Committee (FOMC) indicated that interest rates would continue at their current level of close to zero until inflation rises above two percent for "some time" so that it averages around two percent over time. A majority of FOMC members projected that interest rates would stay near zero through 2023. Beefing up the description of its future policy, the Fed “expects to maintain an accommodative stance” until the goals of maximum employment and two percent inflation are achieved, it said in a statement following the meeting.
OECD lifts global outlook but warns against tightening too soon. The Organization for Economic Cooperation and Development (OECD) upgraded its outlook for the world economy while warning policy makers not to tighten policy too quickly. The OECD said that global gross domestic product will shrink by 4.5 percent this year, and rise by five percent in 2021. That is a big improvement from the OECD’s June projections, which was for a six percent contraction this year, followed by 5.2 percent growth in 2021. The OECD attributed the improvement to better-than expected outcomes for China and the US in the first half of this year, and the massive government stimulus across the globe. But the Paris-based organisation said that output in many countries at the end of 2021 will still be below the levels at the end of 2019, and well below what was forecast before the pandemic.
German investor sentiment rises, despite Covid, Brexit headwinds. German Investor sentiment in Germany rose unexpectedly in September, the ZEW economic research institute said on Tuesday. This supports the view that confidence is recovering from the crisis brought about by the coronavirus pandemic, despite headwinds from stalled Brexit talks and rising new infection rates. The survey shows that investors’ economic sentiment rose to 77.4 this month from 71.5 points in August, confounding economists’ expectations of a fall to 69.8. “The ZEW indicator has increased again, signalling that the experts continue to expect a noticeable recovery of the German economy,” said ZEW President Achim Wambach. Europe’s largest economy has been recovering since May when lockdowns were lifted. However, activity remains below pre-crisis levels and economists expect a slow recovery.
UK retail sales rise for fourth straight month. British retail sales continued to increase for the fourth month in row, helped by spending on household goods and DIY, according to official figures. The Office for National Statistics (ONS) said that retail sales volumes rose by 0.8 percent between July and August. Sales are now four percent higher than in February, when the coronavirus pandemic was declared. "Retail sales continued to grow, further surpassing their pre-pandemic level," the ONS said. But spending may yet falter as the furlough scheme is wound down and unemployment rises, weighing on household incomes and job security, the ONS economist added.
Australia's unemployment rate falls to 6.8 percent. The jobless rate in Australia came in at a seasonally adjusted 6.8 percent in August, the Australian Bureau of Statistics (ABS) said on Thursday. That is well below expectations for 7.7 percent and was down from the 7.5 percent recorded in July. The ABS also said that the Australian economy added 111,000 jobs in August to 12,583,400 - again blowing past forecasts for a loss of 50,000 jobs following the addition of 114,700 jobs in the previous month. The participation rate came in at 64.8 percent, exceeding forecasts for 64.7 percent - which would have been unchanged.