Macroeconomic round up: Global GDP growth expectations shift down a gear
Jason Walls breaks down the week's biggest news in macroeconomics on NBR Radio, and on demand on MyNBR Radio.
Jason Walls breaks down the week's biggest news in macroeconomics on NBR Radio, and on demand on MyNBR Radio.
IMF managing director Christina Lagarde has revealed she no longer thinks a global GDP growth of 3.3% is “realistic.”
She says previous forecasts of 3.8% growth in 2016 are now unlikely too.
Ms Lagarde was optimistic about the US Fed not raising rates in September, telling media “there is no reason to rush to tighten policy.”
She noted both the Japanese central bank and the European Central Bank in recent years hiked rates, then were forced to quickly retreat.
“Reversing is much more harmful than a delayed hike,” she said.
Ms Lagarde also cited issues over emerging economies and their lack of growth, specifically China, as a reason for her call.
But the People’s Republic is not the only emerging economy which is having difficulties.
Earlier this week, the Reserve Bank of India (RBI) slashed its interest rates from 7.25% to 6.75%.
The 50 basis point cut was more than many economists were expecting, with various analysts expecting rates to be dropped to 7%.
Reserve Bank of India governor Dr Raghuram Rajan suggested inflation was one of the main contributors to the interest rate cut.
The Reserve Bank of India has been under a lot of pressure to boost its inflation, which is at the record low level of 3.6%.
It also set a new inflation target to achieve roughly 5% by March 2017.
It cited low commodity prices as one of the reasons for the low inflation levels.
The RBI has cut its interest rate by 75 basis points this year.