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Subscribe to our myFT Daily Digest email and stay informed about the latest news in the Global Economy. Good morning! The world’s top central bank leaders have indicated their preparedness to raise interest rates further and keep them high. They argue that tight labor markets are continuing to drive up wages and prices, necessitating more action to bring inflation down to around 2%. Despite concerns that additional rate hikes could lead to a recession or financial crisis, the heads of the US Federal Reserve, the European Central Bank, and the Bank of England stressed the need for continued restrictive policy. Fed Chair Jay Powell stated that the labor market is significantly influencing the economy, hinting at potential rate increases in the coming months. Some economists have suggested that these central bankers are willing to tolerate a mild recession if it helps achieve their inflation targets. A key concern raised at the conference was the impact of higher rates on the global financial system; the IMF’s deputy director warned that central banks may need to reconsider their fight against inflation if it resulted in a systemic financial crisis.
In other news:
– Italy’s Prime Minister criticized the European Central Bank for its repeated interest rate hikes, arguing that its approach to combating inflation is overly simplistic and could harm European economies.
– The final first-quarter GDP figures for the US are expected to be released today.
– Member states of the United Nations will vote on the establishment of an institution to investigate the fate of over 102,000 people who have disappeared during Syria’s ongoing conflict.
– Wildfire smoke from Canadian fires has led to poor air quality in several major US metropolitan areas.
– Vladimir Putin is reshuffling Russia’s security services following the failed insurrection by the Wagner group. He aims to regain control by promoting loyalists and sidelining individuals aligned with the paramilitary organization’s leader, Yevgeny Prigozhin.
– The Biden administration is considering new export controls on chips used for artificial intelligence. These controls could make it more difficult for companies like Nvidia and Advanced Micro Devices to sell advanced chips to China.
– Protests have erupted in Parisian suburbs after police shot and killed a 17-year-old driver who attempted to evade traffic control officers.
– The annual stress tests conducted by the Federal Reserve indicate that although the largest US banks could lose $541 billion in a hypothetical economic doomsday scenario, they still have sufficient capital reserves to withstand the losses.
– Sri Lanka’s cabinet has approved a proposal to restructure the country’s domestic debts of $42 billion in order to comply with the terms of its IMF bailout. The government has declared holidays to prevent a bank run following the decision.
The Big Read:
Gibraltar, which voted overwhelmingly against Brexit, is facing potential challenges in its efforts to establish closer ties with the EU. Fears of a hard border with Spain threaten the ease of movement that workers in Gibraltar have grown accustomed to.
We’re also reading and listening to:
– The case for a digital euro, which could provide a new way to pay throughout the eurozone, benefiting consumers.
– The use of AI in sales methods, which some argue could lead to exploitative practices.
– The Unhedged podcast, where the FT’s Ethan Wu and Katie Martin discuss Japan’s stock market rally and potential concerns.
Chart of the day:
Chinese companies are capitalizing on President Xi Jinping’s energy independence plan by entering the country’s energy storage sector. Battery technologies are expected to be part of a more than $7 trillion infrastructure investment opportunity by 2040.
Take a break from the news:
Discover the secrets behind your favorite go-to garments and why certain clothing pieces hold personal meaning for people.
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