How Powell and Xi Can Salvage Global Growth
The Fed and Chinese officials recognize the dangers to their respective economies. That’s encouraging for the world.
Change of tune.
Photographer: Raul Ariano/BloombergThe salvage team received the memo. World growth won’t be great next year, but nor is 2024 destined to be a write-off. Key officials in the US and China have recognized the risk of a sharp slowdown and are beginning to recalibrate their stances. The messaging is welcome. Deeds will matter next.
The week belongs to optimists, so far. Federal Reserve policymakers questioned the need for additional hikes in interest rates and China is considering fresh stimulus to aid the country's sub-par recovery. I hesitate to call the comments from Fed Vice Chair Philip Jefferson and Dallas Fed President Lorie Logan dovish; an interest-rate cut isn't in sight. There has been, though, a retreat from hawkish positions. The tightening in financial conditions — specifically, the climb in bond yields — will minimize whatever work the Fed has left. It may negate the need for any.