In the first interest monetary policy meeting of the year on Thursday, the European Central Bank’s Board of Directors unanimously decided, in line with market expectations, to keep the main deposit interest rate at the historic low of -0.5%.
The ECB’s marginal lending rate was left at 0.25%, while the refinancing operations rate remained at 0%.
ECB President Christine Lagarde said she was concerned about negative interests, but argued that the low rates were a necessity. The bank also launched a strategic review that Lagarde has given great importance since taking office.
The review expected to be concluded by the end of 2020, will encompass quantitative formulation of price stability, monetary policy toolkit, economic and monetary analyses, and communication practices, the ECB said.
Other considerations, such as financial stability, employment, and environmental sustainability, will also be part of the review, it noted.
China central bank
China’s central bank (PBOC) announced on Friday it would temporarily raise the upper limit on small bank batch payments to 500 million yuan ($72.42 million) effective immediately until January 30. Reuters reported the move was aimed at easing fund transfers in the midst of a coronavirus outbreak.
Stricter measures from China
In its latest update, Chinese state media said that the number of people infected by the coronavirus rose to 830 as the number of victims stood at 25.
The Chinese Communist Party government, that as of Friday quarantined a population of 41 million in at least 11 cities in the central Hubei province, also banned urban transportation, new year celebrations and touristic group tours throughout the country.
Following Thailand, Japan, South Korea, Australia and Singapore, international wires reported three cases or suspected cases of the virus from Russia, five from Britain, one from Italy, one more case from the US.
The World Health Organization (WHO) said it was too early to declare an international emergency at its extraordinary meeting that was extended into Thursday. The organization underlined that the situation was urgent for China, but not so globally.
The US stocks saw mixed performance Thursday amid the China virus reports and company earnings. The S&P500 closed Thursday slightly higher as Nasdaq saw a new record thanks to Netflix earnings and interest in biotech companies. However, the coronavirus outbreak in China and some company losses put pressure on the market.
The Dow Jones Industrial Average fell by 26.18 points, or 0.09%, to 29,160 points as S&P gained 3.79 points, or 0.11%, to reach 3.325, and the Nasdaq Compound Index reached 9,402, earning 18.71 points, or 0.2%, thanks to Netflix biotech profits.
Nasdaq shares rose after the American Gilead Sciences biotech company reported active negotiations with the US and Chinese authorities to use the anti-viral drug Remdesivir for research treatment against the coronavirus.
Recovery in the German private sector
According to an IHS Markit survey released on Friday, the private sector in Germany gained momentum in January as growth in service activities increased and a decline in production slowed.
IHS Markit’s composite Purchasing Managers Index (PMI) rose from the previous month’s 50.2 level to 51.1, indicating that Europe’s largest economy could meet the challenges it faces in early 2020.
Virus pressure on oil
Oil prices rose slightly after a drop in the US crude stocks, but could not overcome the weekly pressure due to concerns that coronavirus from China could spread, impeding travel, fuel demand, and economic prospects.
Japan’s core consumer prices rose in December 2019 compared to the previous year and previous month, but remained well below the 2% target of the central bank.
The main consumer price index (CPI), which includes oil costs but excludes floating fresh food prices, rose 0.7% in December, matching the median forecast, according to government data released Friday. In November, the index increased by 0.5%.