Charting the global economy: Bank of Japan raises interest rates

(Bloomberg) –The Bank of Japan raised its key policy rate to the highest level since 2008 and took a more bullish view on the strength of inflation.The rate hike followed a report showing consumer prices excluding fresh food rising at a faster pace of 3%, well above the central bank’s inflation target. In its outlook report, the BOJ raised most of its inflation projections, with all six of them currently at 2% or more for the first time since it started publishing them.

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

Asia

Bloomberg

BOJ Governor Kazuo Ueda and his fellow board members lifted the overnight call rate by a quarter-percentage point to 0.5% at the end of a two-day meeting. A hike was almost fully priced into market expectations ahead of the announcement.

President Xi Jinping’s government has been cracking down on anything perceived as too Western or immoral at the box office in recent years. But as officials try to boost consumer spending to support a cooling economy, there are early signs those constraints are easing.

South Korea’s economy continued to sputter last quarter after President Yoon Suk Yeol’s short-lived declaration of martial law battered consumer confidence just as businesses and policymakers were already fretting about the possibility of US tariffs. For 2024 as a whole, the economy expanded 2%.

US

Sales of previously owned homes in the US rose for the third straight month in December, entering 2025 with some momentum after the worst year in nearly three decades. For all of 2024, sales reached the lowest since 1995, when the US had about 70 million fewer people. It marked the third straight annual decline, stretches only ever seen in the 2006 housing crisis as well as the recessions around the early 1980s and 1990s.

Americans are rolling over an ever-larger share of their credit card debts even with interest rates near multi-decade highs, a sign of growing strain on consumer finances. The share of borrowers who are only making the minimum payments was also the biggest on record.

Europe

Inflation concerns are staging a comeback, raising questions over when the European Central Bank may need to pause or halt interest-rate reductions in the spring, according to a Bloomberg survey of economists. The base case for four quarter-point cuts in 2025 remains in place, with respondents aligned on moves next week and in March.

The euro area’s private sector expanded in January for the first time in three months, surprising analysts as the embattled manufacturing sector showed small signs of improvement. Despite the PMI uptick, though, a meaningful revival in the region’s 20-nation economy looks some way off.

UK employment plunged in the weeks after Labour increased payroll taxes in its first budget, reinforcing the case for the Bank of England to continue cutting interest rates. Data based on tax records showed the number of employees on payroll at the lowest level in over a year after falling by 47,000 in December — the largest drop since the end of 2020 when the country was under Covid restrictions.

Emerging Markets

Mexico’s annual inflation slowed slightly more than expected in early January, keeping in play chances of a bigger interest rate cut at the central bank’s next policy meeting.

Brazil’s government will cut some import taxes and eschew both price controls and the use of fiscal measures as it rushes to lower food costs, a top cabinet official said Friday. The administration will reduce levies on imported food that’s cheaper abroad, and the Finance Ministry will study ways to cut intermediary costs, Chief of Staff Rui Costa told reporters in Brasilia.

World

In addition to the BOJ, Norway held rates steady but signaled a cut in March, and central bankers in Turkey delivered another large reduction. Malaysia and Uzbekistan and Paraguay kept their benchmark rates unchanged, while Ukraine boosted borrowing costs to help curb inflation. Singapore eased policy for the first time in nearly five years.