Policy makers spent the week navigating a split world: Europe tightening into an energy shock, while China courts the Global South.
On the European side, published research highlighted that the ECB delivered another 25bp hike in September — its second of the summer — as Middle East conflict pushed headline inflation to 3.8% and fed through to food prices. Analysts expect that energy-driven pressure to persist well into H1 2027. Growth is still projected to recover (0.9% this year, 1.4% in 2027, 1.5% in 2028), supported by AI investment and easing real incomes, but researchers flagged elevated financial stability risks tied to AI concentration, cyber exposure, and third-party provider dependencies. Fiscal guidance from the published commentary was blunt: any energy response must stay temporary and targeted, and high-debt sovereigns need to rebuild buffers.
Separately, analysts noted PBOC Governor Pan Gongsheng used the IMF–World Bank meetings to hold bilateral talks with central bank chiefs across Asia, Africa, the Caucasus and Türkiye — read as a deliberate push to deepen trade finance, infrastructure and currency ties across emerging and frontier markets.