Donald Trump keeps an eye on Jerome Powell
History doesn’t repeat itself but it echoes quite loudly at times.
Financial markets have performed so wretchedly in recent months, even as the world enjoyed decent GDP growth, that investors and policymakers have become hung up on the question of whether they are now discounting a coming recession.
The Federal Reserve in particular has come under pressure from president Trump to pause policy rate increases, and looks to have bowed to a mix of this verbal assault and its own fears of potential instability from market volatility. It is now emphasizing how flexible it will be on further rate rises and attentive to new economic data.
Economists still struggle to see this recession, though. At the start of January, Citi, for example, revised down its global growth and inflation forecasts for this year, but only by tiny fractions. It now predicts global growth will be 3.1% in 2019, down from 3.2% previously, with inflation likely to come in at 2.4%, down from a previously expected 2.8%.
This is tweaking numbers at the edges: no big deal at all.
