On this Morning Macro episode: a look ahead to the US Fed rate rise that markets expect tomorrow – and how fiscal policy should react to the upswing in US economic fortunes. Plus: a discussion of Brexit, trade, and oil prices dynamics.
Harry Colvin, from Longview Economics, explained to Sigrún why financial markets are so sure the US Fed will put up interest rates. He also had some thoughts on one of the hottest topic in the Brexit debate: the idea that the UK outside of the EU desperately needs trade deals. Well, Colvin argues, since the UK economy is mostly driven by consumer spending, trade deals aren’t quite as important as they’re cracked up to be for the UK. And lastly, oil prices took a dip recently but Harry argues that the trend for oil prices is still a steady rise.
In the second half of the show, US economics professor Ed Dolan tells Tom of his concerns that US fiscal policy will continue a long-standing trend of being pro-cyclical, as the Trump administration plans a wave of tax cuts just as the economy is starting to reach full capacity.