From interest rates to donuts, the world of international business saw a mixture of positive and weak economic data as well as announcements from major brands. In Europe, the central bank maintained record-low rates. In the United States, donuts may get delivered to your door, while the service sector is helping jobs numbers, and healthier sandwiches are on the way. These are the top business headlines from the around in the past week.
1. ECB Holds Firm on Rates
The European Central Bank (ECB) decided to keep interest rates at record lows during a Governing Council meeting last week in Frankfurt. The benchmark rate will stand at 0.05 percent, the deposit rate will remain at -0.2 percent and the marginal lending rate will stay at 0.3 percent.
ECB President Mario Draghi told reporters at a press conference that he expects inflation to continue being low in the next several months, but to increase by the end of 2015. The annual inflation rate in Europe jumped to 0.3 percent.
Draghi announced earlier this year of an aggressive asset-buying initiative similar to quantitative easing in the U.S. as part of efforts to stimulate the economy and combat deflation. The program, which sees the ECB purchasing $67 billion (60 billion euros) in securities each month, is being called into question.
Nevertheless, Draghi told BBC News that the initiative was performing quite well and noted that it was on course to come to an end in September 2016.
"Our monetary policy measures have contributed to a broad-based easing in financial conditions, a recovery in inflation expectations and more favorable borrowing conditions for firms and households," Draghi told the news outlet. "There has been a loss or some loss of momentum... mostly due to weakening of the economies outside the euro area, emerging markets mostly."
2. IMF Urges Fed to Wait on Rate Hike
As the Federal Reserve weighs the pros and cons of raising interest rates in September – even if it’s just a minuscule 25 basis points – one international body is urging the U.S. central bank to wait another year before hiking rates.
The International Monetary Fund (IMF) urged the Fed on Thursday that it should postpone any action on interest rates, citing weak economic forecasts for the world’s second largest economy.
In its annual review, the IMF outlined a number of negative economic data, such as bad winter weather, falling inflation and a stronger greenback, had hurt momentum for job creation and economic expansion. This prompted the IMF to slash its growth rate expectations to 2.5 percent this year, down from April’s 3.1 percent prediction.
According to the IMF, these are all aspects that should encourage the Fed to hold off on an increase in interest rates until the first half of 2016.
"Inflation is not progressing at a rate that would warrant, without risk, a rate hike in the next few months. The economy will be better off with a rate hike in early 2016," said IMF Managing Director Christine Lagarde in a statement at a Washington news conference. "Raising rates too soon could trigger a greater than expected tightening of financial conditions or a bout of financial instability, causing the economy to stall. This would likely force the Fed to reverse direction, moving rates back down toward zero with potential costs to credibility."
3. Donuts Straight to Your Door?
Imagine a box of donuts – apple fritters, chocolate glazed, honey crullers, dutchies, Boston creams – delivered straight to your door on Monday morning. Well, you may not have to imagine any longer as one top doughnut company in the U.S. is mulling over an on-demand delivery system.
Speaking in an interview with CNBC on Sunday, Dunkin’ Donuts CEO Nigel Travis revealed the company is looking at providing customers with delivery options, much like how Chipotle and Starbucks are experimenting with.
Travis believes delivery will be the next big thing in the world of fast food and retail as part of efforts to better serve tech-savvy consumers. However, he did urge caution as he noted that Dunkin’ Donuts is not making the mistake of having a full-launch into this area.
"Delivery is clearly a big opportunity," stated Travis. "We’re now developing mobile ordering. We’re doing a private test. We’ll move to a more public test later this year. We’ll probably launch mobile ordering sometime next year."
He added that convenience is the major trend in the U.S. economy, and delivery will complement that demand. "I think the next few years you’re going to see us get more and more into delivery."
When it comes to the coffee and bakery segment of the U.S. economy, Starbucks maintains a 35 percent market share, followed by Dunkin’ Donuts with 19.8 percent. Tim Hortons and Krispy Kreme only have a 1.9 percent and 1.6 percent market share, respectively.
4. Subway Abiding by its Motto in 2017
Subway is living up to its motto – eat fresh – by announcing that it is rolling out an all-natural menu by the year 2017 and will rid itself of artificial ingredients. This comes as many consumers have complained about the ingredients used in its bread and the fatty sandwiches being offered.
The company unveiled this initiative to the Associated Press last week, and confirmed that North American customers will certainly have a healthier alternative to McDonald’s and Wendy’s with an all-natural menu. This means artificial colors, flavors and preservatives will be gone.
One of the ingredients to be eliminated is the caramel coloring added to pastrami and steak.
Subway isn’t the only fast food chain to adopt this healthy trend. McDonald’s, for instance, announced earlier this year that it is removing chicken with human antibiotics and milk with hormones from its menu. Panera also confirmed that it’s getting rid of artificial ingredients from its bread.
It’s a wise business strategy considering that healthier ingredients and food options draw customers by more than 40 percent.
5. Service Sector Boosts U.S. Jobs Numbers
After a disappointing month of April, May turned out to be better than expected.
Payroll firm ADP announced Wednesday that the private sector created about 201,000 jobs, more than the expected 200,000. This may provide the Fed with ammunition to start moving ahead with a hike in interest rates; Wall Street is keeping a very close eye on these jobs numbers over the next few months.
A significant portion of the job creation came from small businesses, while larger companies hired fewer workers last month. Manufacturers, meanwhile, slashed payrolls. The service sector was the major contributor to the amount of jobs created.
Of the 201,000 jobs established, the service sector created 192,000 jobs. Although jobs are being created, the quality of the jobs isn’t so great. A lot of employment opportunities in the service sector of the economy are low-wage and part-time with little room for growth.
See Also: June Millennial Data
Are you excited about donuts being delivered to your door? Or has another headline piqued your interest? Let us know in the comments section below!