Saturday, 28 January 2017

Global Economy Weekahead - Wait-and-see central banks to play second fiddle to Trump

U.S. President Donald Trump will again be centre of attention in the coming week with any policy statements, having helped put the Federal Reserve, Bank of England and other central banks in wait-and-see mode. Trump, inaugurated as 45th president on Jan. 20, pushed Republican lawmakers on Thursday for swift action on a sweeping agenda including his planned U.S.-Mexico border wall, tax cuts and repealing Obamacare. 

The White House also floated the idea of imposing a 20 percent tax on goods from Mexico to pay for the wall, sending the peso tumbling and deepening a crisis between the two neighbours. "Markets will be focused on whether he (Trump) continues to show a high degree of commitment to implementing his pre-election promises and whether he gets onto detailing his fiscal plans. 

A rise in protectionist trade policies is the biggest risk facing the global economy. Trump has already withdrawn from the Trans-Pacific Partnership (TPP) and threatened to renegotiate - or even scrap - the North Atlantic Free Trade Agreement (NAFTA) with Mexico and Canada. 

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