The debate on how to improve the european union’s fiscal rules will come into full swing this year. Literature on the topic is leaning towards setting ceilings on primary spending growth, calculated
in such a way as to allow a gradual reduction of the debt/GDP ratio, under a scenario of GDP growth in line with the trend of potential GDP. However, implementing the reform could be a slow
process, with Member States disagreeing on its scope. Probably, 2023 will again be managed base on the european commission’s Commission’s interpretations, waiting for a compromise to be reached.
United states – Ready for the (rates) liftoff! Labor market data indicate that maximum employment has been reached, in our view, although 3.6 mln jobs are still missing compared to
February 2020. This shortfall is due to supply shortages and cannot be filled in the short to medium term. We await the first hike in March and raise the projected rate path, to 4 hikes in 2022. The rates’ path will be influenced by the balance sheet reduction process, due to start in the summer, and its impact on financial conditions, still highly uncertain.
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