ECB keeps rates steady, and other economics news to read this week

The European Central Bank has left its key interest rate at a record high 4%, while noting that underlying inflation has continued to cool.

"The declining trend in underlying inflation has continued, and the past interest rate increases keep being transmitted forcefully into financing conditions," the ECB said.

Deposit rates are at their highest since the bank was formed, and are likely to stay at that level, it added.

The US economy grew quicker than was expected in the fourth quarter of 2023, according to an advance report from the country's Commerce Department. Gross domestic product grew at an annualized rate of 3.3% in the quarter.

It builds on stronger-than-expected growth throughout 2023. Growth for the full year was 2.5% – rising from 1.9% in 2022 and the fastest increase in two years.

Government spending, rising exports and business investment all helped drive the growth, Reuters reports. It comes in contrast to forecasts for 2023, which had been cautious, as a result of Federal Reserve rate increases to tame inflation. In December 2022, a 0.1% contraction for the US economy in 2023 had been forecast.

Eurozone business activity contracted for an eighth straight month in January, although the manufacturing outlook did improve.

Japanese exports jumped in December, with shipments to the US hitting a record level, while those to China rose for the first time in 13 months.

Unemployment rates rose in 15 US states in December, an increase of three from the previous month.

Beijing has announced a growth target of 5% for 2024 up from last year's target of above 4.5% for the Chinese capital.

Inflation in Sri Lanka increased to 4.2% year-on-year in December, with the consumer price index increasing largely as a result of rising food prices. Inflation peaked at 70% in September 2022.

According to new data, core inflation in Tokyo has slowed to its lowest level in nearly two years. The city's consumer price index rose 1.6% year-on-year in January, missing the central bank's 2% target.

British retail sales volumes fell at their fastest rate in three years in January, according to a monthly gauge from the Confederation of British Industry.

Close to 50,000 UK businesses are on the brink of collapse, according to a new report, after a jump in the number of companies facing financial distress.

The World Economic Forum's Annual Meeting took place in Davos last week. Here, Huw van Steenis, the Vice Chair of Oliver Wyman, discusses his five takeaways from the week on finance and the economy.

Our latest Chief Economists Outlook paints an uncertain picture for the global economy in 2024. Read more about what chief economists are predicting for the year ahead.

What needs to change in the global financial system to tackle poverty and the impacts of climate change? David Miliband, President and Chief Executive Officer, International Rescue Committee, Gayle E. Smith, Chief Executive Officer, ONE, explore the issue in this article written for Davos.