As central banks the world over find their place in the monetary policy tightening cycle, the one at the helm is the most at risk of falling behind on interest-rate increases, according to Swiss Re AG’s Chief Economist Jerome Haegeli.
The Federal Reserve is “doing everything right,” Haegeli said in a phone interview Aug. 31 from Zurich. “But if you ask who do I think has risk of falling behind, it’s the U.S. because you have tight labor-market conditions” and wages with room to rise, he said.
Across the global economy, Haegeli sees a number of regions growing above their potential output and interest rates still “extraordinarily accommodative” — all pointing to more turbulence in the global economy, even before taking into account the risk of a protracted trade war. Key central banks, the Fed among them, might soon have to tighten faster than expected.
While the global economy still earns a tag of “strong” for 2018, a slowdown is imminent, Haegeli estimates.
