While governments around the world contemplate the fallout from Donald Trump’s trade war with China, banks are wrestling with central bank moves that are likely to have a much more fundamental impact on the global economy.

On Wednesday the US Federal Reserve pressed ahead with its policy of raising interest rates, adding a seventh quarter-point rise since 2015 to leave the base rate at 1.75-2%. The Fed also pledged to continue selling back to the private markets loans it bought as part of a vast $4.5 trillion quantitative easing programme.

The European Central Bank indicated on Thursday that it was far less confident about the stability of the eurozone than its counterpart across the Atlantic was about the US economy. Mario Draghi, the ECB president, said his institution wouldn’t take its first baby step on the path to increasing its key base rate – still at zero per cent – until next summer at the earliest.

There was only a modest degree of confidence in the complementary announcement that the ECB’s €2.4tn of QE would be tapered until the end of the year and then stopped.

That puts the ECB ahead of the Bank of Japan, which is still busy injecting vast sums via QE into the Japanese economy every month and has vowed to maintain rates at zero indefinitely. But the ECB’s move leaves it well behind the Fed and even the Bank of England, which has raised its base rate to 0.5% and is threatening to add another 0.25 percentage points in August.

Investment banks, asset managers and corporations tend to put their savings where they can gain the highest interest for taking virtually no risk. Today that clearly means the US. Funds are flowing back to the US at an accelerated pace using a myriad of financial instruments, some of them more transparent than others.

Mario Draghi. Photograph: Valda Kalnina/EPA

As one analyst said recently, “it is hard to ignore the impact of monetary tightening”, because whenever the Fed raises interest rates significantly, “things start to go wrong in the rest of the world, particularly when said tightening follows a long period of stimulus”.

For one thing, investors charge more for lending money to riskier places. That means Argentina, Turkey and even Italy find the cost of financing their debts goes up.

Italy’s new government has chosen to steer away from a fight with Brussels over money, and the cost of its borrowing has fallen in recent days in line with the calmer rhetoric. But it shows that, in a world where it is possible to earn interest safely and without trying, those countries that pose a risk can find themselves in bigger trouble than they expected.

While we should not exaggerate the scale of these moves to date, there are parallel developments that could end in disaster. Go back to 2006 and US interest rates, which had climbed steeply, were so attractive that billions of euros, principally from Germany, had flowed into the US in search of higher returns. Germans were major investors in sub-prime mortgages, lending huge sums on the assumption that these mortgages were as safe as government bonds.

What if funds that cannot get a return in Europe while Draghi keeps rates low are flowing back to the US? Likewise funds from the developing world, where the risks are seen as too great. They won’t be funding sub-prime mortgages. But maybe they are invested in other risky assets that are about to be found out as worthless.

Unfortunately, no one knows the final destination of Europe’s savings and how safe they will be should the current global economic slowdown get worse.

How long will private firms stay on the rails if passenger number falls?

The number of people using Britain’s railways fell last year for the first time since the financial crisis, recording the biggest drop since privatisation. It is a troubling statistic: streets are less congested and the air cleaner when people choose trains over cars. But given the state of the railways, who could blame them for staying away?

The current timetable fiasco, where delays and cancellations have shredded services in the north-west and south-east, disrupting working and family lives, is only the latest calamity for rail. An industry stacked with highly paid officials that has attracted unprecedented recent investment, largely borne by the public purse, has somehow descended into a shambles. Disruptive engineering works, many of whose promised benefits are yet to be felt, have been compounded by industrial relations battles that have frequently left the travelling public as collateral damage. A nd all at a time when passengers have seen fares steadily ratcheting up.

The worry for the industry is whether this is just a blip or the start of a long-term descent. There are short-term explanations: many people were unable to travel not by choice but because their service was cancelled, as a result of bad weather, staff shortages, or many other problems before the timetable meltdown.

But before that, the soon-to-be-defunct Virgin Trains East Coast had already discovered that optimistic growth forecasts were misplaced. Other franchises are also struggling to make their numbers add up.

The current franchise system is already something of a smoke and mirrors affair, as far as competition goes. The proportion of the railway operated on entrepreneurial risk-and-reward contracts, to benefit from supposed private-sector flair and innovation, has diminished fast: instead, management contracts and direct awards have sustained troublesome franchises such as Govia Thameslink Railway – whose chief executive quit on Friday – and Great Western Railway, whose ultimate boss at First Group also departed two weeks back with franchise losses mounting.

The appetite of private firms for rail must now be diminishing faster than their passenger numbers. For a transport secretary passionately opposed to public sector control, the headaches may yet grow worse.

Time for BP to help power generation get greener

‘This is really striking, this is really worrying,” warned BP’s chief economist, pointing at a graph showing that the power the world gets from fossil fuels and non-fossil sources is virtually unchanged from two decades ago.

Spencer Dale said the data should serve as a “wake-up call” for the world. The chart suggests that global efforts to cut carbon emissions from power stations are failing because populations are growing, economies are expanding and nuclear plants closing.

The lesson, the former Bank of England chief economist argued, is that the power sector should be the focus for anyone serious about cutting carbon emissions.

“How much progress in the last 20 years have we made in the power sector? None. What should all of us be thinking about when we think about carbon? It’s the power sector.”

There’s an accounting trick going on here. Yes, the shares of fossil and non-fossil in power have barely changed. But another chart in BP’s own report shows the real picture: renewables and gas have grown dramatically at the expense of oil, nuclear and hydroelectric.

The wake-up call here should be for BP itself, now that it has correctly realised that the power sector is not cutting emissions fast enough to stop dangerous levels of climate change (despite solar-panel installations doubling in a year).

BP only has two major routes towards decarbonisation. One is to produce less oil and more gas, which it is already doing.

The other is to go beyond just dipping its toe into the power generation sector and get serious about renewables. The company’s recent $200m stake in Europe’s biggest solar company is a start. But clean energy amounts to just $400m of its planned $15.6bn expenditure for this year.

With the financial burden of Deepwater Horizon receding, it’s time BP went beyond identifying big problems, and started fixing them.