World economy to continue recovery

Like other market participants, we expect inflation to remain low and the world economy to continue to recover in the coming months. Although we are below consensus on US growth, our 2.25% forecast for this year still represents a perfectly reasonable rate of expansion. Importantly, this combination of growth and inflation will allow interest rates to remain low: for example, our estimate of US short-term interest rates of 2.25% at year-end represents a very low level of real (after inflation) rates and an exceptionally low level in nominal (headline) terms. The economic backdrop in ...