Darkening Global Outlook, Central Bank Pivots Signal More Turbulence

• Growing signs of lackluster growth and risks emerging in the job market overshadowed a gathering of global policymakers at the U.S. Federal Reserve's annual Jackson Hole conference, highlighting the changing trajectory of monetary policy as U.S. and European central banks eye cutting interest rates.
• Even as the focus of U.S. and European central bankers shifts from high inflation to softening job markets, the Bank of Japan reaffirmed its resolve to wean its economy off decades of monetary support amid growing signs of sustained price growth.
• The divergence in policy direction, coupled with lingering weakness in China, the world's second-largest economy, points to turbulent times for the global economy and financial markets. The policymakers who met at the annual economic symposium already had a taste of what may come when weak U.S. jobs data earlier this month stoked recession fears and triggered a market rout aggravated by the BOJ's surprise rate hike in July.
• So far, many analysts agree with the International Monetary Fund's projection that the global economy will achieve modest growth in coming years as the U.S. achieves a soft landing, Europe's growth picks up and China emerges from the doldrums.
• However, such rosy projections rest on shaky ground, with doubts emerging over prospects for a U.S. soft landing, euro-zone growth failing to revive, and China suffering from sluggish consumption.

(Source: Reuters)