Charting the Global Economy: ECB holds, the UK tilts toward rate cut

The European Central Bank left interest rates unchanged, while President Christine Lagarde downplayed a recent rally in the euro and maintained that inflation as broadly balanced.

In the UK, central bankers came within a vote of lowering interest rates and predicted inflation will fall below its target, a closer-than-expected decision that revived hopes the Bank of England will cut next month. 

Ahead of next week’s marquee US jobs report, several releases showed the labour market remains in a fragile state. Meanwhile, President Donald Trump and India’s Prime Minister Narendra Modi reached a deal to reduce tariffs.

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

World

Trump and Modi took a major step to reset fractured ties with a surprise deal on Monday to slash tariffs, bringing much-needed relief to India’s economy. Trump said Modi had agreed to buy $500 billion of US goods, cut its tariffs to zero, and halt crude purchases from Russia, a key demand of the US president.

In addition to the decisions by the ECB and BOE to stand pat, Armenia, Madagascar, Iceland, Poland, Czech Republic, Mexico and India also left rates unchanged. Australia became the first major economy to hike interest rates in 2026. 

USA

US companies added fewer jobs than expected in January, pointing to a continued slowdown in the labor market at the start of the year.

Private-sector payrolls increased by 22,000 after a downward revision to the prior month, according to ADP Research. The ADP figures offered a glimpse of the labor market in January as official data from the Bureau of Labor Statistics was delayed due to the partial government shutdown.

US manufacturing activity unexpectedly expanded in January at the fastest pace since 2022, energized by solid growth in new orders and production, Institute for Supply Management data showed.

Following nearly a year of contraction, the demand-related spike in factory activity is welcome news. Sustained growth would help provide reassurance that manufacturing is on the mend after languishing the past three years.

December was the second straight month with more unemployed workers than job openings — a stark contrast to the situation just three years earlier, when there were twice as many job openings as seekers. While vacancies are rising in construction and manufacturing, openings for white-collar workers tumbled at year-end.

Europe

German factory orders unexpectedly rose at the fastest pace in two years, supporting expectations of a recovery in the key manufacturing sector. A rebound in industrial activity is seen as crucial for a sustainable recovery in Europe’s largest economy, which only narrowly avoided a triple-dip recession in 2025.

French inflation unexpectedly eased to a five-year low, staying well short of the ECB’s 2 per cent target as energy prices fell. French inflation has been an outlier among the euro zone’s biggest economies — with price gains in the bloc as a whole running close to 2 per cent.

Asia

Apartment prices in Seoul have now risen for 52 consecutive weeks, according to Korea Real Estate Board. The rally has defied repeated attempts by successive governments to cool the market with steps including tighter lending rules, extending pressure on would-be buyers.

India’s finance minister unveiled a relatively cautious budget on Sunday, focusing on economic stability in the face of rising global risks. Analysts saw the budget as providing a measure of predictability that investors needed in uncertain times.

China’s economy stumbled into the new year, bolstering the case for Beijing to ramp up policy support in coming weeks as strong exports failed to offset weak domestic demand.

Emerging Markets

Chile’s economic activity bounced back in December in a report published days after the central bank held its interest rate at the lowest level since 2022 and said temporary factors had dragged on growth.

Mexico’s central bank kept its benchmark interest rate unchanged, pausing an easing cycle that started nearly two years ago as core inflation hovers just above the upper limit of the tolerance range.

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Published on February 7, 2026