Soft landings, sticky inflation, the dash to decarbonise and great power rivalry including the emergence of India are among subjects exercising Paul Gruenwald, S&P Global’s chief economist.
“So as long as job creation is strong and wage growth is strong,” he said, central banks should be able to sap excessive heat from the economy and avoid growth “undershooting”.The most recent successful US soft landing was in 1994-95, while Australia has – Covid aside – done a better job of keeping growth going.
ANZ is among banks predicting Australia’s jobless rate to tick lower, to 3.6%, when August data is released by the Australian Bureau of Statistics on Thursday.Central banks were “a bit too sanguine about inflation”, given the scale of the Covid-related fiscal stimuli. The spike in energy prices after Russia’s invasion of Ukraine added to the inflationary cocktail.
Only once central banks were confident inflation was “well and truly under control” would they start cutting rates. For the US, that might not be until late 2024, he said.