Image copyrightImage captionIn December central bank governor Graeme Wheeler said he was positive on the outlook for inflation and economic growth
In a surprise move, the Reserve Bank of New Zealand (RBNZ) has cut its lending rates for the fifth time since June last year to a record low of 2.25%.
The bank said the 25 basis point cut was due to global growth worries and weaker demand from China - an important trade partner.
New Zealand is the world's largest dairy exporter but the sector has been facing some challenges.
The central bank signalled it could cut rates further to help boost growth.
The New Zealand dollar fell on the news by more than 1%.
The RBNZ last cut rates in December from 2.75% to 2.5%, saying the country's economy had softened in 2015.
At the time, central bank governor Graeme Wheeler said he was positive about the outlook for inflation and economic growth for 2016.
Image copyrightImage captionNew Zealand's dollar fell on the news of the surprise cut on Thursday by more than 1%
However, as he announced the bank's latest cut, Mr Wheeler said the outlook for global growth had worsened since the December cut "due to weaker growth in China and other emerging markets, and slower growth in Europe."
Mr Wheeler's announcement comes ahead of a European Central Bank (ECB) meeting later on Thursday. The ECB is widely expected to announce further stimulus measures to help bolster the eurozone's economic recovery.
Important dairy
Agriculture is an economic mainstay in New Zealand, particularly its dairy sector.
The country exports some 95% of its milk production, with 87% of that collected by Fonterra, the world's biggest dairy exporter.
Image copyrightImage captionNew Zealand is the world's largest dairy exporter and its products are popular in Asia - in particular China
But New Zealand's dairy exports have been hurt by falling prices internationally together with a slowdown of its major trading partner China - a big buyer of its dairy products.
"Domestically, the dairy sector faces difficult challenges," Mr Wheeler said.
Inflation has also been a concern for the country, with its annual rate at 0.1%. The bank's target is between 1% and 3%. Lowering benchmark lending rates is seen as one way to increase inflation.
Mr Wheeler's outlook was not altogether negative, however.
He said the country's growth was expected to be supported "by strong inward migration, tourism, a pipeline of construction activity, and accommodative monetary policy".
The European Central Bank is expected to announce further measures to stimulate the eurozone economy when its governing council meets on Thursday.
Inflation has continued to fall, putting more pressure on ECB president Mario Draghi to take action.
The annual rate of inflation now stands at minus 0.2% - even further below the bank's target of just under 2%.
A figure that low underlines the weakness in the economies of the 19 countries that use the euro.
The ECB is widely expected to cut the deposit rate for funds from commercial banks even further into negative territory. Such a move is intended to encourage banks to lend more money and boost economic activity in theory.
The deposit rate for funds from commercial banks stands at minus 0.3%, which means they must pay to park money with the ECB, but may be cut to minus 0.4% or even minus 0.5%.
The negative rate is regarded as a drastic and experimental move that reveals just how far the ECB is from meeting its inflation target.
The ECB could also expand its bond-buying programme, also known as quantitative easing, which pumps newly printed money into the economy.
Image copyrighImage captionECB president Mario Draghi
It may decide to buy more than the current €60bn of bonds a month. The bank uses new cash to buy government and some private-sector bonds from banks. That pushes more euros into the banking system in the hope they will be loaned to businesses and consumers. In theory, that should eventually raise inflation and economic activity.
The programme could also be extended past its existing March 2017 end date.
Ben May, an analyst at Oxford Economics, said the ECB could raise the purchases to as much as €80bn a month.
Mr Draghi may also say that the ECB will not make banks hold more cash as reserves against possible losses, easing financial pressure on them.
His comments will be scrutinised for signs of dissent on the 25-member council.
Jens Weidmann, the head of Germany's central bank and a governing council member, has repeatedly warned against more ECB stimulus.
More broadly, the Bank for International Settlements - an international organisation of central banks - said in a report on Sunday that central bank measures could be "approaching their limits".
'Negative rate battle'
Traders will also monitor the effect of Mr Draghi's comments on the euro. Exports benefit if the euro falls against other currencies.
Marco Valli, chief eurozone economist at UniCredit Research, fears that the ECB may become "trapped in a negative rate battle" with other central banks such as those in Japan, Sweden and Switzerland that have also cut their rates below zero and encouraged their currencies to weaken.
If one currency falls, another must rise, cancelling out the effect of any stimulus measures.
However, Spreadex financial analyst Connor Campbell warned that no matter what Draighi revealed investors may well be disappointed: "Given the arguable lack of effect the past and present programmes have had, it is difficult to tell what the markets would treat as a satisfactory announcement from the central bank."
Analysis: Kamal Ahmed, economics editor
Negative interest rates sound like they come, fully formed, from the Through the Looking Glass world of economics.
Central banks in countries or geographies with a growth problem - Japan and the eurozone, for example - have used them to try and encourage lending and boost inflation.
Surely it is better for banks to put funds to work in the real world than deposit them at a central bank - and pay them for the privilege.
Sadly, that does not appear to be the case.
Highly regulated banks deposit excess funds with central banks because it is secure.
Lending to a wider range of businesses or buying into different asset classes is riskier and could have an expensive impact on the amount of capital the bank has to hold.
Negative interest rates have also tended to undermine banks' ability to make profits.
In a hyper-low interest rate world, banks feel unable to pass on the increased costs of negative interest rates to customers and are taking the hit themselves.
Bank share prices have fallen markedly in the last year as negative interest rates add to the financial services gloom.
And, if central banks are resorting to such unorthodox monetary policies, doesn't it just show that the global economy is in much more of a mess than anyone is admitting?
With the world's second largest economy often referred to as as "the engine of global growth", weaker global demand for its goods is read as an indicator of the general global economic climate.
Image copyrighsImage captionIf the global growth engine stutters, it's time to worry
'Highly vulnerable'
The IMF has already said it is likely to downgrade its current forecast of 3.4% for global growth when it releases its economic predictions in April.
Last month, the international lender had warned that the world economy was "highly vulnerable" and called for new efforts to spur growth.
In a report ahead of last month's Shanghai G20 meeting, the IMF said the group should plan a co-ordinated stimulus programme as world growth had slowed and could be derailed by market turbulence, the oil price crash and geopolitical conflicts.
In his Washington speech, Mr Lipton said "the burden to lift growth falls more squarely on advanced economies" which have fiscal room to move.
"The downside risks are clearly much more pronounced than before, and the case for more forceful and concerted policy action, has become more compelling."
"Moreover, risks have increased further, with volatile financial markets and low commodity prices creating fresh concerns about the health of the global economy," he added.
The downbeat picture is one that has continuing ramifications for businesses and industries that bet on China's growth story.
Image copyrightImage captionBeijing faces the tough task of reforming the economy while trying to maintain stability
There also is concern over rising unemployment as Beijing seeks to gradually shift its economy from overdependence on manufacturing and industry towards more services and consumer spending.
China's economy is growing at the slowest rate in 25 years, and the slowdown has created considerable uncertainty in financial markets around the world and led to sharp falls in commodity prices.
The Bank of England said it will offer extra liquidity to the financial system around the U.K.’s European Union referendum in order to improve the availability of funds to banks.
The central bank will offer three additional indexed long-term repo operations in the weeks around the vote scheduled for June 23, taking the total number that month to four from the usual one, it said in a statement published on its website on Monday.
The move is a precautionary measure to help ensure the continued smooth functioning of sterling markets and is not in response to specific concerns about liquidity stress around the referendum, according to a person familiar with the situation, who asked not to be named because deliberations on the matter are confidential.
“It seems as though the BOE is erring on the side of caution,” said Orlando Green, a fixed-income strategist at Credit Agricole SA’s corporate and investment-banking unit in London. “There will likely be a significant level of volatility due to the voyage into the unknown if there is an ‘out’ vote. Hence the BOE will want to offer additional support for banks.”
Carney Testimony
With Bank of England Governor Mark Carney due to testify at Parliament’s Treasury Committee on Tuesday on the economic and financial costs and benefits of EU membership, the announcement is an early insight into the central bank’s contingency planning. While the BOE didn’t announce extra liquidity operations before Scotland’s independence referendum in September 2014, it later disclosed emergency plans to pump money into the financial system in the event of a breakup of the U.K.
“The bank will continue to monitor market conditions carefully and keep its operations under review,” the central bank said on Monday. The BOE “stands ready to take additional action if necessary.”
The extra operations will be held on June 14, June 21 and June 28, and will be in addition to BOE’s regular monthly ILTR operations. The central bank will continue to offer liquidity insurance via its other facilities throughout this period, it said.
“It is clear that the bank does not want to be accused of being asleep at the wheel and are setting out a backstop plan to ensure banks have ample liquidity in the event that it is required,” said Jason Simpson, a strategist at Societe Generale SA in London.
Brazil's GDP fared worse than almost any other major economy in 2015, contracting by 3.8%, according to the national statistics agency IBGE.
Economic growth in the world's seventh-largest economy has fallen sharply in recent months.
This was due partly to low commodity prices and sluggish global growth.
But political paralysis has hampered Brazil's efforts to tackle its economic problems, including a budget deficit that has reached 10.8% of GDP.
President Dilma Rousseff is trying to head off the opposition's efforts to impeach her over alleged accounting irregularities, which means she cannot afford to alienate supporters in her Workers' Party by cutting spending or raising taxes.
Investigations are also continuing into a high-level bribery and corruption scandal involving major construction projects. Ms Rousseff's predecessor as president, fellow Workers' Party politician Luiz Inacio Lula da Silva, is one of the people under investigation.
Analysis: Andrew Walker, economics correspondent
What a contrast with the optimism of the 2000s. That was when the term Brics was coined, covering the largest emerging economies, including Brazil, which were seen as major contributors to global economic growth.
Among the group today, India is still performing strongly, but China has slowed - and many economists say by much more than the official figures suggest.
Russia's economy contracted by a similar amount to that of Brazil last year, and South Africa - a later addition to this group - managed a very lacklustre 1.3% growth last year.
These figures do pose the question: is this dip in emerging economies' performance just that - a temporary dip. Or is it a longer-term transition to slower growth?
Some factors, such as Brazil's political crisis, may pass, but on the wider question for the emerging economies, the jury is still out.
Inflation surge
Brazil's economic performance last year vies with that of Russia as the worst in a major economy for 2015. Official figures for Russia's GDP last year have not yet been released.
It was also Brazil's worst set of figures since 1990.
Analysts say Brazil is now caught in a classic case of stagflation - a combination of high inflation and a recession.
On Wednesday, policymakers at the country's central bank voted to keep the benchmark Selic interest rate at its current level of 14.25%.
High interest rates have traditionally been used in Brazil as a policy tool to keep inflation in check. But inflation has surged in any case, now standing at 11%, while high rates are hurting businesses.
"While we don't think Brazil is on the cusp of a fiscal crisis, the position is fragile," said emerging markets economist Edward Glossop at Capital Economics.
"If nothing else, it is facing an extended period of budget austerity - and the longer the government fudges or delays the necessary adjustment, the more painful it will be."
Global gloom is catching up with the U.K. While economic growth came in at 0.5 percent in the fourth quarter, a recent bad run of numbers is threatening that pace. Markit Economics sees 0.3 percent — at best — this quarter, and says its indexes are back at a level that in the past has been consistent with more Bank of England stimulus.
Manufacturing, highly dependent on exports, has been struggling against global headwinds. But services, the biggest part of the economy, was apparently faring well — until this morning.
Here's Markit's index of activity in services. Now at the lowest in almost three years.
And here's manufacturing from Tuesday.
Even going back to last Thursday's fourth-quarter growth data, there are troubling signs. While the pace compared favorably with Europe's other big economies of Germany, France and Italy, the detail showed imbalances. Net trade dragged on growth, as did industrial production, which dropped 0.5 percent in the quarter.
And what about the Brits themselves? Consumers have helped to keep the show on the road, but even they've become a little nervous about the outlook. Here's a measure of their economic optimism from GfK last Friday, and it's near the lowest in three years.
And there's still the vote on EU membership to come. While most polls last month gave the "stay" camp a lead, it's the big cloud hanging over the year. Economists in a Bloomberg survey in February said a vote to leave — a “Brexit” — would dramatically increase the chance of a recession.
They put the odds at 40 percent, three times the risk seen if the status quo is kept.
At least the Bank of England isn't making any moves to increase interest rates from a record-low 0.5 percent. Even with unemployment at a decade low and limited spare capacity, global risks have increased and the economy isn't quite on a solid footing. Some investors are even pricing in a rate cut.
Australia's economy grew by 3% in the three months ending December 2015, compared to the same period a year ago.
Compared to the third quarter, growth was up 0.6%, beating market expectations of 0.4%.
Household consumption, construction and public spending were the main factors driving the better-than-expected growth.
The strong data comes despite the global commodity slump hitting the country's vital mining and oil sectors.
Australia's benchmark ASX/200 was up 1.5% on the positive news.
"Given Australia is going through the biggest mining pullback in our lifetimes, this is a pretty good outcome," said David de Garis, a senior economist at National Australia Bank.
Analysts also said the stronger-than-expected figure meant further cuts in interest rates were unlikely in the near future.
The Australian central bank has held rates steady since May last year and earlier this week decided to keep its main interest rate at 2% for a tenth consecutive month saying it saw "reasonable prospects" for growth.
However The Reserve Bank governor Glenn Stevens said the bank would be keeping an eye on the country's low inflation rate.
"Continued low inflation would provide scope for easier policy, should that be appropriate to lend support to demand," he said.
Analysis: Karishma Vaswani, Asia business correspondent
Australians must be feeling pretty smug these days. Despite a collapse in global commodity prices, it has managed to escape recession yet again.
There's no denying that as mines have closed, jobs have been lost and that's putting pressure on the government to find new avenues of growth - but don't forget Australia is already a highly diversified economy.
Services like tourism, finance, business, technology and education are major components of Australia's economy and they've benefited from a weaker Australian dollar. The agriculture sector is also seeing renewed interest - check out the reports I did on Australia's agricultural sector here.
Mining has also seen a boost from the lower Australian dollar, because it has meant that Australia's products are cheaper at a time when demand has dropped.
Investments in mining software have helped the industry to remain competitive even in a downturn, and maintain Australia's global share of resource exports.
