U.S. Called Most Likely to Fall Behind on Rate Raises
As central banks the world over find their place in the monetary policy tightening cycle, the one at the helm is the most at risk of falling behind on interest-rate increases, according to Swiss Re AG’s Chief Economist Jerome Haegeli.
The Federal Reserve is “doing everything right,” Haegeli said in a phone interview Aug. 31 from Zurich. “But if you ask who do I think has risk of falling behind, it’s the U.S. because you have tight labor-market conditions” and wages with room to rise, he said.
Across the global economy, Haegeli sees a number of regions growing above their potential output and interest rates still “extraordinarily accommodative” — all pointing to more turbulence in the global economy, even before taking into account the risk of a protracted trade war. Key central banks, the Fed among them, might soon have to tighten faster than expected.
While the global economy still earns a tag of “strong” for 2018, a slowdown is imminent, Haegeli estimates.