​(Communicated by the BOI Spokesperson)

The state of global economic activity portrayed by recent indicators is mostly positive, though there is continued uncertainty regarding political processes and their economic ramifications. Growth forecasts for some advanced economies were revised slightly upward, there was improvement in the rate of world trade growth, and sentiment indices remain elevated. In the US, positive data were published regarding the labor market, personal consumption, the industrial sector, and the real estate industry, and core inflation indices are around the target. The Federal Reserve raised the federal funds target rate, and is expected to raise it twice more over the course of the year. In Europe as well, data were positive with regard to employment, manufacturing, sales and expectations of future activity. However, core inflation remains relatively low and accommodative monetary policy continues. Purchasing managers indices in emerging markets pointed to optimism regarding the development of economic activity, though growth forecasts for some were reduced. Data on economic activity published in China indicated stable growth. Energy prices declined in the past month against the background of increased supply, but the decline did not offset the upward trend of the past year.

Based on the Research Department’s updated macroeconomic forecast, GDP is expected to grow by 2.8 percent in 2017 (although the growth rate net of the effect of fluctuations in vehicle imports is expected to be higher) and by 3.3 percent in 2018. Inflation is expected to be 0.7 percent in the coming year (ending in the first quarter of 2018), and to converge to within the target range in the second quarter of 2018. The monetary interest rate is expected to remain at its current level of 0.1 percent throughout the coming year and to increase gradually from the second quarter of 2018.