(Bloomberg) — The Swiss National Bank surprised with the first interest-rate cut among its global peers, central bankers in Japan ended the most aggressive monetary stimulus in modern history and the Federal Reserve held the line on US borrowing costs.
As Fed policymakers stuck to their path of lowering rates this year, the Bank of England also moved closer to cuts.
Here are some of the charts that appeared on Bloomberg this week on the latest developments in the global economy:
Europe
Officials in Zurich lowered their benchmark to 1.5%, the first such reduction for one of the world’s 10 most-traded currencies since the pandemic abated. The central bank’s revised down inflation forecast suggests “a fundamental reassessment of the momentum of inflation,” said George Moran, European economist at Nomura International Plc.
The Bank of England took another step toward cutting interest rates in the coming months after two of its most ardent hawks dropped their demands for hikes. Catherine Mann and Jonathan Haskel joined an 8-1 majority on the Monetary Policy Committee to keep rates at a 16-year high of 5.25%, the latest sign that the BOE was edging toward easing policy later this year.
Euro-area labor-cost increases slowed at the end of last year, an outcome that is likely to provide encouragement for European Central Bank policymakers who are studying the strength of wages as a key input for their decision on when to cut interest rates.
Asia
Now that Japan increased interest rates for the first time since 2007, investors and economists are divided over how long it will take before the central bank opts for another hike. Governor Kazuo Ueda repeatedly said that real interest rates in Japan remain deeply negative, and renewed weakness in the yen may also spark concern among government officials seeking more action to firm up the currency.
Hong Kong has fast-tracked into law domestic security legislation, prompting fresh warnings from the US, European Union and UK that the move could muzzle open discussion in the global finance hub. President Xi Jinping’s government tightened its grip over Hong Kong in the wake of mass pro-democracy protests that rocked the semi-autonomous Chinese city in 2019.
US
Fed officials maintained their outlook for three interest-rate cuts this year and moved toward slowing the pace of reducing their bond holdings, suggesting they aren’t alarmed by a recent uptick in inflation. Policymakers signaled they remain on track to cut rates this year for the first time since March 2020, but they now see just three reductions in 2025, down from four forecast in December, based on the median projection.
The Biden administration is considering blacklisting a number of Chinese semiconductor firms linked to Huawei Technologies Co. after the telecom giant notched a significant technological breakthrough last year. The US government is pressing allies including the Netherlands, Germany, South Korea and Japan to further tighten restrictions on China’s access to semiconductor technology.
When the Fed raises interest rates, US households — in aggregate — usually get a boost to interest income that outweighs the extra cost of servicing debt. Not this time. Unlike every other Fed hiking cycle of the past half century, the latest one triggered a sharp decline in household net interest income.
World
In addition to the major central banks, Pakistan held its key interest rate at a record high, Indonesia kept its rate near a five-year high and Iceland maintained western Europe’s highest rate. Australia signaled it’s done tightening policy, Norway left rates at a 16-year high and Turkey raised in a surprise decision. Mexico delivered a much-awaited rate cut.
The BOJ finally ended an eight-year experiment with negative interest rates that has left more than $4 trillion in funds hunting for higher returns abroad. What comes next threatens to shake up money flows in Japan and across the world. One of the biggest questions is what happens to that big ball of money stashed overseas in assets including US government bonds, European power stations and Singapore equities. So far, markets have taken Japan’s first interest-rate hike since 2007 in stride.
Finland was crowned the world’s happiest country for the seventh consecutive year in the global life-satisfaction rankings, but a drop in living standards among young Americans meant the world’s biggest economy fell outside the top 20 for the first time. The UN list is based on factors such as gross domestic product, life expectancy, having someone to count on, a sense of freedom, generosity and perceptions of corruption.
Emerging Markets
Ghana’s economy expanded at its fastest pace in a year after the industry sector exited four straight quarters of contraction.
All across Israel, building sites are idle as a ban on Palestinian workers continues with no end in sight. It’s turned the bellwether construction industry into an economic-crisis epicenter, offering a glimpse of what awaits both sides if the war in Gaza permanently ruptures their precarious ties.
–With assistance from Galit Altstein, Irina Anghel, Bastian Benrath, Ruth Carson, Ekow Dontoh, Moses Mozart Dzawu, Toru Fujioka, Mackenzie Hawkins, Siuming Ho, Fadwa Hodali, Ben Holland, Sumio Ito, Masaki Kondo, Steve Matthews, Yoshiaki Nohara, Kati Pohjanpalo, Tom Rees, Yasufumi Saito and Zoe Schneeweiss.
OTTAWA – Canada’s unemployment rate held steady at 6.5 per cent last month as hiring remained weak across the economy.
Statistics Canada’s labour force survey on Friday said employment rose by a modest 15,000 jobs in October.
Business, building and support services saw the largest gain in employment.
Meanwhile, finance, insurance, real estate, rental and leasing experienced the largest decline.
Many economists see weakness in the job market continuing in the short term, before the Bank of Canada’s interest rate cuts spark a rebound in economic growth next year.
Despite ongoing softness in the labour market, however, strong wage growth has raged on in Canada. Average hourly wages in October grew 4.9 per cent from a year ago, reaching $35.76.
Friday’s report also shed some light on the financial health of households.
According to the agency, 28.8 per cent of Canadians aged 15 or older were living in a household that had difficulty meeting financial needs – like food and housing – in the previous four weeks.
That was down from 33.1 per cent in October 2023 and 35.5 per cent in October 2022, but still above the 20.4 per cent figure recorded in October 2020.
People living in a rented home were more likely to report difficulty meeting financial needs, with nearly four in 10 reporting that was the case.
That compares with just under a quarter of those living in an owned home by a household member.
Immigrants were also more likely to report facing financial strain last month, with about four out of 10 immigrants who landed in the last year doing so.
That compares with about three in 10 more established immigrants and one in four of people born in Canada.
This report by The Canadian Press was first published Nov. 8, 2024.
The Canadian Institute for Health Information says health-care spending in Canada is projected to reach a new high in 2024.
The annual report released Thursday says total health spending is expected to hit $372 billion, or $9,054 per Canadian.
CIHI’s national analysis predicts expenditures will rise by 5.7 per cent in 2024, compared to 4.5 per cent in 2023 and 1.7 per cent in 2022.
This year’s health spending is estimated to represent 12.4 per cent of Canada’s gross domestic product. Excluding two years of the pandemic, it would be the highest ratio in the country’s history.
While it’s not unusual for health expenditures to outpace economic growth, the report says this could be the case for the next several years due to Canada’s growing population and its aging demographic.
Canada’s per capita spending on health care in 2022 was among the highest in the world, but still less than countries such as the United States and Sweden.
The report notes that the Canadian dental and pharmacare plans could push health-care spending even further as more people who previously couldn’t afford these services start using them.
This report by The Canadian Press was first published Nov. 7, 2024.
Canadian Press health coverage receives support through a partnership with the Canadian Medical Association. CP is solely responsible for this content.
As Canadians wake up to news that Donald Trump will return to the White House, the president-elect’s protectionist stance is casting a spotlight on what effect his second term will have on Canada-U.S. economic ties.
Some Canadian business leaders have expressed worry over Trump’s promise to introduce a universal 10 per cent tariff on all American imports.
A Canadian Chamber of Commerce report released last month suggested those tariffs would shrink the Canadian economy, resulting in around $30 billion per year in economic costs.
More than 77 per cent of Canadian exports go to the U.S.
Canada’s manufacturing sector faces the biggest risk should Trump push forward on imposing broad tariffs, said Canadian Manufacturers and Exporters president and CEO Dennis Darby. He said the sector is the “most trade-exposed” within Canada.
“It’s in the U.S.’s best interest, it’s in our best interest, but most importantly for consumers across North America, that we’re able to trade goods, materials, ingredients, as we have under the trade agreements,” Darby said in an interview.
“It’s a more complex or complicated outcome than it would have been with the Democrats, but we’ve had to deal with this before and we’re going to do our best to deal with it again.”
American economists have also warned Trump’s plan could cause inflation and possibly a recession, which could have ripple effects in Canada.
It’s consumers who will ultimately feel the burden of any inflationary effect caused by broad tariffs, said Darby.
“A tariff tends to raise costs, and it ultimately raises prices, so that’s something that we have to be prepared for,” he said.
“It could tilt production mandates. A tariff makes goods more expensive, but on the same token, it also will make inputs for the U.S. more expensive.”
A report last month by TD economist Marc Ercolao said research shows a full-scale implementation of Trump’s tariff plan could lead to a near-five per cent reduction in Canadian export volumes to the U.S. by early-2027, relative to current baseline forecasts.
Retaliation by Canada would also increase costs for domestic producers, and push import volumes lower in the process.
“Slowing import activity mitigates some of the negative net trade impact on total GDP enough to avoid a technical recession, but still produces a period of extended stagnation through 2025 and 2026,” Ercolao said.
Since the Canada-United States-Mexico Agreement came into effect in 2020, trade between Canada and the U.S. has surged by 46 per cent, according to the Toronto Region Board of Trade.
With that deal is up for review in 2026, Canadian Chamber of Commerce president and CEO Candace Laing said the Canadian government “must collaborate effectively with the Trump administration to preserve and strengthen our bilateral economic partnership.”
“With an impressive $3.6 billion in daily trade, Canada and the United States are each other’s closest international partners. The secure and efficient flow of goods and people across our border … remains essential for the economies of both countries,” she said in a statement.
“By resisting tariffs and trade barriers that will only raise prices and hurt consumers in both countries, Canada and the United States can strengthen resilient cross-border supply chains that enhance our shared economic security.”
This report by The Canadian Press was first published Nov. 6, 2024.
