Its monthly poll of consumer confidence fell from 131.4 to 124.1 as consumers reported they were more pessimistic about the future. “If activity softens more than expected or if inflation and inflation expectations run too low, then policy may have to be left on hold – or perhaps even loosened.”Įarlier this week the Confidence Board reported a sharp dip in consumer confidence. “At the moment, the risks from the downside scenarios loom larger than those from the upside ones,” Charles Evans, the president of the Chicago Fed, said on Monday in Hong Kong. The Fed has stopped raising interest rates, worried by signs that the long-running economic recovery is running out of steam. The US Federal Reserve and many economists are predicting slower growth in the near future. Imports were also revised lower amid continuing trade tensions between the US and its major trading partners. The fall came as consumer and government spending were revised down. The US commerce department said its full-year estimate for 2018 was that the economy grew at 3%. After months of meetings, Reuters reported that Beijing had tabled fresh plans to limit technology transfers and open Chinese markets to foreign competition. Stock markets remained stable after it emerged negotiators on both sides of the US-China trade talks were edging closer to a compromise deal. The hint had the desired effect, pushing the currency down 1.6% to $0.6801. Pressure also surfaced on Australia and New Zealand, which hinted at a rate cut to prevent its currency increasing and driving domestic exporters out of business. German bond yields spiralled lower into negative territory – meaning investors must pay to lend the German government money – after the ECB president, Mario Draghi, said in a speech on Wednesday night he may need to cut the effective base rate should the outlook weaken.
Consumers remain gloomy, and service sector confidence also dipped. Emphasising the sense of gloom, the European commission’s gauge of economic sentiment fell, dragged down by rising pessimism among industry bosses in February.