Expects U.S. Growth North of 3%: Garzarelli

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Dec. 05 (Bloomberg) -- Francesco Garzarelli, Co-Head of Macro and Market Research at Goldman Sachs, discusses what to expect from central banks worldwide and his subsequent economic outlook. He speaks on Bloomberg Television’s “On The Move.” (Source: Bloomberg)

At the european central bank.

They influence your topics for 2014. inflation is the centerpiece for deliberations.

The trend has been lower and lower the scary part is that services are declining and the bigger picture is one of progress and removing inflation in the area they cannot compensate for what is happening in france and italy.

That will set the tone for the interest decisions and rates will be low for longer.

Do think there is extra stimulus?

They want extra stimulus to combat the inflation.

A continues to play a big role in their discussion and is stronger.

It is the case that the eurozone is a relatively closed economic area with a lot of inflow from overseas.

People are trying to rebalance their portfolios and not put pressure on the euro.

Everything that goes in the direction of this can be read as a fiscal expansion.

That drives the currency up and they will think about the euro.

They will wait to see what the fed does to the dollar.

We are expecting a federal taper in 2014. what does that mean for the team?

They are positive.

The idea is that the united states fed will let go and manage that directly.

They have different successes, as you know.

We had a low interest rate and it went back up.

The strategy is turning towards keeping the structures aligned to where they think it should be . that is a concept that depends on the economy and they are trying to do that by maneuvering the front end of the curve.

This guidance concept is something that they are likely to strengthen as they taper.

You expect it to accelerate more than three percent.

How would you play with currencies?

The currency puts the aussie- dollar against the u.s. dollar.

We will have a gradual differential in real rates going on and we think that the central bank will find itself needing to cut rates more.

The mining cycle will turnover and it will not compensate enough for other parts of demand and exports.

That is the main proposition.

They have been talking about it being too strong.

It is difficult to disagree.

That is how we think they will engineer.

We use that as a henge for a long essay and p position.

We are positive on development in equities.

What you think is the more controversial call?

What is the one where you think you have to think about it a little bit more than the others?

I would say there are two.

One is around an idea of looking and we have come to a low volatility -- volatility environment.

We know why that is the case.

The economy is stronger and improving.

That is why people are lowering the forecasts.

A lot people are saying the same things and the volatility is down.

The central banks are in the markets aggressively.

Whether or not that will last all of 2014 is a question.

And for the first six months?

More likely than not.

The economy will pick up stream -- steam and volatility is something that people are starting to think about whether or not that is appropriate.

We will take a short break and continue our conversation with the head of markets research.

Manus cranny will give us an update in two minutes.

This text has been automatically generated. It may not be 100% accurate.

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