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UK growth cut to 1.1%; Reeves defends plan
Chancellor Rachel Reeves said her economic plan is the right one even in uncertain times, despite growth estimates for the United Kingdom being lowered for this year. “(It’s) a plan that is even more important in a world that, in the last few years, has become yet more uncertain,” she said. This comes as the Office for Budget Responsibility (OBR) cut its expected growth rate for 2026 to 1.1% from the 1.4% it predicted in last year’s budget, but has upgraded estimates for later years. The OBR also said that it expects inflation to be lower this year than previously thought. It is important to note that these estimates were finalised before conflict broke out in the Middle East, and the OBR noted that such an outbreak could have a “very significant” impact on the global and UK economies. “It is incumbent on me and on this government to chart a course through that uncertainty to secure our economy against shocks and protect families from the turbulence that we see beyond our borders,” Reeves said. According to Reeves, the plan would see the economy grow and leave people £1000 better off. According to the OBR forecast, inflation is expected to drop to 2.3% through the year, down from its estimate of 2.5% in Novemb
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Fed's Williams: Tariffs hit US firms, households
American businesses and households are absorbing the overwhelming share of President Donald Trump’s tariffs, according to John Williams, in remarks that directly challenge White House assertions that foreign exporters would shoulder the cost. Speaking at a conference in Washington, D.C., the president of the Federal Reserve Bank of New York said recent analysis shows the burden has fallen squarely at home. “The tariffs have overwhelmingly been borne domestically — a New York Fed analysis estimates that most of the burden has fallen on U.S. firms and consumers.,” Williams said. “In addition, the tariffs have already meaningfully increased U.S. prices of imported goods, and the full effects have likely not yet been felt.” The findings stem from a white paper published on the New York Fed’s website, in which researchers estimated that as much as 90% of the added costs from tariffs had been passed through to domestic producers and consumers. That conclusion contradicts claims by President Donald Trump and other administration officials that foreign exporters would absorb the higher costs rather than raise prices. The study has generated significant debate in recent weeks. Kevin Hassett, director of the National Econo
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Fed officials urge caution on rate cuts
The United States Federal Reserve should refrain from cutting interest rates until there is clearer evidence that inflation is moving sustainably back towards target, Chicago Fed President Austan Goolsbee said, warning that price pressures remain uncomfortably high. Speaking at the National Association for Business Economics annual conference in Washington, Goolsbee stressed that policymakers must avoid repeating past mistakes by easing too quickly. Inflation has retreated significantly from its peak but remains above the central bank’s 2% objective. “We have been burned by assuming transitory inflation” in the past, Goolsbee said, cautioning against complacency. “I feel that front-loading too many rate cuts is not prudent in that circumstance,” he added. “People express that prices are one of their most pressing concerns. Let’s pay attention. Before we cut rates more to stimulate the economy, let’s be sure inflation is heading back to 2%.” The latest data for December showed core inflation, which strips out volatile food and energy components, running at 3% under the personal consumption expenditures index, the Fed’s preferred gauge. That marked a 0.2 percentage point rise from November. While some of the increase
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Refund risk clouds US fiscal outlook
While markets were hoping the United States Supreme Court would draw a line under President Donald Trump’s tariff experiment, it has torn up the rule book and left bond traders, currency desks and policymakers guessing what comes next. The court ruled that Trump overreached by using the International Emergency Economic Powers Act - a law designed for national emergencies - to impose sweeping tariffs. In plain English, it said taxing imports is Congress’s job, not the President’s, yet it stopped short of clarifying whether the roughly US$170 billion already collected must be refunded. That omission has created a lot of uncertainty. If businesses successfully sue for refunds, Washington faces a funding gap at a time when deficits are already running red hot. The U.S. government spends more than it collects annually, and it plugs the deficit by issuing bonds - aka Treasuries - to investors. More bonds mean more supply, and greater supply typically means higher yields, which are simply the interest rates the government pays to borrow. The White House responded within hours, pivoting to Section 122 of the 1974 Trade Act. That provision allows a temporary tariff — up to 15% for 150 days — without congressional
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Fed split over rate path, minutes show
The United States Federal Reserve signalled deep divisions over the future direction of interest rates at its January policy meeting, with officials broadly agreeing to hold rates steady but split over what should come next. Minutes from the 27–28 January meeting of the Federal Open Market Committee (FOMC) showed policymakers were united in keeping the benchmark rate unchanged, but differed sharply on whether further cuts, a prolonged pause, or even rate hikes could be warranted depending on inflation and labour market developments. “In considering the outlook for monetary policy, several participants commented that further downward adjustments to the target range for the federal funds rate would likely be appropriate if inflation were to decline in line with their expectations,” the meeting summary said. However, that conditional support for easing was counterbalanced by caution among others who argued the central bank should remain on hold until clearer evidence emerged that inflation was firmly returning to target. “Some participants commented that it would likely be appropriate to hold the policy rate steady for some time as the Committee carefully assesses incoming data, and a number of these participants judged t

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Warsh faces hurdles in shrinking Fed balance sheet
Kevin Warsh’s reported ambition to significantly shrink the Federal Reserve’s balance sheet is likely to encounter stiff resistance from the structural realities of the United States financial system, according to economists and market analysts. Warsh, nominated by the Trump administration to succeed current Fed Chair Jerome Powell when his leadership term ends in May, has long criticised the central bank’s heavy reliance on bond holdings as a policy tool. However, while a smaller balance sheet may be politically and philosophically appealing, experts argue it could prove difficult to achieve without fundamental changes to the way the financial system operates. At the core of the challenge is the framework the Federal Reserve now uses to implement monetary policy. Since the global financial crisis and the pandemic-era interventions of 2020, the Fed has relied on a system that requires banks to hold substantial reserves. The abundance of liquidity underpins the central bank’s ability to steer short-term interest rates using administered tools. Breaking that equilibrium would likely require changes both to the Fed’s rate-control mechanisms and to regulatory settings that shape banks’ demand for reserves. Without such
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RBA minutes flag material shift in inflation risks
Minutes from the Reserve Bank of Australia’s February meeting show policymakers concluded that risks to inflation and employment had “shifted materially”, prompting a 25 basis point rate increase while reinforcing a tightening bias without pre-committing to further action. The Board judged that, without a policy response, inflation would likely remain above the 2–3% target band for an extended period. Data since the prior meeting had generally surprised to the upside, reinforcing concerns that price pressures were more persistent and broad-based than previously expected. The cash rate was lifted by 25 basis points to 3.85%. While members discussed the option of holding rates at 3.60%, they agreed that a hike represented the stronger policy response given the evolving risk profile. The Board's decision was unanimous. The meeting minutes noted: "The forecast for inflation had been revised materially higher compared with that in the November Statement on Monetary Policy (which itself was higher than in the August Statement). "The central projection for trimmed mean inflation now peaked at 3.7 per cent in mid-2026, with headline inflation at 4.2 per cent around that time (reflecting the ending of electricity rebates)
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S&P Global’s top sustainability trends shaping 2026
Sustainability in 2026 is set to be defined by a balancing act between near-term economic and political pressures and longer-term environmental and social risks. According to S&P Global's Top 10 Sustainability Trends to Watch in 2026, businesses, governments and investors are adjusting strategies to reflect a more fragmented policy landscape, intensifying climate impacts and the rapid expansion of energy- and resource-intensive technologies such as artificial intelligence. A central theme is the shift towards a more pragmatic framing of sustainability. Corporations are increasingly linking environmental and social initiatives to risk management, operational resilience and profitability, rather than relying solely on climate or ESG narratives. This evolution comes as political cycles, regulatory divergence and economic uncertainty complicate long-term planning, especially for global firms operating across multiple jurisdictions.Geopolitics and fragmentationGlobal coordination on sustainability is weakening as multilateral approaches give way to more regional and national strategies. Divergent energy and climate policies among major economies, particularly the United States and China, are shaping trade flows, technology supply
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US budget deficit set to grow in 2026: CBO
The United States’ budget deficit will grow in fiscal 2026, the Congressional Budget Office (CBO) has projected. The deficit is set to be US$1.853 trillion, per the CBO’s forecast, widening from fiscal 2025’s $1.775 trillion. This is around 5.8% of the U.S.’ gross domestic product, a similar ratio to the previous year. Since the CBO’s previous forecast in January 2025, “three major developments have affected CBO's baseline budget and economic projections: the 2025 reconciliation act [formerly known as the One Big Beautiful Bill Act], higher tariffs, and lower immigration,” wrote CBO director Phill Swagel. The 2025 spending bill raised projected deficits by $4.7 trillion over the next decade, while lower immigration would lift deficits by $500 billion. The increase in tariffs would cut expected deficits by $3 trillion. Deficits from fiscal 2026 to 2035 are forecast to total $23.1 trillion, rising 6% from the CBO’s projection last year. In fiscal 2036, the deficit would reach $3.1 trillion and represent 6.7% of GDP. “Those sustained large deficits are historically unusual, given that the unemployment rate is projected to remain below 5 percent,” wrote Swagel. Revenues would remain largely stable as a percentage of