(Bloomberg) — The European Central Bank left interest rates unchanged for a fourth meeting as a softer outlook for inflation and economic growth bolstered expectations for cuts starting in June.
Separate data showed the euro-area economy stagnated at the end of last year, underscoring the central bank’s forecast for slower growth in 2024 than previously estimated.
In the US, the unemployment rate climbed to a two-year high in February even as hiring remained healthy, pointing to a cooler yet resilient labor market. In Japan, inflation in Tokyo last month surged back above the central bank’s target, bolstering the case to raise interest rates.
Here are some of the charts that appeared on Bloomberg this week on the latest developments in the global economy, geopolitics and markets:
Europe
The ECB’s latest quarterly outlook puts inflation at 2.3% this year — down from 2.7% in December — and revises the 2025 forecast down to 2%. The economy, meanwhile, is seen expanding by 0.6% in 2024 versus 0.8% previously. The majority of officials have been converging around a June rate-cut timeline — even if some would like swifter action as the continent’s economy struggles to exit more than a year of stagnation.
The euro-area economy’s failure to expand in the fourth quarter was down to a plunge in trade. The region’s outlook for this year isn’t much better. The ECB this week cut its 2024 growth forecast to just 0.6%, saying gross domestic product will only rise 0.1% this quarter.
US
Nonfarm payrolls advanced 275,000 last month following a combined 167,000 downward revision to the prior two months, according to a Bureau of Labor Statistics report. Digging beneath the surface, data showed some of the increase in the unemployment rate to 3.9% was due to people entering the labor force and not immediately finding work.
Households are now paying roughly as much interest on other kinds of debt, from credit cards to student loans, as they are on their mortgages, according to the latest numbers from the Bureau of Economic Analysis.
Asia
Price growth in Tokyo surged back above the Bank of Japan’s target in February, a jump that supports the case for the central bank’s first interest rate hike since 2007. The pickup largely reflected the fading impact of government subsidies rolled out last year to keep a lid on utility costs.
Key goals outlined by China ranged from countering US-led efforts to curb Chinese tech advancements to boosting defense expenditure — illustrating ongoing competition between the world’s two largest economies. US and other foreign companies have grown pessimistic on China in recent years as economic growth slows and geopolitical tensions rise. Direct investment into the nation by overseas businesses slumped to a 30-year low in 2023.
China’s oil demand has entered a low-growth phase as decarbonization starts to eat into consumption of fossil fuels, the country’s biggest energy producer said.
Emerging Markets
Consumers in Argentina are running out of options to shield themselves from runaway price increases as President Javier Milei’s austerity measures send the country deeper into recession. Spending at small- and medium-size businesses — Argentina’s largest sector of employment — plunged 25.5% in February from a year ago, the third straight month of double-digit losses.
World
Outside of the ECB, Egypt delivered a record interest-rate hike and allowed its currency to weaken that may pave the way for billions more in loans from the International Monetary Fund. Uganda hiked as well. Canada, Poland, Malaysia and Serbia held. Peru unexpectedly held rates unchanged after six straight cuts.
–With assistance from Serene Cheong, Katia Dmitrieva, Toru Fujioka, Patrick Gillespie, Ben Holland, John Liu, Augusta Saraiva, Zoe Schneeweiss, Rebecca Choong Wilkins and Erica Yokoyama.
TORONTO – Canada’s main stock index was higher in late-morning trading, helped by strength in energy stocks, while U.S. stock markets also moved up.
The S&P/TSX composite index was up 34.91 points at 23,736.98.
In New York, the Dow Jones industrial average was up 178.05 points at 41,800.13. The S&P 500 index was up 28.38 points at 5,661.47, while the Nasdaq composite was up 133.17 points at 17,725.30.
The Canadian dollar traded for 73.56 cents US compared with 73.57 cents US on Monday.
The November crude oil contract was up 68 cents at US$69.70 per barrel and the October natural gas contract was up three cents at US$2.40 per mmBTU.
The December gold contract was down US$7.80 at US$2,601.10 an ounce and the December copper contract was up a penny at US$4.28 a pound.
This report by The Canadian Press was first published Sept. 17, 2024.
OTTAWA – Canada’s inflation rate fell to two per cent last month, finally hitting the Bank of Canada’s target after a tumultuous battle with skyrocketing price growth.
The annual inflation rate fell from 2.5 per cent in July to reach the lowest level since February 2021.
Statistics Canada’s consumer price index report on Tuesday attributed the slowdown in part to lower gasoline prices.
Clothing and footwear prices also decreased on a month-over-month basis, marking the first decline in the month of August since 1971 as retailers offered larger discounts to entice shoppers amid slowing demand.
The Bank of Canada’s preferred core measures of inflation, which strip out volatility in prices, also edged down in August.
The marked slowdown in price growth last month was steeper than the 2.1 per cent annual increase forecasters were expecting ahead of Tuesday’s release and will likely spark speculation of a larger interest rate cut next month from the Bank of Canada.
“Inflation remains unthreatening and the Bank of Canada should now focus on trying to stimulate the economy and halting the upward climb in the unemployment rate,” wrote CIBC senior economist Andrew Grantham.
Benjamin Reitzes, managing director of Canadian rates and macro strategist at BMO, said Tuesday’s figures “tilt the scales” slightly in favour of more aggressive cuts, though he noted the Bank of Canada will have one more inflation reading before its October rate announcement.
“If we get another big downside surprise, calls for a 50 basis-point cut will only grow louder,” wrote Reitzes in a client note.
The central bank began rapidly hiking interest rates in March 2022 in response to runaway inflation, which peaked at a whopping 8.1 per cent that summer.
The central bank increased its key lending rate to five per cent and held it at that level until June 2024, when it delivered its first rate cut in four years.
A combination of recovered global supply chains and high interest rates have helped cool price growth in Canada and around the world.
Bank of Canada governor Tiff Macklem recently signalled that the central bank is ready to increase the size of its interest rate cuts, if inflation or the economy slow by more than expected.
Its key lending rate currently stands at 4.25 per cent.
CIBC is forecasting the central bank will cut its key rate by two percentage points between now and the middle of next year.
The U.S. Federal Reserve is also expected on Wednesday to deliver its first interest rate cut in four years.
This report by The Canadian Press was first published Sept. 17, 2024.
FREDERICTON – New Brunswick‘s finance minister says the province recorded a surplus of $500.8 million for the fiscal year that ended in March.
Ernie Steeves says the amount — more than 10 times higher than the province’s original $40.3-million budget projection for the 2023-24 fiscal year — was largely the result of a strong economy and population growth.
The report of a big surplus comes as the province prepares for an election campaign, which will officially start on Thursday and end with a vote on Oct. 21.
Steeves says growth of the surplus was fed by revenue from the Harmonized Sales Tax and federal money, especially for health-care funding.
Progressive Conservative Premier Blaine Higgs has promised to reduce the HST by two percentage points to 13 per cent if the party is elected to govern next month.
Meanwhile, the province’s net debt, according to the audited consolidated financial statements, has dropped from $12.3 billion in 2022-23 to $11.8 billion in the most recent fiscal year.
Liberal critic René Legacy says having a stronger balance sheet does not eliminate issues in health care, housing and education.
This report by The Canadian Press was first published Sept. 16, 2024.
