Some more weight has been added to the scale that is tipping in favour of an interest cut in the United States. Economic growth, in the U.S., slowed to 2.1% in the second quarter, down a full percentage point, from 3.1% in the first quarter.
A key factor in the slowdown is a 5.2% drop in exports. Many analysts see that as self-imposed pain brought on by the Trump administration’s trade fight with China. The dispute is also contributing to the slowdown in Europe, and elsewhere.
The drop in GDP growth is seen as additional ammunition for those targeting the U.S. Federal Reserve for a rate cut this week. However, there are prominent analysts who say a cut is not needed at this time. U.S. growth remains above the five-year average and unemployment is at 50 year lows.
Last week the European Central Bank held the line on its benchmark interest rate, but made it clear it intends to take steps to boost the Euro-Zone’s sagging economy. The ECB is signalling the distinct possibility of rate cuts and it is also looking at restarting its simulative bond buying program.
The Bank of Canada remains firmly on the sidelines. It is content with the country’s employment rate, inflation, and its current growth figures.
Jul 29, 2019
First National Financial LP