St Louis’ Federal
Reserve President James Bullard pointed to a firmer labour market to suggest a
US Fed rate hike early. San Francisco Federal Reserve Bank President John
Williams also seemed to think on similar lines. He opined that that rate hike may
be despite world conditions.
Fed may not be so happy with the position of global
economy: and so may be constrained to delay a rate hike rather than bring it forward::
- The Chinese economy, Japan and most emerging economies are at low equilibrium.
- Britons vote in the EU referendum on June 23. This has serious implication for EU already in to QE.
- Japan just managed to avoid a recession with a growth of 0.4 % in the first quarter of 2016. Abenomics has not been so successful. In a lesson for EMEs (including India)
- Japan indicates that falling interest rates alone cannot induce investment. The Japanese central bank’s negative rate policy has not really kicked growth.
- The International Monetary Fund in April pruned its growth forecast for Japan . (3rd largest economy)
- The fall in commodity prices have been severely agonizing for most EMEs.
- Recent spurt in oil prices needs confirmation.
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