April 4: The Day That Was

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April 4 was a pretty busy day in some of the world's largest markets, with the United Kingdom, Europe, and Japan announcing their respective interest rate decisions.

While all three central banks--the Bank of Japan, Bank of England, and the European Central Bank (currently at 0.1%, 0.5%, 0.75%, respectively)--announced no changes in their rates, there were bigger things that need a closer inspection.

Japan for one, said that it plans on pumping even more money to its economy. To be exact, it plans to provide a stimulus package worth $1.4 trillion into its economy within a two-year period. This involves buying bonds worth $78.6 billion on a monthly basis. This puts the stimulus package at par with that of the US, despite Japan's economy being just a third that of the US.

Meanwhile in Europe, the ECB's Mario Draghi displayed indications that the central bank is seriously considering cutting rates further in the region's ailing economy. 

"Our monetary policy stance will remain accommodative for as long as needed," said Mr Draghi said in yesterday's statement, who is facing pressure to find new ways to help the EU out of the debt crisis it faces.

While there are currently no indicators that the EU will announce a cut in April, it may come soon nevertheless. For one, the latest decision was not unanimous, indicating that there are those in the ECB who think that a rate cut should be made already.

And while Japan decided to rain money on its economy, the UK thought it prudent to put a hold on its own stimulus package for now. Its service sector is on a slight but positive rise from February's 51.8 to 52.4, helping lift the UK economy by 0.1% in Q1 2013.

By FX Strategy Team, Published on 5th of April 2013
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