Slow global economic growth, weak inflation and low commodities prices – Wells Fargo

By FXStreet Analysts from Wells Fargo, look for the global economy to grow less than 3% during 2016, creating an environment of low commodities prices, weak inflation and abnormal low interest rates.

Key Quotes:

“The environment of slow global economic growth that has characterized the past few years appears to have remained largely intact thus far in 2016.”

“We look for global GDP to grow less than 3 percent in 2016. Slow global growth should mean that commodity prices remain low, that inflation in most countries stays benign and that interest rates remain abnormally low. Central banks in most foreign countries likely will refrain from tightening monetary policy in 2016 and arguably in 2017 as well.”

“There are a number of implications of slow global economic growth. First, weak incremental demand for commodities keeps their prices low. Second, slow global growth means that inflation in most economies should remain benign.”

“With global GDP growth and inflation weak, interest rates should remain abnormally low for the foreseeable future. With the notable exception of the Federal Reserve, we believe that most major central banks will refrain from hiking policy rates in the remainder of 2016. Many foreign central banks likely will be on hold next year as …read more

Source:: FX Street