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  Daily Economic News – Jan. 29, 2015


AUTHORS                Derek Chen (x-81602)                      Eung Ju Kim (x-85804)
                       Mizuho Kida (x-31943)



Greek banks bounce back…U.S. Fed keeps policy rates unchanged…Brazil’s
unemployment rate eases to record low


Financial Markets

Greek bank shares rallied from a three-day plunge that wiped out about $10 billion in market
capitalization after the government made an effort to downplay the prospect of an imminent clash with
international creditors. The country’s banking-stock index surged 13%, the most since May 2013, after
closing at its weakest level since at least 1995.



High Income Economies

The U.S. Federal Reserve held its key rate at 0 to 0.25% in its first meeting of 2015, keeping its pledge to
remain “patient" on raising interest rates amid unusually low inflation that could derail the economic
recovery. The Fed said the U.S. economy is now expanding at a "solid" pace with strong gains in
employment; amid falling energy prices, however, it expects inflation to drop further in the near-term, but
then rise toward 2% as the jobs market further improves.

The Eurozone economic confidence index climbed to 101.2 in January from 100.6 in December, the
highest since July, but less than 101.6 forecast by economists. Stronger confidence among consumers
and in the industrial and retail sectors positively contributed to the headline index.

Germany’s unemployment rate dropped to a record low of 6.5% in January from a revised 6.6% in
December, reflecting the strongest economic expansion in three years in 2014. Meanwhile, Germany’s
headline consumer price inflation declined to -0.3% (m/m) in January from December’s 0.2%. Similarly,
the EU-harmonized inflation rate slumped to -0.5% in January from December’s 0.1%.



Developing Economies

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Latin America and Caribbean

Brazil’s unemployment rate fell sharply to a record low of 4.3% in December, down from 4.8% in
November and below economists’ expectation of 4.6%, data from the statistics ag ency IBGE showed.
The average unemployment rate for 2014 was 4.8%, down from 5.4% in 2013. That was also a record
low. The unemployment rate, as calculated by the IBGE, tallies jobs in the formal sector as well as
informal sector. It has remained near record lows despite weaker job growth, mostly because many
young adults passed up entering the work force to remain in training.

Sub-Saharan Africa

South Africa's producer price inflation slowed more than expected in December to 5.8% (y/y), following
the 6.5% rise in November and against economists’ expectation of a 6% rise. Producer price inflation
slowed for the eight month in a row. Month-on-month, producer prices were down 0.2% in December after
being flat in November and faster than a 0.1% decline expected by economists.

You’ll find recent issues of this Daily and lots of other current analysis and high -frequency data on our
GEM intranet website: http://go.worldbank.org/0TC32BNV30

See also our Prospects blog: http://blogs.worldbank.org/prospects

The Daily Economic News is an informal briefing for Bank staff whose responsibilities require that they
stay abreast of changes in global markets. The views expressed here do not reflect those of the World
Bank Group.
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