Charting the Global Economy: Central banks hold the line

Monetary policymakers from the US and the UK to Japan left interest rates unchanged this week as they assessed renewed inflation risks from higher energy costs and war in the Middle East.

The Federal Reserve kept borrowing costs unchanged, but three officials voted for higher rates. The Bank of Japan and Bank of England also held rates steady, but like the US, several BOE policymakers also pushed for tighter policy.

Elsewhere, higher costs complicated the outlook. Inflation accelerated in Germany and in France. Japan lowered its economic growth forecast and Singapore expanded support for households and businesses facing higher costs from the prolonged Middle East conflict.


Here are some of the charts that appeared on Bloomberg this week on the latest developments in the global economy, markets and geopolitics:

World

In addition to decisions by central bankers in the US, UK and Japan, Pakistan, Kyrgyzstan, Chile, Georgia, Uzbekistan, and Mozambique kept rates unchanged. Ukraine raised interest rates, while Singapore tightened monetary policy through the exchange rate.

US

US economic growth moderated in the second quarter, though a pickup in consumer spending and solid business investment signaled underlying strength. Consumer spending, which comprises about two-thirds of economic activity, rose at a stronger-than-expected 3.2% rate. Business investment continued to boom amid a rush to invest in artificial intelligence.

Federal Reserve Chairman Kevin Warsh insisted policymakers’ decision to leave interest rates unchanged wasn’t a sign of inertia at the central bank, which he reiterated is committed to tackling inflation. The Federal Open Market Committee voted 9-3 to hold the benchmark federal funds rate in a range of 3.5% to 3.75%.

US consumer confidence fell in July as Americans’ views about current business conditions and the labor market deteriorated. An indicator of present conditions dropped to the lowest since 2021, while the Conference Board’s measure of expectations for the next six months was unchanged.

Europe

German inflation accelerated to the highest level in three months after temporary fuel-price relief expired and renewed fighting in the Middle East bolstered oil. Consumer prices rose an annual 2.8% in July, the statistics office said.

The Bank of England kept interest rates steady at 3.75% on Thursday, with Governor Andrew Bailey insisting his committee is not getting closer to a hike despite three members voting for tighter policy.

French inflation unexpectedly quickened this month, supporting the case for another European Central Bank interest-rate increase. Consumer-price growth in the euro area’s second-largest economy jumped to 2.4% in July, the statistics agency Insee said.

Asia

China’s top officials struck a more supportive tone on the economy but stopped short of announcing fresh stimulus, holding back from aggressive measures despite an abrupt slowdown in growth. The measured approach taken by China’s leadership disappointed investors who anticipated a more forceful response.

Japan lowered its economic growth forecast for the current fiscal year, reflecting expectations that higher oil prices driven by tensions in the Middle East will weigh on domestic demand and add urgency to Prime Minister Sanae Takaichi’s efforts to address rising costs of living.

Singapore is nearly doubling its support package to help households and businesses defray higher costs caused by a protracted Middle East conflict. The government will offer another S$900 million ($700 million) in assistance especially for lower-income Singaporean households as well as small and medium enterprises. That adds to an earlier support package unveiled in April, taking its total to nearly S$2 billion.

Emerging Markets

Mexico’s economy rebounded in the second quarter after exports rose to a record despite prolonged trade tensions with the US. Exports have provided some relief to the Mexican economy during a 19-month decline in gross fixed investment, which only came to a halt in April thanks to government spending.

Chile’s business confidence fell for the fifth straight month to the lowest level since December 2024, marking another sign of economic unease, according to the Institute for Quality Business Management. Mining confidence drove much of July’s deterioration, declining to the lowest level since 2024 as winter storms disrupted some operations in central parts of the country.

Brazil’s economy created more jobs than expected in June, bouncing back from a weak figure the prior month. Brazil’s latest job creation and consumer price figures are painting a mixed picture for central bankers. While inflation slowed much more than forecast in early July, a solid labor market is still supporting demand and complicating policymakers’ efforts to haul cost-of-living rises to their 3% target.