Charting the Global Economy: Fed Headlines Concert of Rate Hikes

(Bloomberg) --

The Federal Reserve, Bank of England and Sweden’s Riksbank were just a handful of central banks raising interest rates this week, underscoring the drastic tightening cycle underway as inflation grips the global economy.

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

On the other hand, Turkey surprised with another rate cut, despite inflation running at a 24-year high and the lira trading at a record low. Officials in Hungary may deliver at least one more hike before considering ending the steepest monetary tightening cycle in the European Union. 

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

World

The Fed headlined a marathon week of interest-rate hikes, which also stretched to central bankers in Taiwan, Sweden and Mongolia. Meanwhile, Brazil and Norway indicated they may take a time-out from their tightening of monetary policy. The Bank of Japan stuck with its ultra-low rates and Governor Haruhiko Kuroda said there’s little prospect of a near-term rate boost.

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 largest miners and metals traders are warning that in just a couple of years’ time, a massive shortfall will emerge for the world’s most critical metal.

US

Fed Chair Jerome Powell vowed the US central bank would crush inflation after officials raised interest rates by 75 basis points for a third straight time and signaled even more aggressive hikes ahead than investors had expected.

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

More consumers are saddled with credit-card debts for longer periods of time, according to a survey, struggling to pay down amid high inflation and rising interest rates. 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 euro-area recession has reached its highest level since July 2020 as concerns grow that a winter energy squeeze will cause a slump in economic activity. Economists polled by Bloomberg now put the probability of two straight quarters of contraction at 80% in the next 12 months, up from 60% in a previous survey.

Dockers at Liverpool, Britain’s fourth-biggest container port, voted unanimously to reject their employer’s latest pay offer -- and walk off the job for two weeks in a strike that got into full swing on Tuesday. It’s the latest outbreak of the labor unrest that’s sweeping through key choke points of the world economy.

Asia

Singapore looks like an attractive location for firms wanting to exit Hong Kong, but they may find a move to the city-state hits their bottom line more than expected. With inflation soaring to the highest level in 14 years, expenses including the hiring of talent, office space and utilities are rising at a faster pace in Singapore than in its financial rival, where price increases have been more modest. 

South Korea’s early trade data showed exports are only just still growing in September in a sign of fallout from lockdowns in China and a struggling global economy. Headline exports dropped 8.7%, led by a 14% decline in shipments to China.

Emerging Markets

Emerging Asian markets are reaping the rewards of years of building up foreign-exchange reserves as they become a preferred destination for risk investors. Even as the dollar rallied, emerging Asia’s currencies are mostly faring better than traditional havens such as the yen and euro.

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

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