Charting the Global Economy: ECB Holds Rates Steady While US Jobless Rate Rises

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(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.

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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.

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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.

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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.

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