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Mar 11, 2024 – The US consumer will continue to provide support to the economy this year (see charts) and help to prevent an ongoing contraction in the manufacturing sector from developing into a ....
New Omicron coronavirus outbreaks in the context of Covid-zero policy, the housing slump and heat waves have been holding up the pace of the Chinese economy. China’s current growth slowdown is an additional step in the trajectory of gradually declining rates that has accompanied the “great rebalancing” since the beginning of the 2010s. One major difference now is the perception of exhaustion of waves of overinvestment in real estate and infrastructure as a lever, as compared to three previous moments since the beginning of the last decade. ....
In its May 15th meeting, the Federal Open Market Committee (FOMC) of the U.S. Federal Reserve (Fed) lifted its benchmark policy rate by 0.75% to 1.50%–1.75%, the most significant increase since 1994. The central bank also signaled an additional increase of 0.75% ahead. FOMC members also raised the median projection for the Fed funds rate to a range between 3.25% and 3.50% next year. In addition to hikes in basic interest rates, liquidity conditions in the US economy will also be affected by the shrinking of the Fed s balance sheet starting this month. The "quantitative easing" (QE) that resumed vigorously in March 2020, in response to the financial shock at the beginning of the pandemic, will now give way to a "quantitative tightening". How complementary - or substitute - will be those movements in interest rates and balance sheet downsizing? What are their likely consequences on capital flows to emerging markets? ....