Global news wrap: Monetary policies, Trump’s threats, Buffett’s defence
- Donald Trump has taken the world by storm with swift actions in the first few days of his second term. Meanwhile, several major central banks will be announcing their monetary policies in March, including US, UK and Japan.
Every month, Mint’s Plain Facts section brings out an update on key global data to thread together the biggest developments in the world that are worth paying attention to. The accompanying analysis and charts explain how each story is creating ripples on the global stage, where it is headed in the coming weeks, and whether it can impact India.
Diverging policies
In 2024, several central banks started the rate-cutting cycle as inflation eased, including the US Federal Reserve. However, the easing cycle was not consistent among different countries and the trend is likely to continue in 2025 as well. Several countries, including the US, the UK, and Japan will announce their monetary policy decisions next month amid an uncertain economic landscape of fears of the return of inflation and changing world order after Donald Trump took over as the US president.
The US Federal Reserve is expected to hold interest rates steady again, while the UK, and the European Union may continue to reduce rates in response to sluggish economic growth. Japan, which had been raising its interest rate, is expected to opt for a hike yet again. As global conditions remain volatile, central banks are set to adopt strategies tailored to their individual challenges, continuing the trend seen in 2024.
The tariff gamble
US President Donald Trump has taken the world by storm with swift actions in the 30 days of his second term. From ending birthright citizenship, slashing federal jobs, and more —he’s been relentless. But it is his aggressive stance on tariff policies that is causing the most concern. Trump’s approach is aimed at addressing the trade imbalances the US faces. In 2024, the deficit in goods trade surged to a staggering $1,200 billion.
His policies are mainly targeting countries with whom the US has largest imbalances and countries that impose hefty import tariffs. So far, Trump’s threats have brought many countries on the negotiating table over a number of issues such as illegal migration, but the world’s largest economy also risks retaliatory tariffs. Moreover, consumers are worried about the near-term impact of tariffs on prices. A survey by University of Michigan showed that inflation expectation for the next year rose to 4.3%, the highest since November 2023.
Revival quest
Germany’s election on Sunday saw a decisive shift in its political landscape. The conservative Christian Democratic Union (CDU) and the Christian Social Union (CSU) bloc emerged victorious, paving the way for CDU head Friedrich Merz to become the next chancellor. Outgoing Chancellor Olaf Scholz’s Social Democratic Party (SPD) suffered its worst-ever outcome. At the heart of this election was Germany’s economic malaise.
Once the engine of Europe’s growth, the country now faces stagnation with frequent negative GDP growth. Meanwhile, manufacturing which was once its strength declined sharply, exacerbated by rising energy costs and fierce competition from China. The new government will face several challenges especially on the fiscal front as the previous government’s “debt-break" limited government borrowing. The new government is expected to focus on tax cuts, reduce bureaucracy, and boost defense spending, while also pushing for infrastructure investments and fiscal reforms.
Buffett’s defence
Warren Buffett's annual letter to Berkshire Hathaway shareholders has shown an inclination towards stocks despite the company reportedly selling more shares in recent times. According to CNBC, Berkshire sold more than $134 billion worth of stocks in 2024, while had a record cash pile of $334 billion in the fourth quarter. However, Buffett said in the letter that the preference for equities won’t change.
“Despite what some commentators currently view as an extraordinary cash position at Berkshire, the great majority of your money remains in equities," Buffett wrote.
The 94-year-old Buffett has earned a name through long-term investments. Despite reports of recent selling, his company continues to be dominated by long-term investments in companies like Coca-Cola, American Express, Bank of America and Apple Inc. These companies together make up 65.4% of Berkshire’s equity portfolio, data compiled from SEC by WhaleWisdom.com shows. However, investors will keenly await the investment strategy of Greg Abel, who is set to succeed Buffett as the company’s CEO soon.
Internet shutdowns
The year 2024 saw more internet shutdowns in more countries than ever as conflicts, protests, elections dominated the world. According to a report released by the Access Now and #KeepItOn coalition, 296 internet shutdowns were documented in 54 countries, higher than 283 shutdowns in 39 countries in 2023. Of the total, 103 were conflict-related shutdowns, 74 due to protests, 16 to prevent cheating in exams, and 12 related to elections.
In a disturbing trend, there were as many as 25 cross-border shutdowns carried out by other countries especially in conflict zones such as Myanmar, Russia, Ukraine, and Gaza. Two countries–Myanmar and India–faced the most number of internet shutdowns, accounting for over 50% of the shutdowns. While Myanmar faced at least six cross-border shutdowns by China and Thailand, India imposed 84 shutdowns, of which 41 were related to protests and 23 to communal violence. The report identified 31 shutdowns, the most, in Myanmar as coinciding with grave human rights abuses.
Pragya Srivastava contributed to this story.
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