Global Economy: Pressures persist

• In June, the European Central Bank (ECB) and Bank of Japan (BoJ) hiked policy interest rates by 25 basis points (bps) each. This was the ECB’s first rate hike since 2023. The BoJ hiked its policy rate from 0.75% to 1%, the highest since 1995
• In the United States (US), inflation based on the Consumer Price Index jumped to 4.2% in May from 3.8% in April and ~1.8 percentage points above the pre-West Asia conflict level
• Following sharp rises in March and April, global commodity prices eased 5.4% on-month in May, on the back of an 8.7% fall in energy prices. However, crude oil prices remained well above the pre-conflict level

Manufacturing activity in major advanced economies remained resilient in May owing to inventory building and frontloading of purchases. The manufacturing Purchasing Managers’ Index (PMI) in the US, the United Kingdom (UK) and Japan remained close to multi-year highs.
 

However, demand was weak, weighed down by geopolitical turbulence. Input costs continued to rise sharply, led by fuel and energy.
 

Services PMI softened in the US, eurozone and Japan, while entering the contractionary zone in the UK amid the conflict in West Asia.
 

Global supply chains continued to experience volatility, although some regions such as Asia saw a gradual improvement.