US Fed, Israel-Hamas, Germany vs Japan: The global events wrap, in charts
US Federal Reserve may once again choose to hold it at the 5.25-5.5% range for the second successive time in its upcoming decision on 1 November. While inflation has nearly halved since October last year, Fed Chair Jerome Powell has said it is still “too high" and the aim is to bring it down to the 2% target level. Since its last meeting in September, Fed officials have indicated a policy of ‘higher-for-longer’ interest rate regime, which means a cut is unlikely to happen anytime soon.
The minutes of that meeting did indicate one more hike to bring the inflation down but analysts do not expect it to come for now. The higher-for-longer US policy may impact monetary policies in several countries, including India, which have also paused their interest rate hikes, and they could be forced to stay hawkish amid hardening bond yields. Despite Germany's economic activity showing signs of stagnation, the country is expected to surpass Japan within the next two months to become the world’s third largest economy, according to latest projections by the International Monetary Fund.
While Germany has maintained a steady rate of growth, Japan witnessed a sharp decline in its nominal GDP in 2014 and 2015 and again in 2021, which has given the former an advantage. Despite having experienced a prolonged period of slow growth, Japan had maintained the tag of ‘second largest economy’ until 2010, before being dislodged by then fast-growing China. In real terms, Japan is projected to grow 2% in 2023, while Germany is expected to contract 0.5%.
However, the depreciation in Japan’s yen will give Germany a leg up. Going ahead, India is expected to leave both Germany and Japan behind to become the third largest economy by 2030. How the global
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