BENGALURU (Reuters) – The US Federal Reserve would raise interest rates again in December and three times the next year, but the vast majority of economists interviewed by Reuters last week said the risk is that will slow down that pace.
Stock image of the Federal Reserve building in Washington, DC, United States. August 22, 2018. REUTERS / Chris Wattie
The likelihood of a recession in the world's largest economy over the next two years, although still low, has also increased to an average of 35% from 30% in the last economists' Reuters poll conducted between 13 and 19 November. It remained at 15% for the next 12 months.
Although many developed economies are already slowing down, growth in the US is still sound, taking advantage of a $ 1.5 trillion package of tax cuts and official unemployment figures are at a low level in almost half a century
But that brightness should start to fade this quarter, with an even slower expansion
the trade showdown with China is not showing signs of relief next year.
"The economy faces an increasing number of problems, including the delayed effects of previous increases in interest rates and the strengthening of the dollar, the uncertainty of trade protectionism at a time when external demand is reduced and the feeling that the support of the tax stimulus gradually vanishes, "said James Knightley, chief international economist at ING.
The gross domestic product would expand at an annualized rate of 2.7 percent this quarter, less than 4.2 percent in the period April-June and 3.5 percent from the three months to October. Thus, GDP would decline from 2 to 2.5 percent in 2019 up to 1.8 percent by the middle of 2020.
The commercial war that President Donald Trump has launched against China has already begun to hit export-sensitive economies, such as Germany and Japan. And the Asia-Pacific Economic Cooperation Forum (APEC) has not reached an agreement on a final statement for the first time in the history of the summit.
This has reduced expectations that Trump and Chinese President Xi Jinping will make significant progress when they meet at the G-20 summit at the end of this month in Argentina.
The recent liquidation on Wall Street opened the expectation that the Fed would soften the tone of monetary tightening at its November meeting, but the central bank did not. The economists of the last survey have unanimously stated that the Fed will raise interest rates by 25 basis points between 2.25% and 2.50% in December.
The forecast median shows three further increases in the cost of money next year, which would bring federal funds at a rate of between 3% and 3.25% by the end of 2019. But the forecasts for the third increase are adjusted, with 54 of 102 economists who estimate this action.
Additional report by Indradip Ghosh and Mumal Rathore Sounding, written in Spanish by Manuel Farías