Global central banks kept interest rates unchanged this week as officials assessed inflation risks from high energy prices. The Federal Reserve and the European Central Bank left the door open to a rate hike in December. Meanwhile, the Bank of Canada raised its benchmark interest rate on Wednesday to fight inflation.
Synopsis
Global central banks have opted to keep interest rates unchanged amidst growing inflation worries stemming from energy costs. While the Federal Reserve and the European Central Bank signaled potential hikes during their December meetings, the US economy displays robust growth from business investments and consumer activity.
Central banks around the world kept interest rates unchanged this week as officials in the US and Europe assessed the risk of inflation stemming from high energy prices.
Both the Federal Reserve and the European Central Bank left the door open to a rate hike at their final meetings of the year in December. In the US, a key price gauge accelerated at the end of a third quarter in which economic growth powered on.
Across the Atlantic, the ECB’s decision was overshadowed by news that President Christine Lagarde will step down in February, adding to concerns about energy costs and the market, budgetary and political tensions gripping France.
Meanwhile, the Bank of Japan signaled the possibility of an interest-rate hike later this year after the central bank held its policy rate unchanged in October.
Here are some of the charts that appeared on Bloomberg this week on the latest developments in the global economy, markets and geopolitics:
Live Events
US & Canada
The US economy expanded in the third quarter at the fastest pace in a year, supercharged by feverish business investment and a resilient American consumer. Outlays for equipment contributed more to GDP in the third quarter than at any time since 2011 outside of the pandemic rebound.
US orders for durable goods rose in September by the most in five months, on stronger bookings for aircraft and other business equipment, adding to evidence of momentum in manufacturing.
The Bank of Canada raised its benchmark interest rate Wednesday in an effort to fight inflation. But for the nation’s housing market, the move is a heavy blow. Unlike in the US, Canadians tend to renew their mortgages every five years or less. Variable-rate borrowing is also common.
Europe
The ECB kept the deposit rate at 2.5%, as predicted by almost all economists. Officials are biding their time having hiked twice since the Iran war jolted energy markets. Policymakers in Frankfurt are widely expected to raise again in December, when updated economic projections will show how severe inflation pressure is.
Germany’s business outlook unexpectedly brightened for a sixth month in a row, underscoring the economy’s rebound from a prolonged downturn. Europe’s largest economy is enjoying a surprisingly strong year, despite inflation triggered by the Iran war and heat waves that crippled key waterways. Underpinning the expansion is vast spending on infrastructure, defense and AI.
French consumer confidence plummeted to its lowest level in 13 years in October as households reckoned with multiple shocks from a bond market selloff to protests that descended into rioting. The gauge dropped five points to 80 with respondents becoming more concerned about their financial situation, living standards and unemployment, statistics agency Insee said.
The euro-area economy grew at twice the pace analysts predicted, despite an unexpected slump in France. Performances were mixed among its biggest members as Germany and Spain grew, Italy stagnated and France shrank by 0.1%.
Asia
South Korea’s economy expanded in the third quarter by more than forecast as an artificial intelligence-fueled chip boom powered exports and investment.
Chinese copper buyers rushing to secure supply in a tightening market have sent a key gauge of import demand shooting to a record high. The surge in the Yangshan premium — named after a Shanghai port that’s a major hub for Chinese copper imports — over the last couple of months reflects greater competition for the metal both inside and outside the country.
Consumer inflation in Tokyo remained well above the Bank of Japan’s 2% target, underscoring persistent price pressures just hours before the central bank’s board held its policy settings steady. But Governor Kazuo Ueda signaled strong prospects for hiking the benchmark interest rate in December.
Taiwan reported its fourth straight quarter of double-digit economic growth, the longest such stretch in nearly 39 years, as the AI boom increasingly spills over into stronger domestic demand.
Emerging Markets
Mexico’s economic growth accelerated in the third quarter at the fastest pace since 2023, powered by public and private investments as well as robust exports. Gross domestic product grew 3.2% in the three months through September compared to the same period last year, according to preliminary data published by the national statistics institute.
Egypt hiked interest rates for the first time since March 2024, after its pound weakened to a record low and the escalating conflict between Saudi Arabia and the Houthis threatens to stoke inflation. The central bank raised the deposit and lending rates by 100 basis points to 20% and 21% respectively, the Monetary Policy Committee said Thursday.
World
In addition to policy decisions at the Fed, ECB and BOJ, New Zealand, Thailand, Chile, Botswana, Malawi, Colombia and the Dominican Republic kept interest rates unchanged. Canada, Pakistan and Ukraine raised rates.
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