trending Market Intelligence /marketintelligence/en/news-insights/trending/cnnkcgpqr0clced7yb439g2 content esgSubNav
In This List

Fitch says rising US inflation could disrupt 'robust' global growth outlook

Blog

Banking Essentials Newsletter: January 11th Edition

Blog

Banking Essentials Newsletter December 21st Edition

Blog

The Road to Basel IV: Navigating the challenge facing European banks

Blog

Basel Framework- Utilizing data to analyze the capital position of European banks.


Fitch says rising US inflation could disrupt 'robust' global growth outlook

The global economy is poised for a "robust" expansion over the near term, but a faster-than-expected rise in U.S. inflation could be "disruptive" for growth, Fitch Ratings said in its latest Global Economic Outlook report.

Global growth is projected at 3.3% in 2018 and 3.2% in 2019, unchanged from Fitch's forecast in March.

Accelerating private investment, tightening labor markets, pro-cyclical U.S. fiscal easing and accommodative monetary policy support above-trend growth in advanced economies, the report said.

Growth forecasts for this year in the U.S. and China were revised upward, offsetting the downward revisions in the eurozone, the U.K. and Japan.

However, a faster pickup in inflation and the Fed's likely aggressive response to it remain a key risk on outlook.

"An inflation shock could bring forward adjustments in the U.S. and global bond yields and sharply increase volatility, harming risk appetite," said Brian Coulton, Fitch's chief economist.

Fitch projects four Fed rate hikes in 2018, followed by three more in 2019.

The rating agency said recent trade tensions are not expected to materially affect its global growth outlook at this stage, but geopolitical concerns in Italy and the rest of the eurozone could weigh on investment prospects.

"A major escalation that entailed blanket across-the-board geographical tariffs on all trade flows between several major countries would be much more damaging," Coulton said.