Weakening global growth amid geo-political tensions
- The global growth outlook has weakened slightly during the past quarter, led by a mid-cycle slowdown in manufacturing across the developed world, and exacerbated by the Trump administration’s enforcement of tariffs in pursuit of its trade policy.
- In response, central banks are likely either to reduce interest rates modestly where they have space to do so, e.g. the Federal Reserve (Fed), or by re-starting extraordinary measures such as asset purchases or new lending to banks, e.g. targeted longer-term refinancing operations (TLTROs) by the European Central Bank (ECB).
- At the same time consumer price inflation in many developed economies such as the US, the eurozone, and Japan remains well below the target of 2%.