We have written about this before, but it bears repeating today. One of the reasons the FOMC felt comfortable going ahead with the balance sheet normalization plan and signaling another rate hike before the end of the year was the significant progress that has been made on global economic growth and the improving global economic outlook for 2018. Concerns about the stability of the global economy, from a China hard landing to Eurozone disintegration, have slowed the Fed’s ability to normalize U.S. monetary policy in the past. However, today it appears such fears are a far more distant concern.
In fact, the global economy has only recently been hitting its stride in this expansion after many false starts and numerous setbacks. The global economy is now more or less firing on all cylinders. Really for the first time in this expansion, we are experiencing a synchronized global growth rebound where central bank monetary tightening is one of the emerging risks.
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