Charting the Global Economy: Key central banks hold on rates

Central bankers in the US, UK and Japan held the line on interest rates this week as officials attempt to gauge the impact of tariffs, uncertainty about economic activity and war in the Middle East.

While the median forecast from US Federal Reserve officials showed two interest-rate cuts by the end of the year, seven policymakers — up from four at the March meeting — indicated they see no reduction.

The Bank of Japan unveiled a plan to ease the pace of its reductions to monthly bond purchases to ensure market stability while sticking to a path of normalization that includes the possibility of more rate hikes. The vote by Bank of England policymakers to hold rates steady was more divided than expected, leaving UK central bankers on course for a possible rate cut in August.

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

World

Japan’s once-slumbering bond market has roared back to life with a burst of volatility that is echoing around the world. Major debt markets have moved in tandem with Japanese government bonds during the recent rout, with a spike in super-long yields in the Asian nation amplifying ructions fueled by global fears of widening fiscal deficits.

Instead of processing copper in the US, many miners now turn abroad—where there’s more than enough capacity—to transform the raw materials they pull from the ground. Economic pressure from China’s army of smelters has been constant over the years and caused the US industry to downsize in the late 2000s and mid-2010s while demand for US copper dwindled. Now, demand is back but the US capacity isn’t.

In addition to US, UK and Japan policy decisions, officials in Pakistan, Chile, Armenia, Indonesia, Namibia, Georgia, Taiwan, Turkey and Botswana kept interest rates unchanged. Sweden lowered its key rate to a 2 1/2-year low and Norway surprised with a cut. The Swiss National Bank dropped its rate to zero and the Philippine central bank also lowered rates. Brazil boosted interest rates.

US

The Federal Open Market Committee voted unanimously to hold the benchmark federal funds rate in a range of 4.25%-4.5%, as they have since the beginning of the year. They also released new economic forecasts — their first since President Donald Trump unveiled a sweeping set of tariffs in April — showing they expect weaker growth, higher inflation and higher unemployment this year.

New US residential construction declined in May to the slowest pace since the onset of the pandemic as an elevated inventory of homes for sale and high mortgage rates sapped the motivation to build. The pace of one-family home starts edged up but is still one of the slowest since 2023, while completions jumped.

Sticker shock has yet to register for the residents of America’s affluent suburbs and downtown condos, the target audience for luxury credit cards from JPMorgan Chase and American Express. The card companies are tapping into a new US economic reality: While the vast majority worries about money and is cutting back, the rich continue to shrug off recession concerns and spend freely.

Europe

In a decision that left rates on course for a potential quarter-point cut in August, six of the BOE’s nine Monetary Policy Committee members voted to leave rates unchanged while three preferred an immediate quarter-point reduction. Economists had expected a 7-2 split.

Investor confidence in Germany’s economy improved more than anticipated as a forthcoming surge in public spending outweighs fears over looming US tariffs.

UK home prices fell in April by most since 2021, government data show, as a tax increase drove some buyers out of the market.

Asia

The BOJ kept its benchmark policy rate at 0.5% and outlined a plan to cut monthly bond purchases from the next fiscal year to quarterly reductions of ¥200 billion ($1.34 billion) from the current ¥400 billion. The board’s decision follows recent sharp moves in JGBs that rippled across global debt markets.

China is testing the limits of what its consumer stimulus can accomplish by subsidizing purchases of select goods, fueling a shopping spree that boosted retail sales growth to the strongest in more than a year but threatening to overwhelm authorities even in the richest regions.

Japan’s exports fell for the first time in eight months as the US tariff campaign weighed on global trade, raising the risk of a technical recession after the economy contracted at the start of the year. The value of exports dropped 1.7% in May from a year earlier even as the export volume climbed 1.8%, suggesting exporters may be absorbing the tariff shock by cutting prices.

Emerging Markets

The United Nations nuclear watchdog said the location of Iran’s near-bomb-grade stockpile of enriched uranium cannot currently be verified, as Israel’s ongoing military assault is preventing inspectors from doing their work. Iran’s 409 kilograms (902 pounds) of highly-enriched uranium — enough to produce 10 nuclear warheads — should theoretically be secured under an International Atomic Energy Agency seal at an underground facility at Isfahan.

With the Trump administration’s aggressive clampdown roiling migration patterns across the hemisphere, the top destination for outbound Cubans is no longer along Florida’s shores. Instead of Miami they’re flocking to Curitiba, in Brazil’s farm country.