• US Federal Open Market Committee increased federal funds rate by 25 basis points to a range of 0.50-0.75% at its December meeting, the first increase since December 2015. Additionally, the expectation for the number of quarter-point rate hikes in 2017 was increased from two to three.
  • 3Q16 GDP growth in the USA was revised up from an annualized 3.2% to an annualized 3.5%, beating expectations.
  • European Central Bank kept its benchmark interest rate at 0.0% and announced a cut in asset purchases from EUR 80bn to EUR 60bn per month, starting April 2017.
  • According to short-term indicators, growth in November 2016 accelerated in Kazakhstan (+2.7% y/y) and Georgia (+2.0% y/y), but decelerated to 3.2% y/y in Ukraine. Following four months of contraction, growth in Armenia came in at 2.3% y/y in November 2016.
  • Negative growth persisted in Azerbaijan (-3.9% y/y) and Belarus (-2.7% y/y) in 11M16.
  • Inflation in November 2016 accelerated further in Azerbaijan (+17.1% y/y) and Belarus (+11.4% y/y) and retreated in Kazakhstan (+8.7% y/y), Russia (+5.8% y/y), and Ukraine (+12.1% y/y). Inflation in Georgia returned to positive territory (+0.2% y/y), while deflation slowed in Armenia (-0.6% y/y).
  • Armenian Central Bank cut its refinancing rate further to 6.25%, down 25 basis points, on December 27, 2016.

Please see the full report for detailed coverage of the fixed income markets of Georgia, Armenia, Azerbaijan, Belarus, Kazakhstan, and Ukraine.