Charting the Global Economy: ECB Holds for First Time in a Year

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(Bloomberg) — The European Central Bank kept interest rates unchanged for the first time in more than a year as it looks for clarity on the European Union’s trade ties with the US.

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Policymakers pushing for another cut in interest rates face an uphill battle, with inflation at 2% and the economy withstanding trade turbulence, Bloomberg reported. A hold looks like the baseline for September after eight reductions since June 2024.

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

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Europe

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The ECB left its deposit rate at 2% while offering no guidance on future moves due to a lack of clarity on US tariffs. The question now is whether policymakers will add to the eight reductions in borrowing costs they’ve made since June 2024 or whether their monetary-easing campaign is over. Traders pared wagers on a final quarter-point move this year, pricing a 70% probability versus about 90% earlier.

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The euro area’s private sector grew at the quickest pace since last August as a three-year manufacturing downturn nears an end and the services sector gathers momentum, even as a trade showdown with the US looms.

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Euro-zone companies’ appetite for loans remained subdued in the months after President Donald Trump’s tariff announcements, the ECB said in a report that shows how the standoff with the US is weighing on the bloc’s economy.

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Asia

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After months of uncertainty, Trump’s latest tariff deals are providing clarity on the broad contours of a new trade landscape for the world’s biggest manufacturing region. Trump on Tuesday announced a deal with Japan that sets tariffs on the nation’s imports at 15%, including for autos — by far the biggest component of the trade deficit between the countries. A separate agreement with the Philippines set a 19% rate, the same level as Indonesia agreed and a percentage point below Vietnam’s 20% baseline level, signaling that the bulk of Southeast Asia is likely to get a similar rate.

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China boosted shipments of rare earth magnets in June — including to the US — after a global supply squeeze that threatened factory closures and inflamed trade tensions. Flows to the US alone rose to 353 tons, up from just 46 tons.

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The massive economic stimulus and boost to clean power from a 1.2 trillion yuan ($167 billion) mega-dam in Tibet has proven convincing enough for Chinese leaders to set aside concerns about potential damage to biodiversity and the impact on relations with India. The estimate is more than four times larger than the $37 billion that Three Gorges cost upon completion in 2009.

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US & Canada

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Trump suggested that he would not go below 15% as he sets so-called reciprocal tariff rates ahead of an Aug. 1 deadline, an indication that the floor for the increased levies was rising. His comment indicates he was looking to more aggressive levies on exports from countries outside the small group that so far has been able to broker trade frameworks with Washington.

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Canadians say they’re ramping up their boycott of US travel and products in response to tariffs, and the country’s central bank is taking notice.