Key highlights of the week ended November 27

Source: Dukascopy Bank SA
US
The world's number one economy grew faster in the third quarter than originally estimated. Gross domestic product rose at a 2.1% annualized rate, compared with the initial reading of 1.5%, according to the Commerce Department. The consumer spending was the biggest contributor to growth as cheap gasoline and greater job security gave more confidence to spend. Household consumption, which makes up almost 70% of the economy, grew at a 3% annualized rate, slightly less than the previously estimated 3.2%. The final release of GDP data for the third quarter is scheduled for late December. Steady growth in the world's largest economy helps to create jobs and push down the unemployment rate, which Fed policy makers are watching as a gauge of how much slack is left in the labour market. Fed officials are considering hiking the benchmark interest rate as soon as next month, if data continue to indicate that the US economy can weather tighter monetary policy. Goldman Sachs predicts the Fed to hike four times next year, raising the federal funds rate by 100 basis points.

UK
Testifying before a treasury select committee, BoE Governor Mark Carney reiterated that the current, record-low interest rates in Britain are likely to continue "for some time", explicitly signalling that the central bank is in no hurry to raise rates. UK interest rates have remained at 0.5% since March 2009. Given the current weak pace of growth and persistently low inflation, most economists do not expect the BoE to hike rates until at least the second quarter of 2016. British consumer prices dropped by 0.1% in October, and are expected to stay close to zero for a few more months. 
Delivering the Autumn Statement and Spending Review, Chancellor George Osborne said the British economy is expected to expand by 2.4% this year. Moreover, growth for the next two years has also been revised up to 2.4% in 2016 and 2.5% in 2017. Osborne underlined the fact that since 2010 no economy in the G-7 group has expanded faster than the UK. Most importantly, the growth has been sustainable and has not been fuelled by an irresponsible banking boom.

Japan
Minutes of the latest BoJ meeting showed that officials reiterated the view that the world's third biggest economy continued to recover moderately, despite exports and production remaining more or less flat due to the effects of the slowdown in emerging markets. On the domestic side, the central bank saw private consumption staying resilient and labour market conditions continuing to improve steadily. With regards to inflation, some members of the BoJ's policy board assumed that an output gap was one reason Japan's economy was taking longer to meet inflation targets, highlighting a lingering worry that the delay in reaching the 2% inflation target meant that QE had been ineffective. At the meeting on October 30, the BoJ pushed back the timing of hitting its 2% goal by six months to the second half of fiscal 2016 due to weak oil prices.

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