(Bloomberg) -- Federal Reserve officials are treading cautiously on interest rates against a backdrop of sturdy US economic activity and a healthy labor market as officials await policy moves from the Trump administration.
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During a week full of central bank policy decisions around the globe, Fed officials kept interest rates in a range of 4.25% to 4.5%, while their European counterparts moved forward with another reduction. With the region’s economy stalling and a 2% inflation target within reach, the European Central Bank lowered borrowing costs for a fifth time since June.
US and European economic report cards were also released. The US closed out a solid year of growth, while the euro zone limped into 2025. In China, the economy stumbled at the start of the year, with surveys showing shrinking manufacturing and near-stagnant services activity.
Here are some of the charts that appeared on Bloomberg this week on the latest developments in the global economy, markets and geopolitics:
World
Aside from decisions from the Fed and the ECB, Sweden’s central bank lowered borrowing costs by a quarter point and signaled its easing campaign may be finished for now. Denmark trimmed rates, as did Pakistan, Mozambique and South Africa. Brazil boosted rates by a full percentage point for a second meeting. Ghana, Sri Lanka, Chile, Hungary, Georgia kept borrowing costs steady. Colombia unexpectedly halted rate cuts as policymakers fret about the worsening fiscal outlook, a large minimum wage hike and tariff threats from US President Donald Trump.
US & Canada
The US economy expanded at a solid pace at the end of 2024, fueled by a generous tailwind from consumer spending that more than offset drags from a strike at Boeing Co. and much leaner inventory investment. Household spending, which comprises the largest share of economic activity, advanced at a 4.2% pace — the first time since late 2021 that outlays have exceeded 3% in consecutive quarters.
The Fed’s preferred measure of underlying inflation remained muted in December and real incomes were soft, which should support further reductions in interest rates this year.
The sudden appearance of DeepSeek — a Chinese AI firm boasting a world-class model developed at bargain-basement costs — triggered a massive selloff in Nvidia and other US tech champions. What matters for the economy, though, is not the ups and downs of stock prices for the Magnificent Seven, but whether AI drives gains in productivity, and how those gains are divided up. For all the excitement, and the trillion-dollar valuations for AI firms, evidence of a boost to productivity remains thin on the ground.