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Axel Weber, president of Deutsche Bundesbank, criticized the European Central Bank's purchase of government debt from nations such as Ireland and Greece. Bond purchases by the ECB total approximately $87 bil (63 bil euros) since May 2010. Weber's criticism is shared by those who believe the purchases compromise the ECB's independence.

The European Central Bank indicated that it is holding off on considering new support measures for the euro zone even though the bloc's economic recovery is weakening. The ECB's stance is significantly different from that of other central banks, which are considering or already implementing support measures including large-scale asset purchasing.

Marko Kranjec, governor of the Bank of Slovenia, stated that the European Central Bank does not establish policies for more vulnerable member countries, but instead makes decisions on the 16-nation bloc in its entirety. Countries such as Portugal, Greece, and Ireland at the middle of the fiscal crisis in the euro zone account for approximately 6% of the 16-nation bloc's gross domestic product, so even steep downturns would have a minimal impact on the regional average.

The economic health of the euro zone is in question after Anglo Irish Bank Corp. was downgraded and Portugal's political tensions cast doubt on the nation's deficit reduction plans. Moody's Investors Service rated the Anglo Irish Bank's senior debt down to Baa3, while Ireland's real estate market collapse threatens its banks. Portugal's government continues to argue over tax increases, raising concerns regarding its austerity program.

The euro zone purchasing-managers index declined in September, indicating that the 16-country bloc is similarly following the United States into weak growth with no impact on unemployment. Ireland's economy contracted during the second quarter by almost 5%.

The European Central Bank increased its government bond purchases as concerns grow regarding the ability of Portugal, Ireland, and Greece to repay their debts. The ECB has spent 323 mil euros last week on bonds, compared to 237 mil euros the week prior, and its highest amount since mid-August. The ECB has spent over $79.58 bil (61 bil euros) since it began the purchase program in May.

The European Central Bank revised up its economic growth forecast for 2010 to 1% but lowered its growth expectations for 2011 due to weak spending in the euro zone. The ECB decided to keep interest rates at a record low for the thirteenth month. The bank did not disclose any details about its program to buy sovereign debt from countries such as Greece and Portugal.

Byline: MEENA THIRUVENGADAM AND BRIAN BLACKSTONE WASHINGTON -- Citing a 'continued sharp contraction in real economic activity,' the U.S. Federal Reserve's policy-making committee said yesterday that it is expecting U.S. [...]

The bond market does not seem to be affected by the recent interest-rate changes and economic policies. This is seen as more of a no-confidence vote for the President and his economic policies.