Global

· IMF's Lagarde Sees 'New Reality' of Mediocre Growth, Rising Currency Risks. Mediocre economic growth could become the "new reality," leaving millions stuck without jobs and increasing the risks to global financial stability, the head of the International Monetary Fund warned on Thursday. Christine Lagarde, the managing director of the IMF, first warned in October the global economy could be stuck on a "new mediocre" growth path with high debt and unemployment, unless policymakers act. "Today, we must prevent that new mediocre from becoming the 'new reality,'" she said, according to prepared remarks at the Washington-based Atlantic Council. Speaking ahead of the release of the IMF's economic forecasts next week, Lagarde said global growth this year is similar to last year, while it is slightly better for advanced economies and slightly worse for emerging markets. She warned that the world economy could is susceptible to currency risks. "Clearly the exchange rate and the currency risks, and the volatility that it creates, is one of those rising risks," Lagarde said, adding that emerging market companies were particularly at risk. (Reuters)

Asia

· Bank of Korea Holds Rates at Record Low, Cuts GDP and CPI Forecasts. South Korea’s central bank cut growth and inflation forecasts while keeping the nation’s key interest rate unchanged as it monitors the impact of record-low borrowing costs. Asia’s fourth-largest economy will expand 3.1% this year and prices will rise 0.9%, Bank of Korea Governor Lee Ju Yeol said Thursday. Both were lower than forecasts made as recently as January. With inflation easing to the slowest pace since 1999, pressure may increase on Lee to consider another reduction in the seven-day repurchase rate. It now stands at 1.75%, after the BOK last month joined about 30 counterparts around the world in a wave of monetary easing this year. (Bloomberg)

· India Outlook Raised by Moody’s while Fitch Sees Faster Growth. India’s credit rating outlook was raised to positive by Moody’s Investors Service and Fitch Ratings boosted its growth forecast, signaling optimism that policy makers can improve Asia’s No. 3 economy. The country’s Baa3 rating was affirmed and the outlook was revised from stable, Moody’s said in a statement Thursday. Fitch affirmed India’s BBB- rating with a stable outlook. Both companies rate India at the lowest investment grade, on par with Indonesia and Turkey. “There is an increasing probability that actions by policy makers will enhance the country’s economic strength and, in turn, the sovereign’s financial strength over coming years,” Moody’s said. “India has grown faster than similarly rated peers over the last decade due to favorable demographics, economic diversity, as well as high savings and investment rates.” (Bloomberg)

· Another Big Budget for Japan. Japan's upper house approved another record-breaking budget that weighs in at 96.3 trillion yen ($799 billion). The government will now begin work in earnest on a plan for achieving a primary surplus by fiscal 2020. But it is showing no desire for the spending cuts needed to get there. Finance Minister Taro Aso seemed pleased with the fiscal 2015 budget passed Thursday, telling reporters after the vote that it "seeks to balance economic regeneration and fiscal consolidation." The Liberal Democratic Party-led ruling coalition is clamoring for more investment in domestic infrastructure. LDP General Council Chairman Toshihiro Nikai and others tout a five-year plan for up to 70 trillion yen in "national resilience" spending. But stubborn budget realities stand in the way. With the budget approved Thursday, Japan will run a primary deficit of 16.4 trillion yen. This equals 3.3% of GDP, exactly half of the level of fiscal 2010. (Nikkei)

USA

· Applications for US Jobless Aid Rise but Still at Low Level. More Americans sought unemployment benefits last week, but applications for jobless aid overall remain low - a reassuring sign after hiring slowed last month. Weekly applications rose 14,000 to a seasonally adjusted 281,000, the Labor Department said Thursday. The climb occurred after applications plummeted to match a 15-year low in the previous week. Even with the increase, other data in the report demonstrated that few people are seeking benefits. Since applications are a proxy for layoffs, that suggests companies are confident enough in the economy to keep their staffs and are cutting few jobs. (AP)

· U.S. Wholesale Inventories Rise in February Amid Weak Sales. U.S. wholesale inventories rose in February as sales remained weak, suggesting wholesalers might have little incentive to aggressively restock warehouses in coming months. The Commerce Department said on Thursday wholesale inventories rose 0.3% after an upwardly revised 0.4% increase in January. Economists had forecast stocks at wholesalers rising 0.2% in February after a previously reported 0.2% gain in January. Sales at wholesalers fell 0.2% in February after declining 3.6% the prior month. At February's sales pace it would take wholesalers 1.29 months to clear shelves, unchanged from January. (Reuters)

· Sagging Productivity behind Slow U.S. Wage Gains, Fed Study Finds. Prospects may be dim for American workers looking for wage gains in the years ahead, according to Cleveland Federal Reserve research that finds that gains partly hinge on U.S. productivity and labor's share of income, both of which have been dropping. Economists at the Cleveland Fed conclude that these longer-term changes in the U.S. economy, which have picked up over the last decade, played a role in the slow real wage growth since the 2007-2009 recession. The Cleveland Fed economists expect wages to tick higher in the short term, but any gains may be short-lived. Labor productivity has been declining for a decade, and for even longer, workers have been earning less overall income relative to the owners of capital. (Reuters)

Europe

· OECD says Eurozone Economy Accelerating. Economic growth is accelerating in the euro zone and in India but slowing in China, Russia and Brazil, the Organisation for Economic Co-operation and Development said on Thursday. In a monthly update, the OECD said that within the euro zone, France and Italy were showing signs of better growth and that the outlook was also improving in Germany, the euro zone's largest economy. The international think tank's leading indicator, a measure supposed to capture turning points in the economy, rose to 100.7 for the euro zone as a whole, from 100.6 a month earlier. (Reuters)

· German Exports Rise in February but Surplus Steady. German exports rebounded in February after dipping to start the year but imports rose at a faster pace, raising questions about whether trade will support growth in Europe's largest economy going forward. Seasonally-adjusted exports rose 1.5% on the month after dipping by 2.1% in January, data from the Federal Statistics Office showed. That was slightly better than a consensus forecast for a 1.0% increase. Imports rose by 1.8%, a stronger increase than the 1.2% acceleration expected by economists. The trade surplus for February remained broadly steady at 19.7 billion euros. (Reuters)

· UK Trade Deficit Hits Seven-Month High. Britain's goods trade deficit widened more than expected to a seven-month high in February as the value of exports fell to its lowest level in more than four years, according to official data on Thursday. The figures also showed January's initially strong-looking trade data now looked much weaker. The Office for National Statistics the deficit in goods widened to 10.34 billion pounds from a shortfall of 9.17 billion pounds in January, bigger than all forecasts in a Reuters poll of economists. Goods exports sank to 23.16 billion pounds, their lowest level in any month since September 2010.The falling exports mainly reflected weaker sales to the United States. (Reuters)

· UK Interest Rates Kept at Record Low. UK interest rates have been held at 0.5% for another month by the Bank of England. The decision by the Monetary Policy Committee comes more than six years after the record low was introduced. Rates have been at a record low for the entire Coalition government period. Expectations of a rise any time this year have been put on hold with Consumer Price Index inflation at zero. The Bank left the scale of its quantitative easing (QE) programme to boost the money supply unchanged at £375bn. (BBC)

Currencies

· Dollar Rallies on Rate Differentials, Policy Forecasts. The U.S. dollar hit a near-three-week peak on Thursday, driven higher by sentiment that U.S. interest rates inevitably will rise, with the prospect of a June increase still in the mix despite spotty economic data. Interest rate differentials between benchmark U.S. and German 10-year government bonds widened to 1.771% on Thursday, their biggest spread since March 26. The euro fell to its lowest level since March 19, trading off 1.34% to $1.06370 on the EBS trading platform. The greenback climbed 1.28% to 0.9790 Swiss francs, a near three-week high. The dollar gained 0.42% to 120.74 yen, its best level since March 20. Sterling fell 1.24% to $1.4680, a three-week low. (Reuters) C

ommodities

· Oil Up on Iran, German Data, but Strong Dollar Curbs Rise. Oil prices rose on Thursday on strong German economic data and uncertainty about negotiations on Iran's nuclear program, even as a strong dollar curbed oil's bounce a day after futures tumbled 6%. Brent crude rallied 4% intraday as European equities strengthened on German industrial output and trade data and Greece's repayment of a loan to the International Monetary Fund. Also supportive was Iran saying it will only sign a final nuclear accord if all sanctions imposed over its disputed nuclear program are lifted the same day. Dollardenominated oil pared gains on the strong dollar, which was driven higher by sentiment that U.S. interest rates inevitably will rise. Brent May crude rose $1.02 to settle at $56.57 a barrel, having reached $58.02. U.S. May crude rose 37 cents to settle at $50.79, after hitting $52.07. U.S. crude's Tuesday close near $54 was the strongest since Dec. 30. (Reuters)

 · Gold Falls on Dollar as Fed Officials Keep Rate Rise Talk Alive. Gold retreated for a third straight session on Thursday on a stronger dollar after comments from U.S. Federal Reserve officials kept alive expectations for an interest rate rise sometime this year despite recent weak economic data. New York Fed President William Dudley and Fed Governor Jerome Powell on Wednesday sketched out scenarios in which the central bank could make an initial move earlier than many now expect, then move slowly on further increases. Minutes from the Fed's March 17-18 meeting showed officials opening the door to a June rate rise. Spot gold fell back below $1,200 an ounce after the minutes and comments and was trading down 0.7% at $1,193.96 an ounce at 2:39 p.m. EDT (1839 GMT). Spot silver fell 1.6% to $16.18 an ounce, while platinum lost 1.1% to $1,151.50 an ounce and palladium was up 0.6% at $759.50 an ounce. (Reuters)