Shifting up another gear?

The world economy has continued to experience fairly rapid growth. Manufacturing output and global trade have picked up, and the latest business surveys and measures of consumer confidence have remained strong. The economic expansion is broad-based, with advanced economies all benefitting and most emerging economies gaining momentum. At the same time, there is little evidence of a pick-up in inflation. Financial markets have generally taken the Fed’s plans to unwind QE and the ECB’s plan to taper their asset purchases in their stride. Admittedly, some equity markets have fallen in recent weeks, but they are still well up on a year ago, as might be expected given the pace of global growth.