Americas: Macroeconomic overview

July 2016

The United States Federal Reserve has refrained from hiking its benchmark interest rate, partly as a result of the UK’s decision to leave the EU.

The Fed has four more opportunities to set interest rates this year, but the Brexit vote means it is unlikely that it will make any aggressive hikes. The central bank has also slashed its 2016 forecast for US GDP growth and increased its inflation projections, further reducing the likelihood of a substantial rate hike this year. The Fed now expects US GDP to grow by 2% in 2016 compared with its previous forecast of 2.2%. It also expects US personal consumption expenditures inflation to be 1.4% in 2016 compared with its previous forecast of 1.2%.