HIGHLIGHTS OF THE WEEK
Economist insights: The FOMC minutes confirmed the continuation of the gradual monetary tightening, euro zone PMIs edged lower (p.1)
› In the US, the minutes of the Federal Reserve meeting indicated that the FOMC members anticipate an acceleration in GDP growth and a gradual rise in inflation…
› …which supports our scenario according to which the Fed will make three 25bp hikes in its fed funds rate in 2018, bringing it to 2.25%
› In the euro zone, the purchasing managers index, despite remaining at a high level, indicated a dip in confidence in February, suggesting a slowdown in GDP growth at the start of 2018
Focus US: Despite unemployment at 4.1%, the US labour market is not yet saturated (p.3)
› While the unemployment rate has reached historically low levels, the participation rate of the 25-54 age bracket is still low and there is still a large number of involuntary part-time workers
› Slack in certain variables of the US labour market backs our analysis according to which the acceleration in wages should be moderate in 2018
› One of the risks on the upside in terms of wages would be the rapid expansion of the construction sector, where wage growth is already high despite a significant unemployment rate
Weekly Economic Insights - February 26th 2018 - FOMC, eurozone PMI & US labour market
