Macroeconomics

For the second time this year, the Fed hiked interest rates, in a widely expected move that reflects the central bank’s confidence in the U.S. economy.

After two-day meeting on Wednesday, the Federal Reserve’s Open Market Committee raised their benchmark interest rate by 25 basis points to a range of 1% to 1.25%.

The move was essentially a foregone conclusion and the market was pricing in a 99% chance of a rate hike, according to CME Group’s FedWatch tool.

Statistics agency Eurostat said 234.2m people were in work across the EU between January and March, of which 154.8m were in the eurozone area.
Employment grew by 1.5 percent on average in the eurozone and by 1.4 percent in the EU. Compared to the previous quarter, employment grew 0.4 percent in both the euro area and the EU during the first quarter of 2017.
Eurostat had previously estimated increases of 0.3 percent on the quarter and 1.1 percent on the year.

The Fed has murdered price discovery in the markets and has enlisted other central banks as henchmen. The SNB (Swiss National Bank) has bought millions of dollars worth of Apple stock, for example, and it remains to be seen what the central banks will do if the slight downturn of the last few days persists. They may all buy the dip.

European officials indicated on Monday that they had few hopes for a comprehensive agreement at Thursday’s Eurogroup that will pave the way for Greece to join the European Central Bank’s quantitative easing plan, despite a French push for a deal.

France’s economy minister, Bruno Le Maire, was in Athens Monday to discuss a proposal whereby relief measures for Greece’s mountainous debt would be strengthened when growth is weak and relaxed when growth is strong. However, he admitted that securing a deal would be “difficult and complex.”

The European Central Bank (ECB) left its benchmark interest rate unchanged on Thursday and dropped any reference to a future rate cut.

In a statement it said it expected interest rates to "remain at present levels for an extended period of time," but added that it would be ready to extend its quantitative easing (QE) program if needed.

On Wednesday OECD released the global economic outlook in Paris. According to its forecasts over Switzerland, GDP growth is projected to rise gradually, which will reduce unemployment. The low interest rate environment is set to continue, helping to revive domestic demand. Deflation seems to have been overcome, but inflation is projected to remain low through 2018. The large current account surplus will persist.

Switzerland’s economy expanded at a slightly faster pace in the first quarter, data from the State Secretariat for Economic Affairs showed Thursday.

Quarter-on-quarter real growth of 0.3 percent surpassed the upwardly revised 0.2 percent in the fourth quarter but lagged the 0.4 percent expansion expected on average in a Reuters poll of five economists.
In the same period GDP performance recorded a 0.5 per cent expansion in the eurozone, 0.6 per cent in Germany and 0.2 per cent in the UK.

A measure reflecting the trends in the Swiss economy rose modestly in April, suggesting average private consumption growth, results of a survey by the UBS investment bank showed Wednesday.

The UBS consumption indicator rose to 1.48 points in April from 1.44 in March, which was revised from 1.50.