After Wednesday’s interest rate increase, Fed Chair Jerome Powell is likely to get the blame for the bursting of the stock market bubble. But it was Trump who introduced a large unfunded tax cut that made unavoidable the interest rate increases that have now brought down the stock market, writes Desmond Lachman.
On the sidelines of the G20 meeting at the beginning of December, US President Donald Trump and Chinese President Xi Jinping agreed to suspend announced tariff increases for 90 days – from 1 January to 1 April 2019 – while undertaking negotiations to avoid a trade war, writes Joergen Oerstroem Moeller.
The US administration should reconsider its decision to freeze its IMF quota and help find a solution for the US, the Fund and the world, writes Mark Sobel. This could include a modest overall increase in IMF quotas, maintaining the US New Arrangements to Borrow position, and boosting China's quota share.
The European Central Bank has decided on a gradual approach to adjusting its reinvestments of maturing bonds according to its adjusted capital key. Now that its four-year €2.6tn bond-buying programme is coming to an end, there are more overt and effective ways to stabilise monetary union, through a more concentrated form of risk-sharing, writes Marcello Minenna.
'Even if IMF resources are ample at this moment, that is no guarantee of the future. Turning our backs on a fund quota increase will be seen across the globe as another US snub of multilateralism, global institutions, and a rules-based order,' said Mark Sobel, OMFIF US chairman, quoted in the Financial Times.
Something is going very wrong with the US administration’s effort to reduce the US trade deficit. The US trade deficit stands at its highest level in the past 10 years and shows every sign of rising. There are at least three reasons why the US trade deficit is widening and will continue to do so despite increased import protection, writes Desmond Lachman.
A power vacuum seems likely to arise in London over the coming weeks, writes Joergen Oerstroem Moeller. Unless Prime Minister Theresa May miraculously reimposes her will over the Conservative party and convinces parliament of the value of her EU withdrawal deal, Britain will drift towards a no-deal Brexit.
Haihong Gao, OMFIF advisory board member and director of the Research Centre for International Finance in the Chinese Academy of Social Sciences, joined OMFIF Chairman David Marsh and Programmes Manager Ellie Groves to discuss key developments for the renminbi heading into 2019.