USIn 2013, a strong increase in asset prices boosted US household net worth to a new record level. The Federal Reserve’s quantitative asset purchases played a key role in the dramatic rebound in household wealth and liquidity positions over the past five years. But sustainable gains rest on the Fed’s ability to exit its current policy without triggering financial instability.
EuropeWith growth picking up only gradually and inflation likely to remain below target for the foreseeable future, it would be premature to rule out further monetary easing in the euro area. But following this week’s hawkish press conference, the hurdle for further action is probably higher than we thought.
AsiaAlthough headline consumer price inflation appears to have bottomed in Asia, there is little sign of economic overheating. We believe that rekindled talk of an imminent monetary tightening in some Asian markets is premature.
JapanThe swing in inflation from negative to positive has been a key marker of policy “success” in Japan. The consumption tax increase on April 1 will see the headline inflation rate ramp up further still, to a 3%-plus rate. We’re entering another crucial phase for the “Abenomics” program.
Latin AmericaThe Argentine government has reached a preliminary agreement with Spanish oil company Repsol to settle a two-year-old dispute over asset expropriation. The accord will be onerous for the country in the near term, but is a positive step toward restoring relations with the international financial community.
AustralasiaA very weak capital spending expectations survey—a key barometer of investment plans—suggests that the rebalancing of the Australian economy from mining to non-mining remains a hope, not a reality.
GlobalOur global growth estimate of 3.2% for 2014 is unchanged from last month as better trends in developed economies offset downgrades to emerging-market economies.
CanadaIt’s no accident that low inflation and a weakening exchange rate have recently dominated discussions about Canada’s economy. While the Bank of Canada (BOC) does not want to explicitly promote a weaker exchange rate, its emphasis on the risk of low inflation has actively inspired continued weakness in the currency.