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The Reserve Bank of Australia will lower its overnight cash rate target to a record low this year as Europe

Malaysia announced private investment plans worth a total 20.5 billion ringgit ($6.5 billion), seeking to bolster growth as Europe

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Premier Wen Jiabao

China

The International Monetary Fund said Britain requires further monetary easing to boost the economy and Chancellor of the Exchequer George Osborne should consider budget stimulus including temporary tax cuts.

Rating agency Moody’s downgraded 16 Spanish banks on Thursday, the latest sign of distress in Europe.

Among those downgraded were giants Banco Santander and BBVA, the country’s two largest banks. Moody’s cited concerns about the banks’ exposure to Spain’s faltering economy and the "reduced" ability of the Spanish government to support them in a crisis.

"The Spanish economy has fallen back into recession in first-quarter 2012, and Moody’s does not expect conditions to improve during 2012," the agency said.

"Moreover, the real-estate crisis that began in 2008 is ongoing, and unemployment has risen to very high levels, with rising risks to white-collar employment (in addition to extremely-high youth unemployment) affecting the outlook for banks’ household lending."

The downgrades come amid mounting concern about a potential Greek exit from the euro, and the implications this could have for other fiscally troubled nations like Spain and Italy. Greece, currently operating with a caretaker government, could leave the euro should anti-austerity parties triumph in elections next month.

Earlier Thursday, Moody’s downgraded Spanish regional governments in Catalunya, Murcia, Andalucia and Extremadura because they are using massive amounts of debt to fund their operations and are unlikely to meet the financial target set by Spain’s central government.

Overall, Spain has pledged to cut its national deficit to 5.3% of GDP, but last week, the European Commission forecasted that the country would fail to meet that goal, instead hitting 6.4% of GDP. Spain announced roughly $35 billion in budget cuts earlier this year.

Credit downgrades are a worrisome sign to investors and can often cause a country’s borrowing costs to rise. The yield on Spain’s 10-year bond has spiked in the last two weeks, and now sits around 6.3%, its highest level since November.  

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He may have 900 million users and billions of dollars, but that doesn

The Federal Reserve is worried about indecision in Congress.

At its last meeting in April, the central bank’s top officials discussed how coming tax increases and spending cuts could weigh on the recovery, and debated whether the Fed should provide additional stimulus to spur consumer spending.

"Participants expected that the government sector would be a drag on economic growth over coming quarters. They generally saw the U.S. fiscal situation also as a risk to the economic outlook; if agreement is not reached on a plan for the federal budget, a sharp fiscal tightening could occur at the start of 2013," the minutes from the meeting said.

The central bank is not alone in its fear of a coming "fiscal cliff" in 2013. The Bush tax cuts, payroll tax cut and extended unemployment benefits are all set to end, at the same time that the government slashes more spending.

While the Fed also acknowledged improvement in the economy early in the year, several members expressed concern that it could be due to waning temporary factors such as warmer winter weather.

As the Fed prepares to wind down its latest round of stimulus, known as Operation Twist, some have called for the central bank to do more to fuel growth.

Fiscal cliff: What you need to know

While those calls have yet to be answered, the minutes showed that the Fed is not ready to close the door on that option.

"Several members indicated that additional monetary policy accommodation could be necessary if the economic recovery lost momentum or the downside risks to the forecast became great enough," the minutes said.

Operation Twist was designed to bring down long-term interest rates and encourage spending by shifting $400 billion from short-term to long-term bonds faxless cash advances. Launched last September, the program is set to end in June.

Since 2008, the Fed has taken numerous steps to bolster the economy, including keeping its key interest rate near zero in an effort to give businesses and consumers cheaper access to credit.

In addition, the Fed has also enacted two rounds of asset purchases known as quantitative easing, also designed to bring down interest rates. But nearly four years later, the economy is still struggling to return to robust growth, leading many to call for more action from the Fed.

The minutes also showed that Fed members discussed the job market in great detail.

"Labor market conditions improved in recent months," the minutes said. "So far this year, payroll employment had expanded at a faster pace than last year and the unemployment rate had declined further, although it remained elevated."

At the last meeting, the Fed improved its forecast for the unemployment rate this year, but continued to believe the economy would be weak enough to warrant historically low interest rates until "at least through late 2014."

The unemployment rate was at 8.1% as of April, and the Fed expects it to fall to between 7.8% and 8% by the end of the year.

Separately, the Fed released a new schedule of two-day meetings for its policy-making committee. Previously, the meetings were set to last either one or two days. 

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Congress will weigh in on the news that JPMorgan Chase lost $2 billion on complex trades intended to hedge against economic risk, and that the losses could mount.

The Senate Banking Committee on Monday announced future oversight hearings, including one that will look into the trading losses at JPMorgan Chase from a regulatory angle. Lawmakers plan to question regulators, not JPMorgan Chase (, Fortune 500) officials.

Sen. Bob Corker, a Tennessee Republican, was the first to call for a hearing on Friday.

"Clearly the losses posted by JPMorgan are significant, and as policy makers we should understand in detail what has transpired," Corker said in a letter to Banking Committee chairman Tim Johnson, a South Dakota Democrat.

House Financial Services Committee and House Oversight Committee staff members said they had no plans yet to hold hearings yet.

The JPMorgan controversy comes a little less than two years after a big push for Wall Street reform led to the passage of the Dodd-Frank Act.

On Friday, two senators who helped craft the Volcker Rule — a new, not-in-effectpart of Dodd-Frank that bars banks from making trades for their own profit-chasing purposes — denounced JPMorgan’s trades.

JPMorgan CEO Jamie Dimon said last week that the faulty trades would have been allowed under the Volcker Rule, named for former Fed chief Paul Volcker, since the rule appears as though it will allow for economic hedging free instant credit score.

However, Democratic senators Jeff Merkley of Oregon and Carl Levin of Michigan, said they intended the law to ban the kind of trades that JPMorgan Chase traders made. They plan to push regulators to write and enforce a strict ban on so-called proprietary trading and hedging against economic forces.

"The law very clearly already excludes this activity," Levin said in a call with the media on Friday. "It specifically says that every single position that you take as a hedge has got to be tied to a specific risk arising from another specific position. Now, that’s about as clear as you can write. So the regulators are now hopefully going to implement the law as written."

The news has even drawn angry accusations from the political field. Elizabeth Warren, a Democratic candidate for U.S. Senate in Massachusetts, has called Dimon to step down from his position as a board member of the New York Federal Reserve.

"This is about accountability," Warren told CNN’s "Starting Point" on Monday. "Jamie Dimon not only is CEO of JPMorgan Chase, he holds this position of public trust, advising the New York Fed on how to regulate risk for these large financial institutions like his own financial institution,"  

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