For the world as a whole, the economic impact of the UK’s vote to leave the European Union should be negligible. Nonetheless, growth looks set to remain lacklustre in advanced economies. And with inflation below target, central banks in the euro-zone and Japan are likely to loosen monetary policy further. The key exception is the US, where inflation is on course to rise sharply in the coming year or so, prompting the Fed to raise rates by more than markets anticipate. Meanwhile, although we do not expect a hard landing in China, medium term risks there are mounting.
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