Charting the Global Economy: Fractured Fed Lowers US Interest Rates

The Federal Reserve lowered its benchmark interest rate again this week, though details from the meeting highlighted fractures among policymakers that will greet a new Fed chair next year.Author of the article:You can save this article by registering for free here. Or sign-in if you have an account.(Bloomberg) — The Federal Reserve lowered its benchmark interest rate again this week, though details from the meeting highlighted fractures among policymakers that will greet a new Fed chair next year.Subscribe now to read the latest news in your city and across Canada.Subscribe now to read the latest news in your city and across Canada.Create an account or sign in to continue with your reading experience.Create an account or sign in to continue with your reading experience.Jerome Powell, whose term as chair expires in May, pushed through the quarter percentage-point cut not only over the objection of a few voters. A much larger group of regional Fed bank presidents who participated in the debate but weren’t among this year’s voting roster also signaled they opposed the reduction.In Europe, a growing chorus of leaders are sounding the alarm about a surge in imports from China. Beijing is also facing higher tariffs from Mexico.Get the latest headlines, breaking news and columns.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try againInterested in more newsletters? Browse here.Here are some of the charts that appeared on Bloomberg this week on the latest developments in the global economy, markets and geopolitics:USFed officials delivered a third consecutive interest-rate reduction and maintained their outlook for just one cut in 2026. The result marked the first time since 2019 that three officials voted against a policy decision, with dissents on both ends of the policy spectrum.US consumer inflation expectations were stable in November while perceptions about job prospects improved, according to a survey from the Federal Reserve Bank of New York. But with job prospects still worse than last year and inflation still elevated, a greater share of households also reported deterioration in their personal finances.There’s a frenzy of development going on to support the AI revolution, and with it an insatiable demand for debt to fund it. Some estimate the overall infrastructure roll-out cost could reach $10 trillion, and with so many lenders lining up to throw cash at the assets, the fear is a bubble is building that could eventually leave equity and credit players facing substantial pain.EuropeGerman industrial production rose much more than anticipated, supporting assumptions that the economy will return to growth in the final quarter of 2025. The advance was driven by construction, machinery and electronics products, though output in the car industry fell.Germany’s chemical companies are grappling with another year of decline as Europe’s biggest economy is at the onset of a de-industrialization process, industry group VCI warns. Its preliminary 2025 figures released on Wednesday show that plants operated at only 70% capacity, the lowest since 2002 and clearly under the profitability threshold of about 80%, VCI said.China’s exports are putting it on a collision course with Europe.

French President Emmanuel Macron has branded the trade imbalance with China “unbearable,” saying what’s at stake now is “a question of life or death for European industry.” European Commission President Ursula von der Leyen believes the bloc’s ties with China “have reached an inflection point.”AsiaChina’s annual trade surplus exceeded $1 trillion for the first time despite a deepening plunge in shipments to the US, risking a backlash from markets flooded by goods from the world’s biggest manufacturing nation. While shipments to the US plummeted 29% in November — the eighth month of double-digit declines and the biggest since August — strong growth in sales to regions like the European Union and Africa more than offset the slump.

The International Monetary Fund linked China’s booming exports and growing trade imbalances in part to a real depreciation of the yuan, lending its voice to a debate over distortions caused by a weaker exchange rate.China is considering a package of incentives worth as much as $70 billion to bankroll and support its chipmaking industry, pouring more state money into a sector it deems pivotal to its technological conflict with the US.Emerging MarketsMexican lawmakers gave final approval for new tariffs on Asian imports, broadly aligning with US efforts to tighten trade barriers against China, as President Claudia Sheinbaum seeks to protect local industry. Mexico’s Senate voted in favor of the bill that imposes tariffs of between 5% and 50% on more than 1,400 products from Asian nations that don’t have a trade deal with Mexico.WorldIn addition to the Fed, policymakers in the Philippines, Kenya and Turkey also cut interest rates. Australia, Canada, Brazil, Switzerland, Uzbekistan, Serbia, Ukraine and Peru left borrowing costs unchanged. —With assistance from Neil Callanan, Maria Eloisa Capurro, Enda Curran, Wilfried Eckl-Dorna, John Liu, Marilen Martin, James Mayger, Catarina Saraiva, Zoe Schneeweiss, Paula Seligson, Gonzalo Soto, Fran Wang and Alexander Weber.Postmedia is committed to maintaining a lively but civil forum for discussion. Please keep comments relevant and respectful. Comments may take up to an hour to appear on the site. You will receive an email if there is a reply to your comment, an update to a thread you follow or if a user you follow comments. Visit our Community Guidelines for more information.