KEY TAKEAWAYS OF THE WEEK

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Economists' insight: The Fed steals Donald Trump’s thunder

Economists’ insight: Wishful thinking by the Bank of England (p. 1)

›       The Bank of England (BoE) did not change its monetary policy last week. In its inflation report, it revised up its growth forecasts and revised down its inflation forecasts for 2018 and 2019

›       This scenario, which we consider rather optimistic given that consumer spending has already slowed considerably, is based on the BoE’s expectation that business investment will pick up

›       According to our forecasts, growth should continue to slow, which could further weaken the pound

Focus on the United States: Real wages set to rise at the end of 2017 (p. 4)

›       Unemployment reached 4.4% in April, yet real wages grew by only 0.2% year on year in the first quarter of 2017

›       However, the drop in underemployment, the shortage of qualified workers and rising inflation should put upward pressure on nominal wages

›       In addition, rising domestic demand at the end of 2017 will give companies the pricing power they need to raise wages and selling prices, according to our projections

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