By Biznomics Research Team
Monetary Policy Dilemma Everywhere
Global Financial markets have turned their attention to the emerging split among monetary policy makers towards policy rate cuts. The Federal Reserve Bank of the United States reduced its policy rate by 25 basis points, but indicated further rate reductions could be on the card as members split on what to do next. Reduced its benchmark overnight lending rate range from 2-2.5 PCT to 1.75-2 PCT
The US President Donald Trump has gone on record that Federal Reserve Bank is risking US competitiveness by keeping interest rates substantially higher than most of the developed countries.
Oil Prices Back to near normal
Brent Crude price which soared to near USD 70/bbl after the attack on Aramco oil facility declined to near USD 60/bbl when Saudi Arabia announced that they will ensure no shortage in medium term. In the background of slowdown in global economy, the attack on Aramco oil infrastructure facility did not reflect sustained pressure on the market demand. The surprised drone strike at the Saudi oil facility on 14th September halt the oil production impacting nearly 5 million barrels of crude processing a day which is 5 PCT of world’s daily production. The US blamed Iran for the attack.
US-China Trade Tension
Us and China delays further tariff increase pending high level talks between the two countries.
The Wall Street journal on 19th September reported that the World economic growth remain low in 2020 and possibly beyond if trade conflict spills over into other aspects of two country economic relationships. OECD expressed its worry over sliding economic growth among major trading partners. Slowing trade flows and business investments are signs that the trade disputes are taking a toll on global growth. The US-China official are due to meet in the third week of September to hold talks ahead of high level trade talks in October. Several rounds of tariffs have been levied by two countries on a larger percentage of commodities traded between two countries.
US Hit USD 1 trillion budget deficit
The US budget deficit passes USD 1 trillion mark for 2019. Reuters reported that the US government posted a USD 200 Bn budget deficit in August 2019 raising the eight-month budget deficit towards USD 1 trillion.