The Bank of Japan stated in its quarterly outlook report that global AI-related demand may exert lasting upward pressure on Japan's inflation, suggesting that AI-driven investment could outweigh productivity gains in the short term and strengthen the case for a near-term interest rate increase.
Federal Reserve Chairman Kevin Warsh testified before Congress for the first time on Tuesday, pledging to make high inflation "a thing of the past" and calling for "regime change" at the central bank. He also vowed to "do my job" if challenged by President Trump, his most direct comment yet on maintaining Fed independence.
Chancellor Friedrich Merz faced boos, jeers and whistles from trade unionists at a labor conference on Tuesday as he urged Germany to "pull itself together" and pursue ambitious economic reforms amid geopolitical turmoil and rising inflation. The hostile reception underscores the political challenges facing his beleaguered government ahead of crucial coalition talks.
International Monetary Fund Managing Director Kristalina Georgieva warned that inflation is already picking up and the global economy could face a 'much worse outcome' if the war in the Middle East continues into 2027, with particular concern about prolonged disruption to energy supplies.
