In post-crisis times in recent decades, this is the first time that US growth is above both global growth and that of emerging markets. Global financial conditions also remain very accommodative. These assessments, though, assume that medium-term inflation expectations remain well anchored. However, if upside risks to inflation materialize, US monetary policy will need to adapt quickly to keep inflation expectations well anchored. This would create an abrupt shift in financial conditions and risk premia with negative implications at home and abroad.

Source: Mint July 08, 2021 16:30 UTC