US: Shrinking Universe – BNPP

US: Shrinking Universe – BNPP

8 April 2016, 06:54
Roberto Jacobs

US: Shrinking Universe – BNPP

Alexandra ESTIOT, Research Analyst at BNP Paribas, notes that the Fed is worried about the negative risks the global slowdown pose to US growth.

Key Quotes

“Yet the United States has a very closed economy, and in the past, it is generally internal or exogenous factors that have triggered economic downturns. Naturally, the next recession is getting closer the further we move away from the previous one, but what will largely determine the scope and duration of the next contraction is the excesses that need to be corrected, and currently they appear limited.

Yet when interest rates are close to their effective lower bound, the risks become asymmetric, which explains why the Fed is being so cautious. Our own concerns are more about the deterioration in the medium-term growth prospects, which are strained by demographics and underinvestment.”

(Market News Provided by FXstreet)

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