Kuwait: December 12, 2017
INTERNATIONAL: TAX CUTS COULD BOOST US GROWTH; BREXIT DEAL MARKS PROGRESS
An already robust global economic picture improved still further in recent weeks. Data in Europe and Japan firmed noticeably, and continued to come in strong in the US. The outlook in the U.S. also benefited from the Senate’s passage of a historic tax reform bill, though a final reconciled measure will require some additional work. Meanwhile, the UK made significant progress on a Brexit agreement with the EU, removing some of the dark clouds on the horizon. With that, equities continued to perform well, hitting fresh highs. Despite the robust outlook for growth, inflation continued to lag behind.
Global equities continue to perform well, posting a gain of 1.8% in November, as measured by the MSCI All Country World Index, while in the U.S., the S&P 500 and the Dow Jones closed up 2.8% and 3.8%, respectively. President Trump nominated Jerome Powell to chair the Federal Reserve, bypassing Janet Yellen for a second term. Powell is expected to maintain similar monetary policy if the economy continues its steady growth. “From today, four rate hikes through the end of next year is still kind of my base view,” San Francisco Federal Reserve President John Williams said during a recent economics forecast lunch. He continued to say “We need to get from here to roughly 2.5 percent fed funds rate over the next couple of years.” The Fed’s current short-term interest rate is between 1% and 1.25%, and a hike of 0.25% is expected in December.