Economists have had a busy week with lots of interesting data and economic news to digest.
Sterling ends the week stronger than the euro and US dollar compared to this time last Friday, with gains of approximately 1.10% and 1.73% respectively.
While the euro gained approximately 0.55% against the pound ahead of the European Central Bank’s interest rate decision on Thursday, it quickly lost these gains.
Following the chancellor’s Budget on Wednesday, the UK government announced that it plans to spend billions to boost the country’s labour supply. It will do this via tax breaks on pensions as well as expanding free childcare.
On Thursday, British retailer, John Lewis announced it is to scrap staff bonuses for the second time. The company also signalled job cuts are in the pipeline after a worse-than-expected £230m full-year loss.
However, it was Credit Suisse who took the limelight this week as its turmoil caused turbulence in the stock markets. As well as European and UK stocks taking a blow, Canadian stocks fell to a three-month low on Thursday. The S&P/TSX Composite index fell 0.8% hitting 19,250 following the potential sale of the First Republic Bank and recent vulnerability of Credit Suisse.
The bank (Credit Suisse) has since been given a lifeline from the Swiss Central Bank, but investors will be keeping their eyes peeled for any further developments.
In the eurozone, ECB policymakers raised interest rates by 50 basis points as expected on Thursday. The decision raised interest rates to 3.5% in an attempt to cool the region’s stubbornly high inflation and pushed borrowing costs in the eurozone to their highest level since late 2008.
In its statement the ECB said, “inflation is projected to remain too high for too long,” the Bank added that, “the Governing Council today decided to increase the three key ECB interest rates by 50 basis points, in line with its determination to ensure the timely return of inflation to the 2% medium-term target.”
Across the pond, US inflation came in slightly below expectations this week, with core inflation easing (to 5.5%) for a fifth consecutive month in February.
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