Key Highlights
- Inflation pressures that re-emerged earlier this year should start to moderate again. Despite bumps in the road ahead, the US Federal Reserve has room to cut interest rates in September and December.
- The European Central Bank will cut rates twice more this year, while the Bank of England is likely to start cutting in August. Interest-rate cuts in emerging markets have been delayed, but not postponed.
- Strong US growth is finally moderating, and the economy seems to be heading for a desired ‘soft landing’. Eurozone and UK growth is recovering.
- China’s property sector continues to be a problem, but gradual policy easing should start to support economic activity.
- Big elections will be sources of uncertainty. Investors need to digest Prime Minister Narendra Modi’s weaker-than-expected performance in India. Ex-president, Donald Trump, is leading the opinion polls in the US. Meanwhile, the UK may have a new government next month.