There are more pressing concerns about the global economic health when the OECD released a global economic forecast of below 3 percent. In a span of 3 months, this is the second time that the forecast on the world economy was downgraded.
Does that sound familiar to you? That is because the International Monetary Fund (IMF) was on the same level last month as they have downgraded their forecast for global growth from 3.3 percent to 3.1 percent. Note that recession is defined by the IMF as a “3 percent growth in the world economy”.
Both IMF and OECD enumerated issues that stem from emerging markets, like Russia and Brazil.
China, on the other hand, is having problems with their economy; they’ve already cut their interest rates 6 times, drop their reserve requirement ratio twice, cut their taxes, as well as devalued the Chinese currency.
The most recent inflation rates would reveal that consumer prices were up at 1.3% in October year-on-year, despite the level of economic stimulus.
This economic data only creates more doubt on the impending increase of interest rates that will be implemented by the US Federal Reserve. Market pricing would tell you that there’s about 70% chance that the Fed will be pulling the trigger this month.
The hope for a delay in interest rate hike is actually good news for the US Congressman Brad Sherman. He told Janet Yellen, the chairwoman for the US Fed, to consider not increasing rates simply because it is not “God’s plan”. His comments has since then been a discussion during the Macroeconomic Roundup. Shortly after that, Sherman’s Deputy Chief of Staff told the NBR that those comments were meant to be a joke.
NBR then asked Sherman’s staff as to why would the congressman tell jokes in a very important meeting. His staff suggested that there’s room for humor during congressional meetings.