Charting the Global Economy: ECB Keeps Interest Rates Unchanged

Charting the Global Economy: ECB Keeps Interest Rates Unchanged

The European Central Bank kept interest rates on hold for a third straight meeting and stuck with wording that suggests cuts may still be some way off.

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(Bloomberg) — The European Central Bank kept interest rates on hold for a third straight meeting and stuck with wording that suggests cuts may still be some way off.

While the ECB repeated that maintaining a record-high 4% deposit rate for sufficiently long will make a “substantial contribution” to taming inflation, traders priced in a 90% chance of a reduction in April. The Bank of Japan also held the line on its negative interest-rate policy.

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In the US, falling inflation helped power consumer spending at the end of 2023. That boosted fourth-quarter economic growth by more than forecast. 

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


Two months of missile, drone and hijacking attacks against civilian ships in the Red Sea have caused the biggest diversion of international trade in decades, pushing up costs for shippers as far away as Asia and North America. The disruption is spreading, fueling fears of broader economic fallout.

Outside of the BOJ and ECB, Sri Lanka, Canada, South Africa, Norway, Ukraine and Malaysia also left rates unchanged. Turkey’s central bank raised interest rates for an eighth straight time and signaled it will continue to tilt hawkish after ending one of its longest-ever tightening cycles. 


President Christine Lagarde’s muted affirmation that the ECB may begin lowering interest rates from around mid-2024 was taken by markets as a sign that earlier moves are very much in play. Meanwhile, the latest euro-zone data offered policymakers an awkward mix of shrinking economic activity and limited progress getting inflation to their 2% goal.

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Private-sector activity in the euro area contracted for an eighth month in January, a weak start to the year after a likely second-half recession. Germany’s January PMI data remain bleak.

Better tax receipts and lower debt-interest costs took the pressure off the UK public finances in December, giving Chancellor Jeremy Hunt a boost as he seeks room for tax cuts in his March budget. The figures are a boost for Prime Minister Rishi Sunak’s struggling government, which wants to cut taxes in March to win over voters ahead of a general election expected to be held later this year. 


US economic growth in the fourth-quarter trounced forecasts as cooling inflation fueled consumer spending, capping a surprisingly strong year that defied recession calls. A closely watched measure of underlying inflation rose 2% for a second straight quarter, in line with the Federal Reserve’s target.

The Fed’s preferred gauge of underlying inflation cooled to an almost three-year low even with robust holiday spending, keeping the debate alive over whether officials will soon cut borrowing costs.

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BOJ Governor Kazuo Ueda said the certainty of achieving the central bank’s projections has continued to gradually increase. That language supports the prevailing view among economists that the BOJ will raise rates at some point in the first part of this year, with meetings slated for March, April, June and July. The question is when.

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China’s $6 trillion stock market rout reveals a painful truth for President Xi Jinping’s government: People are hopelessly gloomy about the outlook for the world’s second-largest economy, and their pessimism is becoming increasingly hard to ignore. 

Orders to Taiwan’s exporters from overseas clients nosedived in December as plummeting demand from the US and Europe brought a brief rebound to an abrupt end. The surprising scale of the decline last year raises questions about global demand and the health of Taiwan’s export recovery.

Kim Jong Un’s bellicose rhetoric in recent weeks has revived speculation that the North Korean leader might be preparing for war. But Kim has at least one fresh reason to avoid plunging into conflict: North Korea’s economy is quietly improving, with growth on pace to reach the fastest level in nearly a decade.

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Emerging Markets

Russia’s war in Ukraine is intensifying an acute deficit of workers that’s hitting businesses from metal refineries to posh Moscow restaurants and igniting a race to increase salaries that threatens the Kremlin’s ability to replenish the armed forces.

Argentina’s economy contracted slightly in November amid a volatile runoff election that handed a victory to President Javier Milei, who warned of a long period of stagflation as he implements shock therapy to narrow the yawning deficit. Economists surveyed by the central bank forecast that gross domestic product will contract 2.6% this year.

—With assistance from Philip Aldrick, Andrew Atkinson, Enda Curran, Samson Ellis, Toru Fujioka, Alice Gledhill, Jon Herskovitz, Masaki Kondo, John Liu, Yujing Liu, Alex Longley, James Mayger, Jana Randow, Augusta Saraiva, Zoe Schneeweiss, Mark Schroers, Craig Stirling, Yumi Teso, Manuela Tobias, Alexander Weber and Sylvia Westall.

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