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ABA Banking Journal Podcast

Jan 17, 2020

The U.S. economy is continuing to “cruise” ahead, though growth is likely to be more moderate in the year ahead, says Citi Global Chief Economist Catherine Mann on a bonus episode on the ABA Banking Journal Podcast. Mann recaps the consensus forecast from the American Bankers Association’s Economic Advisory Committee, which projects a 1.9% growth rate in GDP for 2020, and personal consumption rising just over 2% through 2021.

What does that mean for monetary policy? Mann says consensus among the committee was that the present “Goldilocks” scenario—with interest rates being “just right”—will prevail, with no rate cuts or hikes likely in 2020. Beyond that, economists were less certain. “By 2021, the dynamics start to develop in such a way that either inflation retreats—and the Fed would cut—or inflation starts to accelerate and maybe the Fed would hike.” Or, she adds, things could remain steady.

Mann also discusses the committee’s views on credit quality and availability, noting that at this stage in the credit cycle, “it’s important to keep your eye on the ball” with respect to credit standards and underwriting.