World growth should be picking up, but ....

The chart below shows two different measures of average world Central Bank discount rates.  The first is a GDP-weighted average covering the countries which together make up 83% of world GDP, the other shows the median discount rate (unweighted by GDP).  Half (by number) of CB discount rates are below the median, and half above.

CBs raised their discount rates when inflation rose during the rebound from the covid crash, and have been cutting them as inflation fell and economic growth stopped.

Economies respond to falling (or rising) interest rates with a lag, which varies from cycle to cycle, and even from country to country, but which is something between 1 and 2 years, so we would expect world economic activity to be now accelerating.  Trump's trade war has complicated this normal process, and though its effect will be mostly felt in the US, it will have some effect on global growth.  The US is stagnating; in other countries on the whole, growth is picking up.  However, it may be too early to see just how bad swingeing US tariffs, combined with a US recession, will be for US trade partners.  If the effect is negative, you can expect CBs outside the US to cut rates faster, but the Fed may be unwilling to cut the Fed Funds rate as inflation accelerates.

As usual, click on the chart to see a clearer image.