In advanced economies, the US Federal Reserve cuts interest rates by 50 basis points, with CPI down to 2.5% in August; the European Central Bank cuts rates by 25 basis points, with headline inflation down to 2.2%.

United States. At September’s meeting, the Federal Open Market Committee (FOMC) decided to lower the target range for the Fed funds rate by 0.5 percentage points to 4.75 to 5%. Current FOMC projections have the Fed funds rate decreasing to 4.4% by the end of the year. The US Federal Reserve projects 2.1% GDP growth for 2024.

The consumer price index (CPI) rose 2.5% over the 12 months ending August, the smallest 12-month rise since March 2021. Core inflation remained at 3.2% (annualized) in August.

Eurozone. Eurozone GDP growth in the second quarter was revised down to 0.2%, from 0.3% in June. This was due to stagnant private consumption, declining investment, and weaker inventories despite a stronger-than-expected contribution from net trade (+0.4 percentage points contribution to growth). The services sector is expanding, while the manufacturing sector is weakening.

The European Central Bank (ECB) cut the deposit facility rate by 25 basis points to 3.5% on September 12. ECB president Christine Lagarde said inflation is aligned with expectations, so it was right to take a further step to moderate monetary policy.

In August, headline inflation was down to 2.2%, mainly because of a decline in energy prices (–3%), while core inflation stood at 2.8%. Services inflation, however, registered 4.1%, which still points to strong domestic price pressures, with wages growth remaining elevated (4.7% in the second quarter of 2024).

United Kingdom. The UK CPI remained unchanged at 2.2% in August. Core inflation (which excludes energy, food, alcohol, and tobacco) rose to 3.6%, from 3.3% in July. On September 19, the Bank of England (BoE) Monetary Policy Committee voted to leave the policy rate at 5%.

Monthly real GDP is estimated to have shown no growth in July, echoing June. GDP has shown no growth for three of the past four months. The economy grew slower than previously thought in the second quarter, with economic output expanding by 0.5% from April to June, the Office for National Statistics announced on September 30 as it downgraded a preliminary estimate of 0.6% GDP growth.

The BoE said CPI inflation is expected to increase to about 2.5% by the end of 2024, as declines in energy prices last year fall out of the annual comparison. Headline GDP growth is expected to return to its underlying pace of about 0.3% per quarter in the second half of the year.

Among emerging economies, China announces a significant package of stimulus measures; India targets the semiconductor market for growth; Russia raises interest rates again.

China. In August, growth in fixed-asset investment rose to 2.2%, up from 1.9% in July. Manufacturing investment remained robust at 8.0% but slowed from 8.3% in July. Infrastructure investment expanded more slowly, growing by 1.2%, down from 2.0% in July.

China’s central bank announced a significant package of stimulus measures. The People’s Bank of China unveiled plans to cut reserve requirement ratios—the amount of cash banks must hold in reserve—by 50 basis points.

China has announced that next year it will gradually raise the statutory retirement age. For men, the retirement age will rise from 60 to 63 years old. For women, it will be adjusted from the current 50 or 55 years old (depending on their job or occupation) to 55 or 58, respectively.

India. The economy expanded by 6.7% in the second quarter of 2024, with only government consumption remaining flat. Inflation remains under control, with core CPI and inflation standing at 3.7% and 3.3%, respectively, while the central bank has kept interest rates unchanged. Both the manufacturing and services sectors continue to experience robust growth, registering purchasing managers’ index (PMI) values of 57.5 and 60.9, respectively. The government is aiming to nearly triple its investment in the semiconductor industry from $150 billion to $500 billion.

Brazil. Inflation fell for the first time in four months to 4.24%, from 4.5% in July; the composite PMI decreased to 50.4 in August, down from 54.0 in July, but stayed above the neutral 50 mark for the eighth consecutive month, indicating a modest expansion. The unemployment rate dropped slightly to 6.8% in July (6.9% in June), down for the fourth time this year, and lower than the same period last year (7.9%).

Russia. Russian economic growth slowed to 3% in June and July, down from 4.5% in April and May. The Central Bank of Russia (CBR) forecast sees Russian GDP increasing by 3.5 to 4.0% this year, with major institutional forecasters predicting 3.0 to 3.5%. Inflation remains high, with consumer prices up 9% year on year in August, well above the central bank’s target rate of 4%. The CBR kept raising its interest rate to 18% in August. In September, it raised the interest rate again to 19% to try to slow inflation.

Mexico. Amid a series of political restructuring policies, Mexico maintains stability in key economic indicators. In August, the inflation rate dropped to 5.0% (from 5.6% in July), decreasing for the first time following an upward trend since February. Mexico’s PMI for manufacturing edged down from 51.2 in May to 51.1 in June.