Global

· Fed, ECB Encourage Return To Emerging Markets In January – IIF. Foreign money flows into emerging markets bounced back in January, buoyed by the ECB starting quantitative easing and by the receding prospect of a U.S. rate hike, the Institute of International Finance (IIF) said. Following the sharpest outflows in 18 months in December, portfolio inflows in January were expected to tally $18b, with bond investment rising to $14b and $4b going into stocks, the Washingtonbased finance industry body said in its monthly report. "Portfolio flows have rebounded in January to more normal levels, after sizeable outflows in December," IIF chief economist Charles Collyns said in the report published late on Tuesday. "Investor interest in emerging markets has benefited from the further scaling back of market expectations for Fed policy rate hikes and by the ECB's announcement of an expanded, open-ended quantitative easing program." (Reuters)

Malaysia

· OPR Kept Pat. As expected, Bank Negara Malaysia (BNM) has opted to retain the Overnight Policy Rate (OPR) at 3.25%. Uncertainties in the global economy remain prevalent, keeping the international financial market volatile but BNM believes that Malaysia is able to weather it. Locally, domestic consumption is expected to moderate in light of the GST. The fall in energy and commodity prices however, will help to buffer inflationary pressures. At 3.25%, the OPR remains accommodative and we believe that BNM will keep at the current stance for the rest of the year. (Please refer to Economic Viewpoint for further comments)

· MIER Tags Malaysia’s 2014 Economic Growth At 5.9pc. The Malaysian Institute of Economic Research (MIER) said the economy will post an 'exceptionally strong' growth at 5.9% in 2014. Executive director Dr Zakariah Abdul Rashid said actual growth remained well above the 'socially efficient level of output' growth at 5.5% per annum. The output gap remained positive during the year with strong contribution from the external sector. GDP grew by 6.1% in the first three quarters of 2014, driven by robust private consumption. (NST)

Asia

· Bank of Thailand Holds Interest Rate, Says Policy Accommodative. Thailand kept its key interest rate unchanged for a seventh straight meeting, refraining from joining global central banks in easing monetary policy to spur economic growth amid dwindling inflation. The Bank of Thailand held its one-day bond repurchase rate at 2%, with monetary policy committee members voting five-to-two in favor, it said in Bangkok on Wednesday. Sixteen economists surveyed by Bloomberg News predicted the decision, while six forecast a quarter of a percentage point cut. (Bloomberg)

· Singapore To Slow Down Appreciation Of Currency. The Monetary Authority of Singapore (MAS) says it will adjust its monetary policy and allow the Singapore dollar to appreciate at a slower pace. As part of its ongoing economic surveillance, MAS has assessed that it is appropriate to adjust the prevailing monetary policy stance. The central bank said it would continue with the policy of a modest and gradual appreciation of the Singapore Dollar Nominal Effective Exchange Rate (S$NEER) policy band. “However, the slope of the policy band will be reduced, with no change to width and the level at which it is centred,” MAS said in its Policy statement released Wednesday. (Bernama)

· India Makes Push To Boost Revenue As Deficit Deadline Nears. India's government made a push on Wednesday to bolster its strained finances, offering to sell a stake in miner Coal India and more mobile phone airwaves as it aimed to deliver on a promise to trim its fiscal deficit. Prime Minister Narendra Modi is racing to honor a commitment to narrow the deficit to a seven-year low of 4.1% of gross domestic product in the year ending in March. A revenue shortfall has driven up the deficit to 99% of the full-year target in the first eight months of the year, casting doubts on that pledge. (Reuters)

USA

· Fed Raises Assessment Of Economy While Staying Patient On Rates. The Federal Reserve boosted its assessment of the economy and downplayed low inflation readings while repeating a pledge to remain “patient” on raising interest rates. The Federal Open Market Committee described the expansion as “solid,” an improvement over the “moderate” performance it saw in December. It substituted “strong” for “solid” in its evaluation of job gains after a meeting today in Washington. While inflation “is anticipated to decline further in the near term,” the FOMC said in a statement, it is likely to rise gradually toward its 2% goal “over the medium term” as the impact of low oil prices diminishes. Policy makers saw a bonus in cheap energy, saying it’s boosting consumer buying power. (Bloomberg)

· U.S. Fed Funds Rate Slips To Lowest In Four Weeks. A key overnight borrowing cost for U.S. banks slipped to its lowest level in nearly four weeks on Tuesday, as money market rates have fallen on expectations the Federal Reserve might raise interest rates later than some economists had forecast, Fed data released on Wednesday showed. A snowstorm that swept across the northeastern United States on Monday and Tuesday reduced trading activity and demand for cash to finance trades, analysts said. The effective or average interest rate on federal funds, the cost for banks to borrow excess reserves from each other, was 0.11%, down from 0.12% on Monday. This was the lowest since 0.06% on Dec. 31. (Reuters)

· Fed To Extend Reverse Repo Tests Through End Of Q1. The U.S. Federal Reserve will extend its testing of the term reverse repurchase program, a new tool it hopes will help control short-term interest rates when the time comes to tighten monetary policy. The New York Fed said it would conduct a series of so-called term RRP operations from mid-February to early March, and an additional series of tests that span the period at the end of the first quarter, which is a critical time for short-term borrowing on Wall Street. It begins with a Feb. 12 operation worth about $10b, and will use Treasury collateral maturing no later than March 12, the New York Fed said. The $50b cap on the first series is in addition to the $300b cap on overnight RRPs. (Reuters)

· U.S. Mortgage Applications Slip In Latest Week: MBA. Applications for U.S. home mortgages fell last week as mortgage rates edged higher, data from an industry group showed on Wednesday. The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes both refinancing and home purchase demand, fell 3.2% in the week ended Jan. 23. The MBA's seasonally adjusted index of refinancing applications fell 5.1% to 2,605.4. The gauge of loan requests for home purchases, a leading indicator of home sales, slipped 0.1%. (Reuters)

Europe

· Eurozone Needs To 'Share Risks', Warns Bank Governor. Bank of England governor Mark Carney has warned the current structure of the eurozone puts it in an "odd position". Mr Carney said sharing a currency without also sharing decisions on taxes and spending did not work. "For complete solutions to current and potential future problems the sharing of fiscal risks is required," he told an audience in Dublin, Ireland. Currently, EU members share the euro currency, but decisions on spending are made at a national level. Mr Carney said "it is no coincidence" that effective currency unions tended to have centralised fiscal authorities. "European monetary union will not be complete until it builds mechanisms to share fiscal sovereignty," he said. (BBC)

· German Gov't Says Sees Economy Growing By 1.5% In 2015. The German government said on Wednesday that it expected Europe's largest economy to grow by 1.5% in 2015, on a par with its performance in 2014, confirming what sources had already told Reuters. In October the government had predicted the German economy would grow by 1.3% this year. The government said the number of people in work would rise to a new record high of 42.8 million in 2015, adding that higher employment and bigger paychecks would help boost the domestic economy this year. (Reuters)

· Russia To Spend $35bn On Economy Plan. The Russian government is to spend at least 2.34 trillion roubles ($35bn) to try to stave off an economic crisis, following a collapse in oil prices and the value of the rouble. The country has also been subject to economic sanctions by the West over its involvement in the crisis in Ukraine. Russia will spend most of the cash on federal loans, pensions and recapitalising its banks. The country will also make public spending cuts. Over the next three years most spending, apart military and social programmes, will be hit. (BBC) Currencies · Dollar Inches Higher After Fed Statement. The dollar inched higher against the euro and pound Wednesday afternoon after the Federal Reserve’s policy statement included no clear guidance about its rate-hike plans. The dollar was at ¥117.43, compared with ¥117.80 Tuesday. The euro traded at $1.1289, compared with $1.1362 Tuesday. The Falling oil prices again weighed on the Norwegian krone and Canadian dollar. The loonie traded at 79.83 cents, its lowest level against the buck in six years. The krone traded at 7.83, its lowest level since June 2002. It traded at 7.75 krone Tuesday. The Russian ruble declined to 67.84 rubles per dollar, compared to 67.75 Tuesday. (Marketwatch)

Commodities · Oil Tumbles; US Crude Prices Near 6-Year Low On Record Stockpiles. Oil slumped on Wednesday, with U.S. crude prices at near six-year lows, after the government reported record-high inventories in the United States that raised anxieties about the global oil glut that had pressured the market since last summer. The U.S. Energy Information Administration (EIA) said domestic crude oil stocks rose by almost 9 million barrels last week to reach nearly 407 million, their highest since the government began keeping records in 1982. U.S. crude's front-month contract settled down $1.78, or almost 4%, at $44.45 a barrel. It sank to as low as $44.08 before the close, marking a bottom since April 2009. Open interest in the front-month remained near record highs for a fifth straight day, according to Reuters data. Benchmark Brent crude closed down $1.13, or 2.3%, at $48.47, after a session low at $48.29. (Reuters) · Gold Falls Further After Fed Reiterates Its Patience. Gold extended losses on Wednesday after the Federal Reserve said it will remain "patient" with regard to any interest rate increase decisions. After its first policy-setting meeting of the year, the Federal Open Market Committee (FOMC) said the U.S. economy is on track de

spite turmoil in other markets around the world. The statement no longer contains the closely watched "considerable time" phrase in connection to interest rates. Spot gold was down 0.6% at $1,284.11 an ounce by 2:57 p.m. EST (1957 GMT), trading in a $13 range. It hit a five-month high of $1,306.20 last week, before retreating on stronger risk appetite after the European Central Bank announced liquidity measures. Among other precious metals, spot silver was down 0.3% at $17.97 an ounce. Palladium gained 2% at $793.50 an ounce while platinum was down 0.4% at $1,253.50 an ounce. (Reuters)