Charting the Global Economy: ECB Is Leaning Toward Rate Hikes

wd72(autb590w4grdx7)57tc_media_dl_8.png US Energy Information Administra

Article content

(Bloomberg) — The European Central Bank is leaning toward lifting interest rates as soon as next month unless there are positive developments on energy prices and ending the Iran war.

Article content

President Christine Lagarde signaled earlier that the ECB will consider an increase in borrowing costs in June after debating and rejecting one this week.

Article content

Article content

Central bankers in the UK also kept interest rates on hold with several saying they might consider future hikes, just as oil prices soared within reach of the Bank of England’s most pessimistic scenario for the economy.

Article content

Article content

The rates outlook in Japan is more murky. While the Bank of Japan left borrowing costs unchanged, Governor Kazuo Ueda indicated there was less confidence in the economic outlook than before. But he also kept the door open to a June rate move even if the economy starts to slow.

Article content

Article content

In the US, Federal Reserve officials left rates unchanged in a decision that revealed a deepening division over the outlook for policy amid increased uncertainty caused by the conflict in the Middle East. 

Article content

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

Article content

World

Article content

In addition to rate decisions by the Fed, ECB, UK and BOJ, central bankers in Canada, Chile, Hungary, Thailand, Namibia, Guatemala, Ukraine, Malawi, Dominican Republic, Colombia and Uzbekistan also held the line on borrowing costs. Officials in Brazil lowered rates. Pakistan and Botswana raised them.

Article content

US

Article content

US economic growth accelerated at the start of the year, bolstered by a massive AI-driven upswing in business investment. Inflation-adjusted gross domestic product increased an annualized 2% in the first quarter. Business outlays on equipment and structures advanced 10.4%, the fastest pace in almost three years and supported by rapid investment in artificial intelligence.

Article content

Article content

Applications for US unemployment benefits plunged to the lowest level in decades, a sign that layoffs remain limited across the economy.

Article content

Europe

Article content

The euro-area economy unexpectedly slowed at the start of 2026, with soaring energy costs triggered by the Iran war threatening stagflation in the months ahead. First-quarter gross domestic product rose 0.1% from the previous three months.

Article content

The Bank of England kept interest rates on hold with several policymakers saying they might consider future hikes, just as oil prices soared within reach of the central bank’s most pessimistic scenario for the economy.

Article content

Euro-area companies expect substantially higher selling prices and input costs due to the Iran war, adding to inflation concerns at the ECB. Firms anticipate a 3.5% increase in selling prices over the next 12 months, according to the ECB’s most recent survey on the access to finance of enterprises, or SAFE. That’s up from 2.9% in the previous round, an increase the ECB called significant.

Article content

Asia

Article content

Taiwan’s economy grew the most since 1987, overcoming disruptions caused by the war in Iran as the island continues to ride demand for its tech products supporting the build-out of artificial intelligence computing.