The European Central Bank (ECB) kept interest rates unchanged, as policymakers expect that the stimulus measures announced previously will boost eurozone growth and inflation in the coming months. After the policy session in Vienna, the 25-member governing council, headed by Mario Draghi, kept the benchmark interest rate at record low of zero per cent.
In April, the interest rate was held steady, following an unexpected five basis point deduction in March. The deposit rate was left unchanged at -0.40 per cent, following a 10-basis point reduction in March. The marginal facility rate was kept at 0.25 per cent, after a five-basis point cut in March.
The ECB also declared that on Wednesday it will start making purchases under the corporate sector purchase programme (CSSP) and on June 22 it will conduct the first operation in its new series of targeted longer-term refinancing operations (TLTRO).
Meanwhile the UK construction sector slowdown continued in May. Survey data from Markit showed that the UK construction experienced another difficult month as output growth eased to its weakest level for almost three years. The seasonally adjusted UK construction Purchasing Managers’ Index (PMI) fell to 51.2 in May, from 52.0 in April. It was projected to remain unchanged at 52. The survey revealed that a third of the respondents had been negatively affected by the uncertainty surrounding the European vote.
Finally, US manufacturing activity increased in May. The Institute for Supply Management (ISM) reported that its manufacturing index rose to 51.3 in May from 50.8 in April. A reading above 50 indicates growth.
In May, new orders and production grew at a slower pace while export orders and the employment measure were unaffected.
The unforeseen growth by the index came as 12 of the 18 manufacturing industries reported growth in May, influenced by wood products manufacturers and textile mills. The dollar has fallen as from January, following the surge of last year, giving some relief to American factories.
This report was compiled by Bank of Valletta plc for general information purposes only.