Charting the Global Economy: Fed Holds While ECB Lowers Rates

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(Bloomberg) – Federal Reserve officials pass through caution over interest rates against the backdrop of strong American economic activity and the health labor market, as political officials are waiting for the Trump administration.

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Within a week full of central bank’s policy decisions around the world, federal reserve officials maintained interest rates in the range of 4.25 % to 4.5 %, while their European counterparts advanced forward. As the region’s economy stops and the target of inflation by 2 % on hand, the European Central Bank reduced borrowing costs for the fifth time since June.

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American and European economic reports cards were also issued. The United States closed a year of strong growth, while the eurozone was exposed in 2025. In China, the economy stumbled at the beginning of the year, as manufacturing polls showed reducing and services activity near skipping.

Below are some of the plans that appeared on Bloomberg this week about the latest developments in the global economy, markets and political geography:

world

Regardless of decisions from the Federal Reserve and the European Central Bank, the Central Bank in Sweden reduced borrowing costs by a quarter of a point and indicated that its campaign that reduces may end at the present time. Denmark reduced its prices, as Pakistan, Mozambique and South Africa did. Brazil strengthened prices at a full percentage of the second meeting. Ghana, Sri Lanka, Chile, Hungary, and Georgia lasted constant borrowing costs. Colombia has unexpectedly stopped price cuts as policy makers are concerned about the increasing financial expectations, a significant increase in wages and identification threats from US President Donald Trump.

United States and Canada

The American economy expanded at a strong pace at the end of 2024, and the generous winds of spending on consumers are fueled by consumers that more than the displacement leads from a blow to Boeing and a more size stock investment. Home spending, which includes the largest share of economic activity, at a rate of 4.2 % – is the first time since late 2021 that expenses exceeded 3 % in consecutive places.

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The preferred scale of the Federal Reserve for Basic Emorage remained silent in December, and the real income was soft, which should support more cuts in interest rates this year.

The sudden appearance of Deepseek-Chinese International, which includes a global model developed at the costs of class ventilation-led to huge sales in NVIDIA and other American technology champions. What matters to the economy, though, not the rise and landing of stock prices for the wonderful seven, but whether artificial intelligence stimulates gains in productivity, and how these gains are divided. Despite all the excitement, a trillion dollars evaluation of artificial intelligence companies, remains evidence of increased productivity on the ground.

Canada Bank has reduced borrowing costs by a quarter of a percentage and stopped giving guidance on any other adjustments to borrowing costs such as the tariffs of customs tariffs from the Trump administration expectations.

Europe

The euro area was unexpectedly stagnated at the end of last year with the collapse of the government in the best two bruising economies between companies and consumers. The gross domestic product in the fourth quarter has not changed from the previous three months, and it is the weakest quarterly performance of this year. Production decreased by 0.2 % in Germany and 0.1 % in France.

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The banks in the euro area have tightened corporate credit standards by more than 2023, which led to a rapid recovery in lending to companies that could support investment. Meanwhile, the poll survey showed that the demand for companies on loans increased a little again, despite a weak shade.

Asia

China’s economic activity is unexpectedly stumbled to start the year, break the recovery momentum ignited by stimulus and emphasizing the need for Beijing to do more to prevent another slowdown. President Xi Jinping pledged to enhance economic recovery and said China was planning to deepen its reforms.

The number of foreign workers in Japan has reached the highest new level, confirming the country’s increasing dependence on people from abroad to address chronic labor deficiency. Japan recorded 2.3 million foreign workers as of October 2024, which represents an increase of 12.4 % over the previous year.

Emerging markets

Throughout February, African countries, which represent nearly three quarters of GDP, have been appointed to different interest rates, as they weigh the risk of American protectionist policies on their economies and inflation.

The unemployment rate in Brazil increased slightly at the end of 2024 while remaining near a low standard, while maintaining pressure on the central bank to raise the interest rate. The unemployment rate is up to 6.2 %.

-With the help of Matthew Bozer, Maria Elweisa Kapooro, Eco Dono, Eric Hirtburg, William Horobin, Lusail Liu, Eugeng Leo, James Mayger, Tom Orlek (Economic), Andrew Rosati, Zoe Shenis, Mark Schuersers, Randy Fort-King, Kiko, Kiko, Kiko, Kiko . Oujikan, Monic Fanik, Alexander Weber, David Wilkox (Economic) and Erika Yukuyama.

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