Bank of America shaves outlook for US GDP next year
One of the US' major banks has today revised down its economic outlook for 2017 following Donald Trump's surprise triumph in the US presidential elections.
In a note from Bank of America Merrill Lynch Global Research, the bank stated that, thanks partly to the large levels of uncertainty surrounding the new president-elect's policies, it was knocking 0.5 of a percentage point from its first and second quarter GDP growth outlook for 2017.
The reduction means the bank's GDP forecast for 2017 is now lowered from 2.1 per cent to 1.8 per cent.
Looking to interest rates, the banking giant is now less confident about rate hikes and felt odds of a December rise are now just one in three.
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For equities, the bank predicted any potential downturn to the S&P 500 in the aftermath of the result "may be more pronounced and long-lived than post-Brexit vote", although it maintained its already cautious outlook for a year-end target of 2,000.
However, Bank of America was less certain about how the medium-term would shape up, as potential problems, such as as troubles over trade deals, could be balanced out by possible benefits, such as ease in passing policies thanks to less gridlock in government.
"We're going to wait to see the policy that might come through," said Michelle Meyer, head of US economics, on a press call.
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