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BofAML _ informe economía global

Redacción - Lunes, 20 de Febrero

Global Economic Weekly: Guns, butter and Fed forbearance •  Some analysts compare the current US policy environment to the Reagan years.•  We think a better analogy is the late 1960s when fiscal easing caused the economy to overheat.•  A key risk to the US today is that the fiscal package is too big, creating a boom-bust scenario.

Global Letter: Guns, butter and Fed forbearance

Some analysts compare the current US policy environment to the Reagan years. We think a better analogy is the late 1960s when fiscal easing caused the economy to overheat. A key risk to the US today is that the fiscal package is too big, creating a boom-bust scenario.

United StatesShould monetary policy be Taylor made?

Those calling for a hike in March argue that the Fed is behind the curve based on typical policy rules. We disagree as it depends on the specification of the rule. Without a golden policy rule, Fed officials will likely continue to rely on discretion, including a focus on risk management. This implies a gradual normalization process. In our view, a hike in March would be inconsistent with this framework.

Euro AreaItaly: Government debt - looking beyond 2017

In a no-policy change scenario, Italian public debt is sustainable with market forward rates and consensus ‎expectations for growth. ‎The biggest risk is a return to economic stagnation combined with full return to pre-QE risk premia. Despite the knock-on effects on growth, we ‎think active fiscal consolidation would work, politics permitting.

AsiaPolicy tightening

In our view, PPI inflation has likely peaked in sequential terms and will likely trend down in the coming quarters. We raise our 2017 CPI inflation forecast to 2.3%, but expect weaker investment demand growth to keep inflation in check. The still negative output gap and tapered policy support should curb inflationary pressure, and prevent benchmark rate hikes.

Emerging EMEARussia: reflation should still be distant

Consumer spending to resume expansion in 1Q17 on the back of rising incomes, end of deleveraging and rising confidence.

Latin AmericaMexico: flat remittances

We estimate remittances will remain at US$27bn in 2017 helped by a strong US labor market. US$27bn adjusts for pre-US election surge.

UKHere comes the squeeze

UK data remain surprisingly resilient. But focus on the consumer, currently the only driver of UK growth, and it seems to us there is trouble ahead. Real wage growth has halved since the referendum and consumer confidence has fallen. The real income squeeze appears underway.




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