Ata mārie and welcome to your Friday summary of international business and political news.
First up, following in the footsteps of the Federal Reserve yesterday, the Bank of England and European Central Bank also held interest rates steady amid the ongoing Iran war.
The BoE signalled that interest rates could rise this year as it attempted to keep a lid on inflation and the "significant energy price shock" from the closure of the Strait of Hormuz.
Most of the BoE’s committee members voted to keep the rate at 3.75% but indicated they would act "forcefully" if oil prices hit a peak of US$130 a barrel and remained high for months.
Governor Andrew Bailey told the BBC that inflation was no one’s friend. “Things like energy and food are a much bigger proportion of spending by those on lower incomes. So, this is a difficult situation.”
Capital Economics deputy chief UK economist Ruth Gregory said the chances of near-term rate hikes were rising. “One or two hikes in the coming months are certainly possible, especially if [oil] prices remain around US$115 per barrel, or rise even further.”
The ECB’s governing council decided to hold its benchmark rate at 2%. In a statement, the bank said that while its previous assessment of the inflation outlook was largely unchanged, “the upside risks to inflation and the downside risks to growth have intensified”.
It said it remained committed to setting monetary policy to ensure that inflation stabilised at the 2% target in the medium term, CNBC reported.
“The longer the war continues and the longer energy prices remain high, the stronger is the likely impact on broader inflation and the economy,” the bank said.
Meanwhile, oil prices jumped to the highest level since 2022 amid reports the US military was set to brief US President Donald Trump on new plans of action in the Iran war, the BBC reported.
Earlier, Brent crude rose about 7% to more than US$126 a barrel, before easing. Trump said the US blockade of Iranian ports could last for months and peace talks remained stalled.
Market traders were beginning to look beyond early optimism that a diplomatic resolution could restore oil flows through the vital trade route soon, and towards “the reality of the supply situation”, the Guardian reported.
Iranian President Masoud Pezeshkian said the US naval blockade on Iranian ports amounted to “an extension of military operations”, Al Jazeera reported.
“Continuation of this oppressive approach is intolerable. [Iran is] paying the price for its resistance and independence.”
Trump also renewed his attacks on German Chancellor Friedrich Merz, suggesting Merz should focus on German and European affairs rather than comment on the conflict in the Middle East.
“The Chancellor of Germany should spend more time on ending the war with Russia/Ukraine (Where he has been totally ineffective!), and fixing his broken Country, especially Immigration and Energy, and less time on interfering with those that are getting rid of the Iran Nuclear threat,” Trump wrote on social media.
CNN also reported that Trump threatened to pull some US troops from Germany. “The United States is studying and reviewing the possible reduction of Troops in Germany, with a determination to be made over the next short period of time,” Trump said.
About 36,436 active-duty US military personnel were permanently stationed in Germany.
Australia has started discussions with the US regarding the latest proposal to reopen the Strait of Hormuz, as the Trump administration attempted to build an international coalition to restore freedom of navigation in the waterway, the ABC reported.
US President Donald Trump.
Elsewhere, Italy condemned Israel’s interception of aid ships bound for Gaza and demanded the release of its citizens. Prime Minister Giorgia Meloni’s office said Rome wanted all Italians freed after they were “unlawfully detained” during the operation near Crete, Al Jazeera reported.
In developing news, US lawmakers voted to fund the Department of Homeland Security, ending a 76-day partial government shutdown, the BBC reported.
The agency had continued to run without routine funds since mid-February, causing major disruptions and long wait times at airports. The measure, supported by Trump, does not include new funding for Immigration and Customs Enforcement or US Border Patrol.
To the markets, Wall Street made gains overnight, with the S&P 500 reaching a fresh all-time intraday high, as investors reacted to upbeat earnings. Earlier, the S&P 500 was up 1.1%, the tech-heavy Nasdaq gained 1%, while the Dow Jones rose 1.8%, CNBC said.
Shares in tech company Alphabet gained 9% after first-quarter revenue beat expectations and the owner of search engine Google also increased its capital expenditure guidance range for this year.
The US economy, meanwhile, grew at an annualised rate of 2% in the first quarter, which fell short of market expectations.
