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Edward Bell - Senior Director, Market Economics
Published Date: 23 May 2023
The US remains without a deal on the debt ceiling though talks between US president Joe Biden and Republican speaker of the house Keving McCarthy were described as “productive.” Biden said the only way to move forward was for a “bipartisan agreement” though disagreements remain on where to cut spending and on tax relief for some segments of the economy. Adding to the necessity of getting a deal done soon, US Treasury secretary Janet Yellen said the government could run out of money as soon as June 1.
Several Fed speakers showed they were leaning toward tightening policy even more at upcoming meetings, even as Fed chair Jerome Powell said the FOMC could wait for the flow of incoming data. James Bullard, president of the St Louis Fed, said there could potentially be “two more moves this year” and called for them “sooner rather than later.” Bullard had been an outspoken hawk on rates last year but does not vote on the FOMC in 2023. Meanwhile, Neel Kashkari of the Minneapolis Fed said a pause or a hike in June was “a close call” and that it was important for the Fed to not signal “we’re done.”
From the European Central Bank, Governor Pablo Hernandez de Cos, said the ECB still has “some way to go” and that rates will need to be in a restrictive stance for “a long time” to help meet inflation targets. Markets are nearly fully pricing in at least two more 25bps hikes from the ECB at their June and July meetings.
S&P Global estimates that Dubai’s debt level will fall to 51% of GDP in 2023, down from nearly 80% in 2020, thanks to “robust economic growth.” S&P estimates GDP growth of 3% for Dubai this year while also highlighting structural reforms that should help to support longer-term, more sustainable growth.
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