The global economy is likely to stabilize at around the current growth rate. U.S. growth settled in at a slower pace in the third quarter, with consumer spending helping lift the economy while manufacturing and business investment faltered. The Federal Reserve lowered the benchmark federal funds rate to a range between 1.5% and 1.75% in October, the third reduction since July, and hinted at a pause in its policy easing. The United States and China are in talks to finalize an initial — or phase one — trade deal, helping diffuse existing tensions. Against this backdrop, the likelihood of a recession remains low.
Elsewhere in the world, the United Kingdom is getting ready for snap elections in mid-December. The vote comes amid continued divisions within Britain over its membership in the European Union (EU) and Prime Minister Boris Johnson's exit plan. We expect a "soft Brexit" vision to prevail. In Japan, policy makers continue to grapple with slowing growth. The Bank of Japan (BoJ) plans to keep its policy rates at the current levels or reduce them so long as uncertainties remain about reaching the central bank's 2% inflation target.