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Or sign-in if you have an account.France's Economy, Finances and Industry Minister Roland Lescure takes a selfie that includes G7 finance ministers and central bank governors as they met to prepare for the summit of heads of state and government to be held in June 2026 in Evian. Photo by JULIEN DE ROSA /AFP via Getty ImagesGlobal finance chiefs are coming to terms with the new economic reality that a consumer-price shock they had hopes of skirting is looking likely to endure.Subscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.Subscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one account.Share your thoughts and join the conversation in the comments.Enjoy additional articles per month.Get email updates from your favourite authors.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one accountShare your thoughts and join the conversation in the commentsEnjoy additional articles per monthGet email updates from your favourite authorsSign In or Create an AccountorAs the second day of Group of Seven discussions proceed in Paris, the aftermath of a bond-market readjustment factoring in more inflation has raised the burden of proof needed to keep borrowing costs unchanged. The prospect of higher interest rates is looming, with associated stress to growth and budget deficits.The talks with finance ministers and central bankers on Tuesday will now continue against a backdrop of 30-year Treasury yields hovering close to the highest since 2007. With the Iran war that caused the energy shock still unresolved, officials will survey the uneven topography of global prosperity and touch on monetary policy too, before turning to discuss terror financing.Get the latest headlines, breaking news and columns.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try againBut darkening the mood over somewhat cerebral discussions about imbalances ranging from U.S. budget deficits to weak Chinese demand is the more pressing reality that the Middle East crisis is bearing down on economies, impacting growth and feeding price pressures.“The longer it goes, the higher the risk of secondary effects,” said Organisation for Economic Co-operation and Development secretary general Mathias Cormann. “If you see increases in wages as secondary effects, then central banks will need to take action — even if the economic growth outlook is somewhat weaker.”Pressure for a response is rising on central bankers from around the G7 club, with investors increasingly betting on moves to raise borrowing costs as soon as June, most notably in the euro zone and Japan.One notable absentee from the meeting is newly appointed Federal Reserve chief Kevin Warsh, who has just taken charge with the expectation from United States President Donald Trump that he should try to cut borrowing costs. The lingering energy crunch is making that prospect ever harder to achieve.“Increasingly as this shock persists, they are getting further behind the curve,” Nuveen Global Investment Strategist Laura Cooper told Bloomberg Television. “The question is, when will the Fed potentially pivot to try to showcase that they’re going to really curtail those inflationary pressures?”Data on Tuesday is underscoring some of the unfolding impacts across the G7 club. In Japan, the economy grew much faster than expected at the start of the year, supporting the case for further Bank of Japan rate hikes.Canadian inflation jumped to 2.8 per cent in April, even though core gauges were steadier.Just before the ministers met meanwhile, U.K. numbers highlighted how the Iran war shock is hitting growth there. Employers slashed jobs by the most since the start of the pandemic, suggesting the crisis is hurting demand for workers.At the onset of the G7 meetings on Monday, host French Finance Minister Roland Lescure had put a brave face on the economic outlook, observing that there’s “less growth, more inflation, but so far we’re not in a recession.”Cormann, whose organization is set to review economic forecasts in coming weeks, was also positive, but with a caveat.“When you look at the way the global economy has performed, it’s been remarkable, the resilience,” Cormann while cautioning that even so, “there is clearly a lot of downside risk.”—With assistance from Erik Hertzberg, Daniel Flatley, Toru Fujioka, Kamil Kowalcze, Cécile Daurat, Eloise Hardy, Oliver Crook and Tomoko Hatakeyama. Join the Conversation This website uses cookies to personalize your content (including ads), and allows us to analyze our traffic. Read more about cookies here. 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