G7 finance ministers voiced growing concern over rising public debt and volatile bond markets as they met in Paris on Monday following a global sell-off driven by fears that the Iran conflict could fuel inflation.
Ministers are expected to discuss the economic fallout from the conflict and turbulence in global bond markets, a particular concern for Japan, while also seeking common ground on addressing economic tensions and global imbalances.
Bonds from Tokyo to New York extended losses on Monday, with investors betting on central bank rate rises amid concerns that higher energy prices could reignite inflation.
Asked whether bond markets were collapsing, French Finance Minister Roland Lescure said: “They’re undergoing a correction - I wouldn’t say they’re collapsing.”
“We are no longer in a period where public debt is not a subject,” he told reporters as he arrived at the meeting.
The meeting, which is also being attended by representatives from G7 central banks, will examine how countries can co-ordinate responses to shocks such as inflation through temporary, targeted and reversible measures, the French finance ministry said.
German central bank chief Joachim Nagel said policymakers could do a great deal to calm markets and restore positive momentum.
Japanese Finance Minister Satsuki Katayama said she had been instructed by Prime Minister Sanae Takaichi to “minimise various risks” when asked about rising long-term interest rates, without elaborating further.
The G7 finance ministers will also seek common ground on tackling global economic tensions and co-ordinating critical raw material supplies.
However, divisions within the G7 are complicating efforts to project unity ahead of a leaders’ summit in the spa town of Évian from 15 to 17 June.
“Don’t put in place measures that would make the situation worse,” International Monetary Fund chief Kristalina Georgieva said as she arrived for the meeting.
At the centre of the Paris agenda are what Lescure described before the meeting as deep-seated global economic imbalances fuelling trade friction and risking a turbulent unwinding in financial markets.
Focus turns to Trump-Xi summit
Lescure, who is hosting the talks, said the G7 offered an opportunity for frank dialogue among allies at a time of widening disagreements with Washington.
“These discussions are not easy. I’m not going to tell you that we agree on everything, including, of course, first and foremost with our American friends,” he told journalists.
The two-day meeting follows a summit between U.S. President Donald Trump and Chinese President Xi Jinping in Beijing that yielded few concrete economic breakthroughs, as tensions over Taiwan and trade simmered beneath a display of diplomatic cordiality.
Finance ministers will be looking for an update on U.S.-China relations following the Trump-Xi summit and the latest U.S. efforts to reopen the Strait of Hormuz.
U.S. Treasury Secretary Scott Bessent said the trip to China had been highly successful, adding that he would urge the G7 to enforce sanctions targeting Iran’s “war machine.”
Critical mineral high on agenda
Another priority will be critical minerals and rare earths, with G7 governments attempting to co-ordinate efforts to reduce dependence on China.
G7 countries are also seeking progress on a shared toolbox of measures to stabilise markets and encourage domestic investment, potentially including price floors for producers, pooled purchasing and tariffs.
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The U.S. and Iran say they have reached a deal to end their conflict, with an immediate ceasefire and reopening of the Strait of Hormuz after the lifting of the U.S. naval blockade. Talks will continue over the next 60 days to finalise the agreement
U.S. President Donald Trump has said a peace agreement with Iran is scheduled to be signed on Sunday in a post on social media, despite Tehran's Foreign Ministry spokesperson Esmaeil Baghaei saying no deal would be approved this weekend.
U.S. and Iranian officials said they had agreed on a framework to end their war, halt the U.S. blockade of Iran and reopen the Strait of Hormuz, a preliminary pact that sent oil prices falling but leaves the fate of Iran's nuclear program to further negotiations.
Details of a reported draft memorandum of understanding between the United States and Iran offer the clearest picture yet of how both sides plan to end months of conflict and move towards a longer-term settlement.
The U.S. and Iran say they have reached a deal to end their conflict, with an immediate ceasefire and reopening of the Strait of Hormuz after the lifting of the U.S. naval blockade. Talks will continue over the next 60 days to finalise the agreement
A senior Iranian official told Reuters that a draft memorandum with the U.S. covers issues including Iran’s nuclear programme, reopening the Strait of Hormuz, and U.S. waivers on oil sanctions, with further negotiations expected within 60 days of an initial agreement.
U.S. President Donald Trump has said a peace agreement with Iran is scheduled to be signed on Sunday in a post on social media, despite Tehran's Foreign Ministry spokesperson Esmaeil Baghaei saying no deal would be approved this weekend.
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