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  • Neil Williams
    The US and UK are already running highly negative interest rates, when QE is considered, according to a report by the International business of Federated Hermes.
  • Ingrid Holmes
    Why stimulus measures should be combined with efforts to tackle climate change
  • Neil Williams
    In hard macro terms, the tragic spread of the coronavirus provides another argument for keeping policy rates close to the floor, and the ‘punch bowl’ of central-bank liquidity filled.
  • Neil Williams
    This marks the tenth anniversary of our quarterly Economic outlook.
  • Neil Williams
    In his latest Economic outlook, Neil Williams, Senior Economic Adviser to Hermes Investment Management, argues that Japan-style deflation is becoming an increasing possibility elsewhere.
  • Neil Williams
    Political risk is ‘trumping’ economics, with a confluence of factors such as populism...
  • Neil Williams
    In his Q4 Economic outlook, Neil Williams, Senior Economic Adviser to Hermes Investment Management, argues that even a decade after the fall of Lehman Brothers - central banks will be slow to lift a tide of liquidity still hiding the rocks beneath.
  • Neil Williams
    In his latest Quarterly Economic Outlook, Neil Williams, Senior Economic Adviser to Hermes Investment Management, argues that markets are still taking a ‘glass half full’ view of the macro outlook, with little real consideration of the new risk emerging. Until now, this has made sense, with speculation the US would open the fiscal box having justified ‘reflation trades’. However, while better for growth (see chart 1), markets are ignoring the darker cloud looming. Rather than financial distrust, we may need to brace for political distrust with the threat of beggar-thy neighbour policies - from the US to anti-European populism - rising. 2018 could be a ‘year of two halves’... In which case, 2018 could be a year of two halves, where stimulus- euphoria gradually gives way to stagflation concern. Helpfully, the trade-off is that policy rates stay lower than many expect. As chart 2 attests, the world’s appetite for international trade has, as a share of GDP, more than doubled in the past 50 years. Nevertheless, without care, the unhelpful jigsaw piece of retaliatory protectionism from the 1930s, might come crashing into place. In 1930, it was triggered by the Smoot-Hawley reforms that raised US tariffs to up to 20% on over 20,000 imported goods. This hit the US’s relatively small number of trading partners, most notably Canada and Europe, and prolonged the depression.
  • Neil Williams
    •While 2017 was again dominated by geopolitical risk, none of that was allowed to seep into financial markets. Reflation trades prevail. Yet, the frustration for central banks is that recoveries are failing to generate enough inflation to trigger their usual reaction functions. •If they truly want to get their ‘powder’ back, in terms of reclaiming policy rates while core inflation stays tame, the spirit, if not the letter, of the Fed’s dual mandate may make sense for others too. •While this may be deemed ‘hawkish’, it would be more than offset if we need to brace for more political distrust: with the threat of beggar-thy-neighbour policies - from the US to an upsurge of anti-European populism - a major risk still unpriced by markets. •Amid these forces, our macro outlook is based on five core beliefs. First, despite ‘muscle flexing’, the road to normalisation will be long & slow. Real rates will stay negative, with ‘peak’ rates ending up below what we’re used to. The question is how to drain the liquidity ‘sink’ without unintended consequences.
  • Neil Williams
    As the BoE raised rates for the first time in a decade the pound plunged and we saw the worst day for sterling since the post-Brexit plummet. Will sterling continue to struggle? And are there more rate hikes on the horizon? Neil Williams, Group Chief Economist at Hermes Investment Management, gives his take on the Bank of England Inflation Report and says the hike was a one-off muscle flex from the BoE giving them more powder to use in an economic slowdown.
  • Neil Williams
    Ten years after the first glimpse of crisis, & major economies have recouped their GDP. But, despite ‘muscle flexing’, the road to policy normalisation will be long & slow, with the prospect of another two years of negative real rates in the US, UK, Japan, & euro-zone. Our analysis suggests that by sustaining its QT programme, the US Fed could ‘take out’ as much as 130bp of further rate hikes by 2019. US rates, when they peak, should be far lower than we’re used to.
  • Neil Williams
    With UK growth forecasts downgraded and interest rates kept on hold, is Brexit already damaging the economy? Carney said the consequences of Brexit are starting to build, warning that the UK is beginning to adjust to an uncertain EU relationship. Hermes’ Neil Williams examines the damage of Brexit and why they didn’t undo the safety net rate cut. Mark Carney, Bank of England Governor, delivers the quarterly Bank of England inflation report.