Global Economy Briefing for September 18, 2025

The Bank of England left interest rates unchanged at 4% on Thursday, though the vote showed cracks: two members favored cuts as inflation eased. At the same time, consumer confidence weakened, with the GfK index falling to –19.

Across Europe, the ECB struck a cautious tone. July’s eurozone current account surplus narrowed to €27.7 billion, while Spain’s bond auctions cleared at higher yields.

Construction output rose modestly in July, and Switzerland’s trade surplus shrank to CHF 4 billion. Norway moved first, trimming its policy rate to 4% from 4.25% as price pressures eased.

In the United States, weekly jobless claims fell to 231,000, beating expectations, while the Philadelphia Fed’s manufacturing index surged to 23.2, its strongest reading in months.

Still, the Conference Board’s leading index dropped 0.5% in August, and foreign demand for U.S. long-term securities slowed to $49 billion from $151 billion in June, signaling more caution abroad.

South Africa’s central bank held its benchmark rate steady at 7%, balancing modest inflation progress with weak growth prospects.

Asia delivered mixed signals. Japan’s inflation slowed to 2.7% in August from 3.1%, supporting the Bank of Japan’s decision to keep rates at 0.5%.

Yet equity outflows were stark, with foreign investors selling over ¥2 trillion in stocks even as Japanese bonds attracted strong demand. In New Zealand, the trade deficit widened to NZ$1.2 billion in August, though credit card spending rose 3.5% year-on-year.

The Story Behind the Story

The picture shows central banks hesitating at a crossroads. The Fed has already cut, while the BoE and ECB are waiting for clearer signals, and Norway is beginning to ease. Japan and South Africa remain on hold.

The challenge is the same everywhere: inflation is no longer the only concern—slowing trade, weak investment, and fading confidence now weigh more heavily. For now, U.S. resilience props up the global economy, but the risk of imbalance grows with each new data point.

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