Business this week

Markets breathed a sigh of relief after a senior legal adviser to the European Court of Justice decided that a programme created by the European Central Bank to buy government bonds of countries where yields have shot up, though “unconventional”, came under its monetary-policy remit. That programme has not yet been used, but a different legal finding would have led to much uncertainty about whether the ECB could launch an expansive round of government-bond purchases across the euro zone, which it might announce at its next meeting on January 22nd. See article

The Swiss central bank shook markets when it scrapped the Swiss franc’s link to the euro. In 2011, when investors flocked to the franc as a haven from the euro, the Swiss National Bank set a ceiling above which it would not let the franc rise. That is no longer justified, it said, because the euro has since depreciated and “divergences between the monetary policies of the major currency areas have increased significantly”. The franc soared after the announcement.

The Reserve Bank of India cut its benchmark interest rate for the first time in two years, by a quarter of a percentage point to 7.75%. Inflation has fallen in India, giving the bank more leeway for a shift in monetary policy to boost growth. See article

Disinflationary pressures

Britain’s annual inflation rate fell to 0.5% in December, the first time it has been more than a percentage point below the Bank of England’s target of 2%. With an election due in May, George Osborne, the chancellor, made sure to contrast low inflation in Britain, which he affirmed as a benefit to households, with “damaging deflation” in the euro zone. See article

One factor behind Britain’s falling inflation rate is the plummeting oil price, which has reduced the cost of petrol for motorists. Brent crude dropped to below $47 a barrel this week after the oil minister of the United Arab Emirates reiterated that OPEC was in no mood to cut production. See article

Meanwhile, underlining the repercussions of cheap oil on energy companies, Royal Dutch Shell cancelled plans for a $6.5 billion petrochemicals project in Qatar because it is “commercially unfeasible” in the “economic climate prevailing” in the industry. BP announced big job cuts in its North Sea operations. See article

Copper comes a cropper

The general rout in commodity prices spread to copper, knocking the share prices of some big mining companies. The price of copper has fallen by 12% since the start of this year. One reason is that China, the biggest importer, has produced a string of weak data. See article

The World Bank cut its estimate for global growth this year to 3%, down from an earlier projection of 3.4%. It shaved 0.7 of a percentage point off the forecast for the euro zone, which it now thinks will grow by 1.1%. The bank said that the outlook is “uncertain”, as the recovery has been “sputtering” in the euro area and Japan and that there is little sign of a return to the hot growth in emerging markets that helped pull the world economy out of the last crisis.

Nagging concerns about the world economy prompted investors to pile into safe government bonds, pushing the yields on ten-year debt issued by Japan, Germany and others to record lows. The yield on US Treasury ten-year notes was at its lowest since 2013.

The rouble slid to its lowest point since its rally in mid-December. Over the past year Russia’s central bank has spent $76 billion trying to prop up the currency. See article

American employers added 252,000 workers to the payrolls in December. Nearly 3m jobs were created in the United States last year, the most since 1999. But retail sales fell, dashing hopes that the Christmas shopping season had been a bumper one.

Another Wall Street titan launched an attack against the Dodd-Frank financial reforms. MetLife, America’s biggest life insurer, is suing regulators for designating it as “systemically important”, making it subject to close supervision by the Federal Reserve. The company argues that its classification as systemically important is “arbitrary and capricious”.

Not for the tax benefits

Shire, a British drugs company, agreed to buy NPS Pharmaceuticals, which is based in New Jersey, for $5.2 billion. Shire was targeted in a tax-inversion takeover by America’s AbbVie last year, until the US Treasury introduced curbs on such deals.

Boeing delivered 723 jets to airlines in 2014, beating Airbus, which supplied 629, for the third consecutive year. Airbus booked more net orders however—1,456 compared with Boeing’s 1,432. Both companies are anxious to build through their mounting backlog of orders.