US-China Trade War Could Continue Unresolved Into 2020: Reuters Poll
According to a recent Reuters poll, the US-China trade war could very well continue into 2020 without a complete resolution in sight. Although the likelihood of the US economy slipping into recession have receded, a rebound seems unlikely next year.
More than 75% of the economists polled indicated that the US and China will be unable to resolve the trade dispute entirely by next year. Global economic growth is likely to stay under pressure over the reigning trade war while inflation is also unlikely to pick up, which heighten the chances of more stimulus measures being rolled out by the Fed next year.
Economists polled also expect the Fed to announce a rate cut in Q3 2020, slightly more hawkish than the previous poll when economists expected the next rate cut to happen in early 2020. The delay for the next rate cut was driven by Fed Chairman Jerome Powell’s optimism about the health of the US economy.
Economists polled felt that risks were still tilted to the downside, which could put pressure on the Fed to cut interest rates at least once in 2020. In case trade talks derail, economic growth in the US could slow down further. Around 46$ of economists expect the Fed to keep rates steady into 2020, higher than the 31% of economists who felt this way in last month’s poll.
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