The US is enjoying a strong rebound after its weather-induced slowdown, the UK has extended its period of rapid growth into Q2 and the recovery in the euro-zone has gained momentum. On the other hand, activity in Japan seems to have slumped in April due to the consumption tax hike, and there is no sign that the period of slower growth in China is coming to an end. Meanwhile, global inflation remains very low and there is still likely to be a period of damagingly low inflation – or even outright deflation – in the eurozone. This environment should allow central banks to continue withdrawing policy stimulus only gradually in the US and to announce additional stimulus in Japan and the euro-zone during the coming months.
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