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90 seconds at 9 am with BNZ: Greece agrees to austerity deal, but donors still nervous; China stimulus less likely despite export slump; Bank of England prints again
Here's my summary of the key news overnight in 90 seconds at 9 am in association with Bank of New Zealand, including news Greek politicians have finally agreed to a new austerity deal, but its donors at the 'troika' of the European Union, the European Central Bank and the International Monetary Fund have yet to put their stamp of approval on the deal.
After weeks of delays and political infighting, Greece's leaders agreed to a programme of wage cuts, public sector job cuts and some pension cuts, but only after reducing the size of the pension cuts and finding 300 million euros of cuts elsewhere. These politicians face elections in April and have been reluctant to be seen imposing yet more austerity on voters.
However the Troika remain distrustful of Greece's ability to follow through on the deal after more than two years of broken promises and failed attempts to control Greece's deficits. The Troika deferred a final decision overnight. See more here at Bloomberg.
This uncertainty meant European stocks and the euro only rose slightly despite the apparent resolution of the Greek situation, which has weighed on markets for months. See more here at Bloomberg.
Meanwhile, there was a US$25 billion settlement deal announced overnight between US Federal and State governments with five big banks over 'fraudclosure' claims. This follows the discovery that some banks were falsifying documents to help foreclose (start mortgagee sales) on home owners after they lost documents. See more here at Bloomberg.
Signs of some recovery in the US jobs market boosted the US stock market. Jobless claims there fell unexpectedly last week.
Closer to home and of more importance to our economy, China yesterday revealed higher than expected inflation figures in January. The increase in the annual inflation rate to 4.5% was seen reducing the prospects for a fresh round of stimulus by the Chinese authorities. See more here at Reuters.
The Australasian and Asian economies are depending on China being able to repeat its stimulus from late 2008 and early 2009 to again help stave off the effects of the fresh slowdown in Europe. The European slowdown is however slowing down China's export growth engine. China is expected later today to report a 1.4% fall in exports in January from a year ago. See more here at Bloomberg.
Meanwhile, emphasising the dire state of the British economy, the Bank of England announced a new round of money printing overnight and kept its official interest rate at 0.5%. The bank increased its programme for buying of gilts or British government bonds by 50 billion pounds to 325 billion pounds. See more here at Reuters.
The New Zealand dollar remained firm but slightly below its recent five month highs as celebration of the Greek deal remains muted.