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As expected, the European Central Bank did not alter the parameters of its monetary policy framework, leaving the main refinancing rate and the deposit rate at 0% and minus 0.4% respectively. President Mario Draghi chose instead to focus on the fact that policy makers still need to see the full impact of the measures. What will be changing is the composition of the current asset purchase program, as corporate bonds are thrown into the mix next week. The ECB had announced it will be buying corporate bonds in its April meeting.
The ECB reiterated its message that governments should do more to unleash the full benefit of its stimulus programme. While not new to this talk, the fact that the message is being repeated against a background of a growingly accommodative monetary policy framework suggests that the adopted measures are not having the desired effect. Draghi has yet again stated that the ECB stands ready to act – “decisively if needed” – but it is highly unlikely this will happen before the ECB’s September meeting, when crucial economic data and revised ECB staff projections will be available.
Oil Partners Strike Half a Deal
Iran insisted it will accelerate its crude oil production on Thursday, but arch-rival Saudi Arabia said it promised not to flood the market in retaliation, giving some relief to OPEC members that their market shares would not be squeezed.
Tensions between the two countries were unusually low at the latest meeting between OPEC and non-OPEC members on Thursday, a stark contrast to the meeting held last December. Saudi Arabia and its allies in the Gulf proposed OPEC set a new collective ceiling in an attempt to prop up the producer’s group diminishing influence ion the oil market. But the meeting ended with no new policy or ceiling amid resistance from Iran.
Oil fell in the aftermath of the announcement, but reversed its fall after the market digested the news that Saudi Arabia will be “very gentle” in managing their supply and will not be “shocking the market in any way”.
New Banknote for the UK, and a Drone for Walmart
As the debate about Brexit rages on in the UK, the Bank of England came through on its commitment made in 2013 and introduced its first plastic banknote. The five-pound note features iconic Prime Minister Winston Churchill, and replaces 19th century prison reformer Elizabeth Fry who has appeared on the note since 2001.
Governor Mark Carney said in a statement that plastic notes – polymer, technically speaking – are now international best practice. The fiver is now more durable and harder to forge, and is expected to be joined by a new 10-pound note in 2017 and a new 20-pound in 2020. The UK joins countries such as Australia, Canada and New Zealand who have already adopted plastic banknotes.
New tech is also on the block at Walmart, as the company announced a series of drones will be deployed in the coming year to replace inventory quality assurance jobs and bring down inventory checks lead time from a month to one day. Quadcopter drones would be hovering over lines in Walmart’s distribution centres in the US, taking pictures and scanning for tracking numbers. The data would then be fed to a computer which would check for mismatches and advise line managers accordingly.
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