Charting the Global Economy: Fed Headlines Concert of Rate Hikes

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The Federal Reserve, the Bank of England and Sweden’s Riksbank were just a handful of central banks that raised interest rates this week, underscoring the ongoing sharp tightening cycle as inflation takes over the world economy.

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Switzerland and South Africa also raised their benchmark rates. Indonesia, the Philippines and Vietnam also raised borrowing costs after the Fed’s decision.

On the other hand, Turkey surprised with another rate cut, despite inflation reaching a 24-year high and the lira trading at an all-time low. Hungarian officials may offer at least one more hike before considering ending the European Union’s steepest monetary tightening cycle.

Here are some of the charts that appeared in Bloomberg this week on the latest developments in the global economy:

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world

The Fed led a marathon week of interest rate hikes, which also spread to central banks in Taiwan, Sweden and Mongolia. Meanwhile, Brazil and Norway indicated they may take a time-out from monetary policy tightening. The Bank of Japan stuck with its ultra-low rates and Governor Haruhiko Kuroda said there was little chance of a rate hike in the near term.

The price of copper, used in everything from computer chips and toasters to power systems and air conditioners, has fallen by nearly a third since March. Still, some of the biggest miners and metals traders warn that within a couple of years, a massive deficit will emerge for the world’s most critical metal.

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Fed Chairman Jerome Powell vowed the U.S. central bank would crush inflation after officials raised interest rates by 75 basis points for the third time in a row and signaled even more aggressive hikes than investors expected .

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Sales of previously owned homes fell for a seventh consecutive month in August as rising mortgage rates continued to erode affordability and deal a significant blow to the housing market. The streak of declines was the longest since the housing market crashed in 2007.

More consumers are carrying credit card debt for longer periods of time, struggling to pay off amid high inflation and rising interest rates, according to a survey. Sixty percent of credit card debtors say they have been in credit card debt for at least a year, up from 50% a year ago, CreditCards.com said.

europe

The risk of a recession in the euro zone has reached its highest level since July 2020 as concerns grow that a winter energy squeeze will cause a drop in economic activity. Economists polled by Bloomberg now put the likelihood of two consecutive quarters of contraction at 80% in the next 12 months, up from 60% in a previous survey.

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Longshoremen in Liverpool, Britain’s fourth-largest container port, voted unanimously to reject their employer’s latest pay offer, walking off the job for two weeks in a strike that began on Tuesday. It is the latest outbreak of labor unrest that is ravaging key points of the world economy.

asia

Singapore seems like an attractive place for companies looking to exit Hong Kong, but a move to the city-state may hit its bottom line more than expected. With inflation rising to a 14-year high, expenses such as hiring talent, office space and utilities are rising at a faster rate in Singapore than in its financial rival, where price increases they have been more modest.

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Early trade data from South Korea showed exports were still growing in September in a sign of the fallout from the blockades in China and a struggling global economy. Core exports fell 8.7%, led by a 14% drop in shipments to China.

The emerging markets

Asian emerging markets are reaping the rewards of years of accumulating foreign exchange reserves as they become a favorite destination for venture investors. While the dollar rallied, Asia’s emerging currencies are mostly doing better than traditional safe havens like the yen and euro.

Mexico’s inflation remained flat in early September, giving Banxico minimal room to reduce the pace of interest rate hikes at its meeting next week.