This context for investment, and global economic prospects more generally, is obviously heavily influenced by developments in the two biggest economies in the world. The trade war that the United States and China are waging is damaging not only their own prospects, but also those of the rest of the world.3 Now, we had been expecting the global economy to slow last year.
The medium term time horizon over which the transmission mechanism of monetary policy operates mean that monetary policy decisions must be made on the basis of a forecast of future developments in the economy.