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The search for yield and looser monetary policies across the board, favor sovereign spreads compression, despite a worsening global outlook, poorer incoming data and balance of risks, and the lack of improvement of fiscal disequilibria.
In the shadow of the spectacular Teton Mountains in Jackson Hole, Wyoming, the Federal Reserve Bank of Kansas City held its forty-third Economic Policy Symposium from August 22 to 24. This year, a decade on from the Great Recession, the discussion focused on "Challenges for Monetary Policy."
Models suggest 70% probability of recession within 24 months. Increased weakness in global growth. Policy uncertainty whipsawing with trade tensions. At times, key financial markets showing signs of panic-like conditions.
The United States is one of the biggest contributors to greenhouse gas (GHG) emissions, making its involvement in the fight against climate a matter of critical importance.
Baseline growth forecast unchanged, but risks tilted to downside. Model-based recession projections suggest probability around 75% over the next 24-months. Mixed signals from labor market indicators. Downside risks to inflation moderating.