Charging the Global Economy: Sticky Inflation Backs a Grounded Warning

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(Bloomberg) — The Federal Reserve’s preferred inflation rate accelerated in October, helping to explain a more cautious approach by U.S. banks in cutting interest rates.

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Headline inflation in the euro area has also picked up, although growth in prices excluding food and fuel has been subdued. European Central Bank officials signed off on a fourth rate cut at their final policy meeting of the year.

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In India, the economy grew at its slowest pace since the closing months of 2022, while a drop in industrial production helped push Turkey’s economy into recession.

Here are some charts from Bloomberg this week on the latest developments in the global economy, markets and world politics:

In the US

The so-called core personal use personal expenditures index, which strips out volatile food and energy items, rose 2.8% from October last year and 0.3% from the previous month. The figures support recent comments by several Fed officials that there is no rush to cut interest rates as long as the labor market remains healthy and the economy continues to be strong.

President-elect Donald Trump has vowed to increase tariffs on Mexico, Canada and China, shaking markets with his first direct threats to top US trading partners since winning the election three weeks ago. Higher North American tariffs could boost the auto industry and other consumer sectors, including food, where the three countries are highly integrated.

In Europe

Inflation in the Eurozone rose above the ECB’s target of 2%, although officials are likely to be deterred from further lowering interest rates next month and beyond.

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Light winds are cutting renewable generation in Germany, forcing it to import power in France, where nuclear power has reached its peak since January. France’s nuclear plants produced about 50 gigawatts on Friday, about 20% more than the annual average.

Sweden has sent China a formal request for cooperation regarding a Chinese merchant ship and its possible involvement in the breach of data cables in the Baltic Sea. The bulk carrier, Yi Peng 3, is anchored just outside the Danish territory. Ships from Sweden, Denmark and Germany have been keeping an eye on it. The high-speed fiber optic cable connecting Finland and Germany was cut about a week ago.

In Asia

India’s economy grew at its slowest pace in nearly two years, lowering the full-year outlook and testing Prime Minister Narendra Modi’s growth plans.

Japanese companies are passing on rising labor costs to business customers in the form of higher service prices at the fastest pace in 32 years, according to Bank of Japan data that supports the case for raising interest rates.

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South Koreans’ opinion of the economy fell at the fastest pace in more than two years in November, according to the central bank’s monthly survey conducted after Donald Trump’s US election victory.

Emerging Markets

Turkey slipped into recession in the third quarter as industrial production fell, providing further evidence for the central bank as it considers whether to start cutting interest rates next month.

Inflation in Brazil rose more than expected in early November as the government prepares to cut public spending that is helping to push up consumer prices more than expected. Price pressures are mounting in Latin America’s largest economy, due to a historic drought and investor concerns about rising government spending.

The world

New Zealand cut rates by half a percentage point, the Bank of Korea surprised with a rate cut, while the Central Bank of Nigeria opted for a small rate hike. Mozambique cut its key rate to its lowest since 2020, Sri Lanka set its new benchmark at 8% and Guatemala fell. Kazakhstan raised rates for the first time since 2022, while Israel’s central bank left interest rates unchanged.

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As Trump prepares for a second term as US president, all eyes are on whether he will renew his policy called high pressure against Iran, which he came to comment on for the first time. But as Iranians struggle economically after years of sanctions, its leaders are showing they are willing to forge a different relationship this time around. Trump’s tough approach could have a major impact on Iran’s oil trade.

—With help from Baris Balci, Nancy Cook, Eamon Akil Farhat, Toru Fujioka, Sam Kim, Golnar Motevalli, Brian Platt, Kati Pohjanpalo, Andrew Rosati, Zoe Schneeweiss, Mark Schroers, Grant Smith and Preeti Soni.

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