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Global Home > Economics

Fed Will Only Cut Rates Once in 2019

The Federal Reserve is likely to cut interest rates by less than financial markets expect over the rest of 2019 given robust jobs growth in the US. A 25bp cut now appears probable at either the July or September FOMC meeting but is unlikely to signal the start of a series of interest rate cuts, in contrast to the path currently priced into Fed funds futures markets. 

Frontier Economies See Lower Interest Rates

A number of frontier economies have seen interest rate cuts in recent months against a backdrop of more accommodative global monetary policy conditions. These include: Angola, Azerbaijan, Costa Rica, El Salvador, Jamaica, Mozambique, Sri Lanka and Tajikistan, as highlighted in Fitch Ratings' latest 'Frontier Vision' slide pack.

Slump in Global Manufacturing Laid Bare

The recent slump in global manufacturing is laid bare in the latest edition of Fitch's '20/20 Vision' economic data chart pack. Manufacturing Purchasing Managers Indices (PMIs) have seen widespread weakening in recent months, while industrial production has slowed in the US, Japan, China, Germany, Australia, Canada, Brazil, India and Mexico. 

Private-Sector Financial Balances Mitigate US Recession Risk

Most post-war US recessions have been preceded by deteriorating private-sector financial imbalances, but these conditions are not in place currently as shown by Fitch Ratings' economics team's latest Chart of the Month.

US-China Trade War Escalation Could Knock 0.4pp Off World GDP by 2020

The imposition by the US of 25% tariffs on the remaining USD300 billion of imports from China would reduce world economic output by 0.4pp in 2020, Fitch Ratings says. Global GDP growth would slow to 2.7% this year and 2.4% next year, compared with our latest "Global Economic Outlook" baseline forecasts of 2.8% and 2.7% respectively.

Trade War Causing Collateral Damage to Global Economic Outlook

The trade war is weighing on investment prospects and has sharply increased downside risks to world economic growth forecasts

2019 Global Banking Conference NY - Fireside Chat - Regulatory View of Financial Stability

Kevin Duignan, Global Head of Financial Institutions, joins Michael S. Piwowar of Milken Institute and Richard Berner of NYU Stern School of Business at Fitch’s Global Banking Conference in New York, for a fireside chat on the banking regulatory environment.

Australia's Growth At Decade-Low Despite De-Synchronised Cycles

 Australia's GDP growth will slow to a decade low of 2% this year despite the cushion provided by de-synchronised movements in house prices and commodity prices. 

Fitch Ratings Ranked #1 Analyst Forecaster in 3 Categories

We are pleased to have received the “#1 Analyst Forecast” award from FocusEconomics for our accurate forecasting of US Interest Rate, Italian Inflation Rate, and Korean Exchange Rate.

Automotive Slowdown Puts the Brakes on World GDP Growth

The slowdown in the global automobile market has had a material impact on world economic growth over the past nine months and has been a key driver of the global manufacturing downturn

bloomberg radio

No Quick Fix Likely on Trade

Brian Coulton, Chief Economist, Fitch Ratings, joined Rishaad Salamat and Doug Krizner on Daybreak Asia. He says we are firmly in escalation mode on trade. He goes onto the potential impact for his forecast on China’s growth and how China may respond.

Milken Institute Global Conference 2019 - The Macroeconomic Outlook: A Balancing Act

James McCormack, global head of sovereign and supranational ratings, addresses how China’s current stimulus package is gaining traction despite Asia’s mixed economic environment at the 2019 Milken Institute Global Conference.

Further Tariff Escalation Would Hamper Global Growth

The U.S. decision to increase tariffs to 25% on an additional USD200 billion of imports from China had been assumed under Fitch Ratings' 2019 base case and does not alter our Chinese or global growth forecasts. However, the decision marks a significant escalation in U.S.-China trade tensions, and highlights the risk of a protracted trade war beyond our current assumptions.

Emerging Market Demand Responsive to Global Financing Conditions

Easier global financial conditions since the start of the year should help stabilise growth in emerging markets according to the latest Chart of the Month. US dollar credit growth to EMs slowed rapidly over the course of last year as global central banks made progress with normalising policy settings and this played a key role in the deterioration of GDP growth dynamics in EM. 

Breadth of Global Equity Market Rebound Since January is Striking

 The breadth of the rebound in global equity prices since January has been striking and has occurred despite trade and industrial indicators remaining weak says Fitch Ratings' Economics team in its latest "20/20 Vision" report. 
 

Late Cycle Risks, What This Means for Investors

As shifting economic winds remain a concern for the global market, join Fitch Ratings for our latest video series, ‘Late Cycle Roundtable,’ which examines current pressures on central banks, the resulting effects on our base case, and what it means for investors.

Global Perspectives

Growing Risks to Central Bank Independence

Recent challenges to central bank independence in a number of countries mark only the beginning of an extended macro policy debate that is likely to play out in the years ahead, especially where economic growth is slowing, according to James McCormack, Fitch Ratings' Global Head of Sovereigns. 

Frontier Vision

Frontier Markets See Trade Weakness But Also Interest Rate Cuts

Frontier market economies continue to see weakening export growth, consistent with the recent slowdown in world trade, but several countries have also seen interest rates decline against a backdrop of the Fed and ECB becoming more dovish, says Fitch Ratings' Economics team. 

Fed's New Balance Sheet Plan Means Easier Global Liquidity Conditions

The Fed's new guidance on its balance sheet policies has material implications for the outlook for global liquidity and will help perpetuate an environment of low market interest rates. Global quantitative tightening will be a lot less intense than expected and may even be completely off the agenda this year if the ECB restarts net asset purchases. 

Global Economic Outlook

Fitch Ratings: Growth A Lot Worse in 2019 Than Expected

Global growth prospects have deteriorated significantly since Fitch Ratings' last Global Economic Outlook (GEO) in December 2018, but while we have quite aggressively cut our forecast for 2019, we do not see the onset of a global recession. Read the report
 

Fitch Ratings' Brian Coulton on Bloomberg Daybreak: "We are forecasting a quite aggressive cut to global growth for 2019, the 0.4pp decline in growth we are now expecting between 2018 and 2019 would be the worst since 2012," says
Brian Coulton, Chief Economist at Fitch Ratings. He told Daybreak Europe’s Matt Miller and Markus Karlsson that the slowdown in Europe is largely to blame, along with emerging markets, and countries that have seen a weaker currency impact their imports. That said, Coulton maintains that he does not expect a global recession in the coming year.

Fitch Ratings Revises Potential Growth for Large EMs as Investment Outlook Deteriorates

Potential growth projections for the larger emerging market (EMs) economies have deteriorated due mainly to a gloomier outlook for investment. A slowdown in projected investment growth over the next few years is the over-arching theme according to Fitch Ratings' Economics team.

Eurozone, China Slowdown Highlighted in 20/20 Vision Chart Pack

 The sharp downturn in the eurozone industrial cycle and the clear weakening in consumer spending growth in China are two clear themes highlighted in Fitch Ratings' latest 20/20 Vision chart pack.

Webinar

The Eurozone Slowdown: Potential Fiscal and Sovereign Rating Implications

Listen on demand to Fitch’s thought leaders from Sovereigns and Supranationals group for a discussion on growth prospects for the Eurozone against the backdrop of increasing uncertainty.  Listen Now

China's Domestic Slowdown Drives Global Trade Slump

The recent pattern of trade flows in Asia suggests that the sharp decline in world trade growth in the second half of 2018 was primarily due to the slowdown in domestic demand in China rather than the direct impact of tariffs associated with increased US-China trade tensions.

Eurozone 2019 Growth Forecast Cut to 1%; ECB Could Restart QE

Eurozone (EZ) GDP growth now looks likely to slow to just 1% this year according to a report published today by Fitch Ratings' Economics team. The deterioration in growth prospects and declining inflation expectations will prompt the ECB to consider restarting asset purchases. 

Credit Hotspot: Brexit

Read the latest research and insight from Fitch Ratings on the UK's exit from the EU. 

Experience Credit Outlooks 2019

Our annual Credit Outlooks are now available. We're producing reports, video, webinars, and commentary across all sectors and regions to give you in-depth insight into credit in 2019 and beyond.

2019 Risks to Watch - Eurozone Tensions

As part of our Risks to Watch series, Brian Coulton, Chief Economist, and Michele Napolitano, Senior Director, Sovereigns, discuss the key credit concerns in the Eurozone over the next 12 months.​

US-China Trade War Direct Impact via Supply Chains Limited

The impact of the US-China trade war on other major economies through supply-chain linkages will be highest in Korea and Japan and reflects their sales of intermediate products to China that are ultimately bound for the US market. However these exposures are still quite small relative to total exports.

Emerging Market Capital Inflows to Remain Subdued after Post-Crisis Low

Capital flows to large emerging markets (EMs) are expected to remain subdued as a share of GDP over the next couple of years due primarily to Fed tightening. This follows a sharp fall in capital flows so far this year, with preliminary estimates for 3Q18 showing aggregate net capital flows to the EM9 (EM10 excluding China) having reached their lowest level since the global financial crisis of 2008-2009.

Labour Supply Gains Supporting Advanced Countries' Potential Growth

The last five years have seen steep increases in the share of the working age population in employment (the employment rate) across most advanced economies. This has gone a long way in offsetting the impact of weaker demographics and labour productivity. 

CNBC-TV18

Fitch Ratings Says Rising Crude Oil Prices Drag on India's Economy

In an interview to CNBC-TV18, Brian Coulton, Chief Economist, said, "We were positively surprised by the Q2 GDP numbers. In some ways, India is more resilient than a lot of the other countries, which are being caught up in this emerging market turmoil recently."

Japan's Remarkable Job Creation Defies Demographics

The number of people working in Japan has increased sharply since 2012, a remarkable achievement as the country's working-age population fell over the same period. The number of people working rose to a new high of more than 66.6 million in 2Q18, exceeding the previous record in 1997, while the working-age population decreased by more than 11 million since 1997.

Fitch on Credit and Interest Rates

Weakening Credit Impulse Helps Explain Euro Area Slowdown

Milken Institute Global Conference 2019

The Macroeconomic Outlook: A Balancing Act

James McCormack, global head of sovereign and supranational ratings, addresses how China’s current stimulus package is gaining traction despite Asia’s mixed economic environment at the 2019 Milken Institute Global Conference.

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Brian Coulton

Chief Economist

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Economics

Robert Ojeda-Sierra

+44 203 530 6094

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Economics

Maxime Darmet

+44 203 530 1624

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