European Central Bank Nowotny says new measures needed to boost inflation

It fuelled speculation that the ECB is preparing to ramp up its quantitative easing programme at the same time as the Bank of England and US Federal Reserve weigh up when to raise interest rates.

According to official data, USA jobless claims fell to their lowest level since 1973 last week (http://www.marketwatch.com/story/jobless-claims-match-42-year-low-2015-10-15).Consumer-prices fell (http://www.marketwatch.com/story/consumer-prices-fall-again-on-cheaper-oil-imports-2015-10-15) in September, in line with expectations, and readings on manufacturing activity in New York state (http://www.marketwatch.com/story/empire-state-factory-gauge-remains-negative-for-third-month-in-october-2015-10-15) and the greater Philadelphia area (http://www.marketwatch.com/story/philly-fed-survey-shows-activity-continued-to-weaken-in-october-2015-10-15) were also stronger than expected.

The dollar.DXY was up 0.5 percent against a basket of currencies, on track for its biggest one-day gain since September 21.

Neil Bouhan, government bond strategist at BMO Capital Markets in Chicago said the data implies a few “possibility that the Fed could still build a 2015 case for liftoff”. While the benchmark S&P 500’s financial sector .SPSY led the pack with banks as the top drivers, results were mixed.

“Nowotny’s comments differ from the recent “wait and see” mantra coming from several ECB policymakers including President Mario Draghi regarding the need for more stimulative action”, IHS Global Insight chief United Kingdom and European economist Howard Archer said in a report. The central bank’s goal is just under 2 percent.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.4 percent. Goldman Sachs shares rose 2.4 percent even after it missed expectations.

European Central Bank council member Ewald Nowotny said “it’s quite obvious” that the region needs more support to stimulate growth and return stubbornly low inflation to target. “Generally the theme is still dollar weakness across the board, because the market is pricing out a rate hike this year”, said Thursday Lan Nguyen, currency analyst with Commerzbank in Frankfurt.

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