Inflationary pressures are also expected to remain largely contained by a strong dollar and lower energy costs. The Fed will therefore face a less difficult trade-off between above-target inflation and consolidating growth. As such, the base case appears to one of a gradual normalisation of the Fed’s policy rate.
The UK recovery also appears to be on track, with the economy growing 2,8 per cent in the third quarter and the unemployment rate falling faster than expected, reaching 6 per cent at the end of the third quarter.