Charting the Global Economy: ECB Nearing End of Rate-Cut Cycle
(Bloomberg) -- The European Central Bank is nearing the end of its campaign to lower interest rates after its eighth reduction in a year, according to ECB President Christine Lagarde.
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With the euro-zone economy suffering repeated blows from US tariffs, the deposit rate was lowered by a quarter-point to 2%. India’s central bank cut interest rates as well and reduced the cash reserve ratio for banks, providing a major liquidity boost to the economy.
Bank of Canada officials, meanwhile, remained sidelined but indicated they stand ready to loosen policy should the economy weaken because of US trade policy.
In the US, the closely watched jobs report showed payrolls growth is moderating, rather than abruptly weakening.
Here are some of the charts that appeared on Bloomberg this week on the latest developments in the global economy, markets and geopolitics:
Europe
The ECB cut its deposit rate a quarter-point to 2% — as predicted by all analysts in a Bloomberg survey. The ECB said inflation “is currently at around” its target, and reiterated that it’s not pre-committing to a particular path for borrowing costs. Officials said in a statement that while trade uncertainty is likely to weigh on business investment and exports, government investment in defense and infrastructure will boost growth later.
The euro zone is set to continue its eastward expansion after Bulgaria was deemed ready to become the currency bloc’s 21st member. The European Commission recommended on Wednesday that the Black Sea nation of 6.4 million should be allowed to adopt the common currency in 2026.
The rift in Russia’s two-track economy is becoming wider as businesses tied to President Vladimir Putin’s invasion of Ukraine thrive and the rest are struggling for resources. Massive spending on the war has left growth increasingly confined to the military-industrial complex, with the imbalance in the economy underscoring how the Kremlin is ready to continue the war, but will potentially need years to return to normalcy even if the fighting stops.
NATO member states signed off on the military alliance’s most ambitious military ramp-up since the Cold War as leaders closed in on an agreement to ratchet up spending at a summit later this month. The summit, which planners have limited to a single working session focused solely on the spending target, will also involve delicate diplomacy to win over US President Donald Trump, who has made the 5% a key demand to reduce European reliance on American military power.