Three of the world’s most influential central banks slowed their pace of rate hikes this week acknowledging easing price pressures, but emphasizing their work to contain inflation is far from over.
The Federal Reserve, European Central Bank and Bank of England hiked interest rates by 50 basis points this week after rising 75 basis points. While the Fed’s decision was unanimous, some policymakers in Europe and the UK favored a more aggressive hike.
Here are some of the charts that appeared on Bloomberg this week on the latest developments in the global economy:
World
BloombergThe Fed, ECB and BOE led a marathon week of central bank meetings. Officials in Mexico, Switzerland, Taiwan, the Philippines, Norway, Denmark and Colombia also hiked borrowing costs, while Russia held back.
BloombergGlobal debt as a percentage of gross domestic product fell in 2021 by the most in seven decades, but policymakers still face challenges as borrowing remains above pre-Covid-19 levels, the International Monetary Fund said. Total debt has fallen to 247% of global GDP over the past year. That’s 10 percentage points down from 2020, but still the second highest in history.
US
BloombergFederal Reserve Chair Jerome Powell says the central bank still has more to do to raise interest rates and beat inflation. Investors on Wall Street appear to have a different view of the outlook for 2023. In a 45-minute press conference after the Fed hiked interest rates by 50 basis points to their highest level since 2007, Powell tried to dispel any notion that the central bank would back down from its fight to bring down inflation despite easing price pressures and mounting fears of job losses and a recession.
BloombergUS inflation data provided the strongest evidence yet that price pressures have peaked, cheering financial markets and threatening a pause from US Federal Reserve rate hikes. So-called core inflation – which excludes food and energy – rose just 0.2% in November, the smallest monthly rise since August 2021.
Europe
BloombergThe European Central Bank hiked interest rates by half a point, and President Christine Lagarde urged investors to prepare for a long-running campaign of similar moves to quell the worst inflation in the euro’s history. Inflation forecasts have been upgraded for the next two years. It is still above the 2% target in 2025.
BloombergThe UK got a moment’s respite from the bleak economic outlook in October as companies regained production lost after the death of Queen Elizabeth II. But the numbers will do little to ease the gloom hanging over an economy grappling with an historic cost-of-living crisis and possibly already a protracted recession.
BloombergSwitzerland lowered its growth forecast for next year again, but sees inflation slowing down. With fears of energy shortages largely eased in the coming months, Switzerland is expected to dodge a recession – economists are forecasting just a quarter of the contraction next year.
Asia
BloombergChina’s economic activity weakened in November before the government abruptly dropped its Covid-zero policy, with a surge in infections likely to create more turmoil in the coming months and urge policymakers to increase stimulus. Key data released Thursday showed business and consumer activity fell to their weakest levels since Shanghai’s lockdown in the spring.
BloombergAustralia is looking to ensure more people share in the benefits of a stronger economy through a new panel that will meet this week to try to address disadvantage and increase economic inclusion. The 14-member committee of economists, academics and philanthropists will provide advice on economic inclusion, such as political attitudes and the effectiveness and sustainability of income support payments, the government said Thursday.
emerging markets
BloombergBrazil’s economy contracted unexpectedly, according to the central bank’s main measure of activity, contributing to signs of weakening demand after a cycle of aggressive rate hikes. The bank’s economic activity index, an indicator of gross domestic product, fell 0.05% from the month of October, compared with the median estimate of 0.40% by analysts in a Bloomberg survey.
BloombergProtests in Peru could threaten global fruit supplies as the world’s largest blueberry exporter faces political unrest amid the growing season in full swing. Peru’s fruit supply is particularly critical for the US, where drought and storms have decimated domestic harvests and pushed up prices.
— With support from Philip Aldrick, Andrew Atkinson, Bastian Benrath, Maria Eloisa Capurro, Elizabeth Elkin, Rich Miller, Ana Monteiro, Swati Pandey, Reade Pickert, Jana Randow, Andrew Rosati, Augusta Saraiva, Zoe Schneeweiss, Liza Tetley, and Alexander Weber .
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