2024-04-30 00:53:56
There is a forecast that there will be no or only one cut in the U.S. base interest rate this year and that it may rise next year.
Adam Posen, director of the Peterson Institute for International Economics in the U.S., said in a keynote speech at the seminar ‘The Fluctuating World Economy, Urgent Diagnosis’ held by the Korean Economic Association at the FKI Tower Conference Center on the 29th, “The neutral interest rate level in the U.S. is rising and prices are not falling.” revealed.
He said, “The G7 and China’s defense, carbon, and industrial policies are expanding their fiscal needs, reducing the inflow of Chinese funds into Western countries, reducing risk aversion (resulting in a decrease in demand for U.S. Treasury bonds), and improving productivity (due to a rise in the neutral interest rate). “The real interest rate on annual government bonds will trend upward for the next few years,” he said, emphasizing the need to prepare for a trend of rising interest rates in the mid- to long-term.
Director Posen said, “The policy differences between Biden’s second term and Trump’s second term in the areas of trade, foreign direct investment, and immigration will be small,” and added, “(Whoever is elected) the first step is protection measures for imports of electric vehicles and batteries from China, and the next step is protection measures for imports of electric vehicles and batteries from China.” “Measures against Chinese pharmaceuticals will continue,” he predicted.
He continued, “In Biden’s second term, offshore export controls and sanctions will be much more aggressive and strict than in Trump’s second term, and climate policies will show significant differences domestically, but internationally, there will not be as much difference as domestically.”
Director Posen also said, “Various tax reduction measures (such as corporate tax rate cuts) introduced in Biden’s first term are scheduled to expire in January 2026, and interest rates and financial uncertainty at this time will be greater if Trump takes office than Biden.” He said.
Regarding the recent strong dollar trend, he said, “The U.S. monetary tightening cycle will resume in 2025, putting additional upward pressure on the dollar,” and “Inflation and increased fiscal deficit in the U.S. could cause Plaza II in 2026.” said. The United States implemented the appreciation of the Japanese yen to resolve fiscal and trade deficits through the Plaza Agreement in 1985.
At this seminar, Ahn Seong-bae, Vice President of the Korea Institute for International Economic Policy, said that the Korean economy is affected by three major risk factors: interest rates, exchange rates, and China, due to changes in the external macroeconomic environment such as △ solid growth in the United States, △ geopolitical conflict in the Middle East, and △ China entering a mid- to long-term low growth path. pointed out that they were faced with
Jeong Cheol, head of research at the Korea Economic Research Institute and head of the Korea Economic Research Institute, emphasized, “We need to alleviate uncertainty in corporate management by preparing response plans for both short- and long-term scenarios for global risks.”
(Seoul = News 1)
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2024-04-30 00:53:56