U.S. Called Most Likely to Fall Be­hind on Rate Raises

The Bond Buyer - - Market News - — Bloomberg News

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.

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