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Bank of Canada Faces Dilemma in Response to War-Fueled Energy-Price Surge, Minutes Say
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- Bank of Canada officials face difficult decisions balancing economic support and inflation control amid surging energy prices and the war in Iran.
- The central bank left its benchmark interest rate unchanged at 2.25% on March 18.
- Officials agreed the jump in energy prices would push headline inflation above the 2% target, creating a difficult policy tradeoff.
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Swiss Inflation Rises to Highest Level in a Year on Jump in Oil Costs
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- Swiss inflation rose to 0.3% on year in March, driven by higher oil prices.
- The Swiss franc appreciated against the euro after Feb. 28 strikes, prompting the Swiss National Bank to consider market intervention.
- The Swiss National Bank expects inflation to average 0.5% this year and 2027, with most investors anticipating a rate hike.
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South Korea Consumer Inflation Accelerates on Mideast Energy Shock
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- South Korea’s headline inflation accelerated to 2.2% in March, driven by surging energy costs amid the Middle East conflict.
- The government introduced price caps on refined oil products and proposed a $17 billion extra budget to cushion energy shocks.
- The OECD raised South Korea’s 2026 inflation forecast to 2.7% from 1.8% and lowered its growth forecast to 1.7% from 2.1%.
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U.K. Businesses Expect Slight Pickup in Price Rises, BOE Survey Finds
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- U.K. businesses expected to raise prices by 3.5% over the next 12 months, a slight increase from February, after attacks on Iran.
- U.K. businesses expected wages to rise by 3.5% over the next 12 months, a slowdown from February, a Bank of England survey found.
- Uncertainty for U.K. firms increased in March, with 57% reporting high or very high levels after attacks on Iran.
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ISM Manufacturing Survey Shows Rising Price Pressures
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- U.S. factory activity expanded in March, but a key index warned of resurgent inflation amid the war in Iran.
- The survey’s prices index hit 78.3 in March, its highest reading since 2022, with all commodities categories rising in price.
- Manufacturing employment remained in contraction at 48.7, while some respondents believe the Supreme Court’s tariff decision could provide a lift.
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Private-Sector Job Growth Steady in March
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- ADP reported the U.S. economy added 62,000 private-sector jobs in March, a slight decrease from February.
- Education and health services added 58,000 jobs in March, leading sector growth, while manufacturing employment shrank.
- Economists expect the government’s official jobs report to show 59,000 new jobs and a 4.4% unemployment rate.
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South Korea’s Export Growth Sped Up in March Under Shadow of Iran War
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- South Korea’s exports rose 48.3% in March, leading to a record $25.74 billion trade surplus.
- Strong demand for semiconductor shipments and higher chip prices drove March’s export growth.
- Naphtha shipments declined sharply, highlighting energy and shipping disruptions from the Middle East conflict.
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