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The U.S. Federal Reserve left its monetary policy unchanged as was widely expected, but emphasized that inflation remains persistently below the central bank’s target even as the economy is expanding at a solid pace. While stocks on Wall Street and in Asia rose, the U.S. dollar declined. The Fed’s worry about low inflation could be interpreted that the central bank will not rush to raise interest rates.

Germany’s economy remains Europe’s growth engine according to the monthly survey results from Munich-based Ifo Institute. The business climate index climbed to 116.0 points (consensus 114.9) from 115.2 a month earlier, reaching a new record high for a third consecutive month despite a stronger euro. In the USA consumer sentiment was surprisingly clear as the survey results from the Conference Board showed. Americans perceived both their position and prospects better than in the previous month. Investors are now awaiting today’s FOMC policy announcement, although no immediate adjustment and no briefing by Fed Chair Yellen is expected.

Sentiment on stock markets was clouded due to weaker economic data, but more so due to insecurities triggered by the current turbulences in the German automobile industry. Yesterday shares of the three biggest German car makers dropped following reports claiming the German manufacturers had colluded for years over diesel technology. The STOXX 600 Automobiles & Parts sector index temporarily dropped as much as -2%.

This week, a large number of major blue chips is scheduled to release quarterly earnings, e.g. Apple, Facebook or Credit Suisse and UBS. Furthermore, capital markets will anticipate the monthly purchasing manager surveys and the Federal Open Market Committee’s interest rate decision on Wednesday.

The European Central Bank (ECB) kept its key interest rates unchanged on record lows, therefore also its monetary stimulus unchanged, as widely expected. ECB President Mario Draghi seems to be willing to hold on to the central bank’s ultra-expansive monetary policy bias, disappointing hopes of many market participants to deliver a clear signal for a change in policy. Despite signs of an improving economy in the euro zone, the central bank seems to regard the inflation trend as too uncertain. However, Draghi also said that the ECB could start discussing whether a policy adjustment is appropriate.