Take two: ECB keeps interest rates unchanged; IMF ups 2025 global growth forecast
- 22 July 2024 (3 min read)
What do you need to know?
The European Central Bank kept (ECB) held its main interest rate at 3.75%, as widely expected, at its policy meeting, however ECB President Christine Lagarde stated the possibility of a cut in September was “wide open”. Eurozone annual inflation was confirmed at 2.5% in June from 2.6% in the previous month, easing in line with expectations, as services inflation remained persistently high. Elsewhere UK inflation remained higher than expected at 2.0% in June as strong increases in hotel prices partly offset declines in other areas including food. Core inflation, which excludes food, energy, alcohol and tobacco, also remained unchanged at 3.5%.
Around the world
The International Monetary Fund (IMF) has edged up its 2025 global growth forecast to 3.3% in its latest World Economic Outlook, up from a previous estimate of 3.2% in April. The organisation however kept its 2024 economic growth forecast unchanged at 3.2%. It warns of slowing momentum on global disinflation, raising the prospect of “higher-for-even-longer interest rates”. Notably, the IMF downwardly revised its 2024 US growth outlook to 2.6% from 2.7%, on the back of lower-than-anticipated consumption during the first quarter (Q1). AXA IM also expects global growth to be 3.2% in 2024, but 3.1% for 2025.
Figure in focus
4.7%
China’s economy expanded at a far slower-than-expected 4.7% year-on-year in Q2 after reaching a much stronger 5.3% in the first three months of 2024. The slowdown is attributed to broad-based economic weaknesses, with the most significant impact from domestic demand as retail sales recorded their slowest pace in 18 months. New homes prices dropped at their quickest pace in almost a decade as the country continues to battle its ongoing property crisis. Despite this, China’s economy grew by 5.0% in the first half of this year which means it is broadly on track to achieve the government’s 5.0% annual growth target, in line with AXA IM’s own forecast.
Words of wisdom
Business for Nature
A global coalition of more than 100 partner organisations, with the aim of driving “credible business action and policy ambition to achieve a nature-positive economy for all by 2030”. The organisation has called on governments to enact tougher policies on the protection of biodiversity in order to reach the 2022 United Nations Biodiversity Conference (COP15) goal of reducing nature loss by 2030. The landmark deal pledged to halt and reverse nature loss, including putting 30% of the planet and 30% of degraded ecosystems under protection by 2030. COP16 commences in October this year at Cali in Columbia.
What’s coming up
Tuesday sees the latest Eurozone Consumer Confidence indicator published. On Wednesday, Bank of Canada policymakers convene to set interest rates while a spate of flash Purchasing Managers’ Indices are issued, which among others will cover Japan, India, the Eurozone, US and UK. Germany’s closely watched Ifo Business Climate indicator is published on Thursday, when all eyes will be on the US as it releases its first estimate for Q2 GDP growth. The 2024 Paris Olympic Games officially open on Friday.
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