Economicandmarketoutlook2026

Reshaping

AbusinessofMarshMcLennan

Risks

Inflation

Markets

Executive

Economic

Private

Monetary

Appendix

growth

markets

summary

policy

Reshaping

Executivesummary

ByRupertWatson,GlobalHeadofEconomicsandDynamicAssetAllocation,Mercer

2025hasfeltlikeahugelyconsequentialyear,and2026islikelytofollowsuit.PresidentTrumpseemstohaveputtheUSonadifferentpathtothattrodsince1945,rippinguptheoldeconomicconsensus.Theaftermathofthisadministrationwillbefeltforyearstocome,anditssuccesswillonlybeabletobefullyjudgeddecadesfromnow.Theexplosive

growthofartificialintelligence(AI)mayheraldthestartofanewera,althoughitsconsequencesareunclearatthisstage.Allwecansaywithcertaintyisthatitislikelytomatterfromaneconomicandfinancialmarketperspective.

Ofcourse,asYogiBerraoncesaid,“it’stoughtomake

predictions,especiallyaboutthefuture,”butasinvestorswemusttry,andourannualoutlookoffersourthoughtsontheglobaleconomyandmarkets.In2025,thetwo

bigdevelopmentswerePresidentTrump’stradeagenda,which,aftermuchalarmatthetime,seemstohavehadonlyamodestimpactongrowth,andtheongoingAI

boom.Theformermayfadefurtherintothebackgroundasaninfluenceontheglobaleconomy,whileAIwill

continuetoloomlarge.

Weexpecttheglobaleconomytostrengthenalittlein

2026astradeheadwindsfadeandmonetaryandfiscal

policyloosensatthemargin.IntheUS,wearelikelytoseethecontinuedslowpass-throughoftariffstoconsumer

prices,hurtingrealincomeandthusrealconsumption.

However,theOneBigBeautifulBillAct(OBBBA)1shouldprovidefiscalsupport,whilestrongequitymarketsoverthelastfewyearsshouldfurtherimprovehousehold

balancesheets,providingmorespendingpower.Lower

interestrateswillalsohelp.Atthetimeofwriting,the

labormarketisshowingsignsofweakness,butwedonotexpectamaterialriseinunemployment,especiallyiftheeconomystrengthensslightlyasweexpect.

Investmentislikelytoremainstrong,drivenbytheAIboom.ThesumsinvolvedarehugeandarelikelytobenefittheUSandothercountrieswherethe

infrastructurebuild-outisunderway,aswellasthosecountriesexportingtheunderlyinghardware.

Theeuro-areaeconomyshouldalsostrengthenalittle,supportedbyinvestment-ledgrowthinGermanyonthebackofitsinfrastructureanddefensespendingplans.

Whileeconomicgrowthintheeurozoneislikelytobe

betteroverthenextfewyears,itremainstobeseen

whetherthisgrowthwillbestrong.Muchwilldepend

onwhethertheregionimprovesitscompetitivenessby

implementingsomeofthereformsrecommendedinthe2024Draghireport.Whilethemoodmusicontheneedforchangehascertainlyimproved,whetherthiswilltranslateintoactionisstillanopenquestion.

ThesamecanbesaidabouttheUK.Itsproblemsare

wellknown—poorlytargetedgovernmentspending,

lowinvestmentandproductivitygrowth,anonerous

regulatoryregime(includingplanning),andpoor

governmentfinances.ThenewLabourgovernmenthasrecentlybeguntograspthescaleofthechallenges,butinsufficientprogresshasbeenmade.Havingsaidthat,pessimismabouttheUKseemsoverblownand,aswe

explainedinarecentpaper2,wedonotseetheUKfacingafiscalcrisis.

WeremainoptimisticontheoutlookforJapanandthink

theeraofdeflationisoverandthatJapanmaybeenteringanewphasecharacterizedbystrongernominalgrowth

andimprovedcorporategovernance.

EconomicandMarketOutlook20262

EconomicandMarketOutlook20263

Inflation

Executivesummary

Economicgrowth

Monetarypolicy

InChina,thepropertycrisispersists,withconsumption

stuckatlowlevels.However,China’sleadinabroadrangeoftechnologiesshouldsupporttheeconomyoverthenextdecade,whileaneventualconsumerrecoveryshouldhelpproduceamorebalancedrecoveryinthefuture.AsintheUS,AIisakeyupsiderisk,withChineseAIproductsand

solutionslikelytodominatetheChinesemarket,althoughitremainstobeseeniftheycanbeexported.

Inthenear-term,weexpectglobalinflationtobe

containedsomewherenearcentralbanks’targets.IntheUS,whilewearelikelytoseeanear-termspikebecauseoftariffs,wewouldexpectthiseffecttofadearound

late2026through2027.Weseewagegrowthasthekeydeterminantofinflationoverthemediumterm.Thisis

drivenbyunemploymentandwagegrowthatnormal

levels,meaninginflationshouldbebackneartargetoncethetariffshockfades.Elsewhere,weseeUKinflation

fallingtoreachthetarget,whileChinaremainsneardeflationarylevels.

IntheUS,theFederalReserve(Fed)hasrestartedits

looseningcycle.Whileweseefurthercutsaslikely,wedonotthinkthisisthestartofamajorlooseningcampaign,asthelabormarketisunlikelytoweakensharply,whileinflationisexpectedtoremainmodestlyabovetarget.

Elsewhere,weonlyseeminorchanges,withtheBankofJapanhikinginterestratesfurtherandtheBankofEnglandinitiatingcuts.

Intermsoffinancialmarkets,ourconvictionlevelremainsguarded,inlargepartbecauseweexpectoveralleconomicgrowth,inflation,andmonetarypolicytoconverge

towardslong-termaverages.ItalsoreflectsthedifficultyofgaugingwhethertheAIboomisturninginto,orhas

alreadyturnedintoabubble.Thesumsbeinginvestedareenormousandthepayofffrommuchofthatinvestmentisstillmanyyearsaway.Ontheotherhand,wedothinkAIisasignificantgeneral-purposetechnology,likeelectricity,theinternet,cars,andtrains.Underanumberofplausiblescenarios,theAIboomisinitsinfancy,andwhilesomeoftheinvestmentwillinevitablysour,hugewealthcouldbecreatedinaggregate.

AIisalreadybeingusedtogreateffectinsomesectors,

andwewouldexpectitsusetoexpandsharplyoverthe

nextfewyearsasthetechnologyimprovesandcompanieslearnhowtouseiteffectively.Thisshould

Risks

Appendix

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Privatemarkets

supportequities,althoughitisworthrememberingthatwhilethetechnologyoptimistswererightinthelate

90sabouthowtheinternetwouldchangetheworld,

expensivetechnologystocksperformedverypoorlyoverthesubsequentdecade.Forthetimebeing,weareneutralonequitiesoverallandarewatchinghowfastandbroadAIusagegrows.

Elsewhere,governmentbondyieldsareatreasonable

levelsinmostpartsoftheworld,althoughwewould

expectlong-datedgiltyieldstodecreaseasinflation

andwagegrowthfallandfiscalfearsmoderate.Credit

spreadsareverytight,andwhileabenigneconomic

outlookshouldsupportcredit,itisdifficulttoseespreadstighteningmuchfromhere,whiletheycouldselloff

sharplyifsomethinggoeswrong.WecontinuetolikefrontiermarketdebtandAsianhigh-yielddebt,wherethefundamentalpictureremainspositive,withthe

strongperformancein2024and2025likelytoattractfurtherinflows.

Wehopeyouenjoythereport.

EconomicandMarketOutlook20264

Inflation

Executivesummary

Economicgrowth

Monetarypolicy

Economicgrowth

WethinkUSeconomicgrowthwillremainresilientandclosetotrendin2026,afteramodestslowdownattheendof

2025.Consumptiongrowthshouldberespectable,drivenbysolidincomegrowthandpositivewealtheffectsfromstrongequityreturnsoverthelastfewyears.Businessinvestmentshouldremainrobust,withanincreaseinAI-related

capitalspending.In2026and2027,hyperscaler3business

Risks

Appendix

Markets

Privatemarkets

investmentisexpectedtoreachcloseto$500billion(seeFigure1).TheOBBBAshouldalsosupportgrowthin2026byextending—andmakingpermanent—personaltaxcutsandprovidingincentivesforapullforwardoffurtherbusinessinvestment.TheUSFederalReserve(Fed)is

expectedtocontinuecuttinginterestrates,whichshouldsupportinterest-ratesensitivesectorsoftheeconomy.

Finally,byearly2026,weshouldhavemoreclarityaroundtrade,whichcouldreducepolicyuncertaintysomewhat.

Figure1.Hyperscalerbusinessinvestmentisexpectedtotop$450billionin2026

$600bn

$500bn

$400bn

$300bn

$200bn

$100bn

$0bn

20152016201720182019202020212022202320242025E2026E2027E

MetaMicrosoftOracle一NVIDIAGoogleAppleTeslaAmazon

Source:FactSet,Mercer.DataasofSeptember30,2025.

Weexpecteuro-areagrowthtopickupaswemoveinto

2026.Weforecastasizeabletailwindfromincreased

Germangovernmentspendingonbothinfrastructureandthemilitary.Consumption,whichhasbeenweakoverrecentyears,couldstrengthenifhouseholdsdecidetospend

someoftheiraccumulatedsavingsandlowertheirelevatedsavingsrate.RecentratecutsbytheEuropeanCentralBankshouldalsosupportconsumersandbusinesses.Therewilllikelyberegionaldifferences,withFranceexpectedtobe

weakerandsomesoutherneconomiesstronger.UStradepolicywillbeaheadwind,whilepressurefromChina’s

dominantmanufacturingsectorissettocontinue.

TheUKeconomyshouldremainsoftin2026asfiscalpolicysupportfromH12025fadesandfiscaltighteningtakes

over.Risingunemployment,slowingwagegrowthandthelaggedeffectsfrompastinterest-ratehikeswillalsoweighonconsumptiongrowth.Businessuncertaintymayalso

remainelevatedduetoUStradepolicy,hamperingbusinessinvestment.However,wedonotthinktheUKisfacinga

fiscalcrisis,andwewouldexpectthesefearstodissipate,whichcouldsupportconsumptionandinvestment(see

Figure2).

EconomicandMarketOutlook20265

Inflation

Executivesummary

Economicgrowth

Monetarypolicy

Figure2.WeexpectUKfiscalfearstodissipate

%ofGDP

6%

5%

4%

3%

2%

1%

0%

Publicsectornetborrowing

2021

2022

2023

2024

2025

2026

2027

2028

2029

Source:UKOfficeforBudgetResponsibility(OBR),Mercer.LightblueshadedbarsindicateOBRforecast.Dataasof

October21,2025.

WeexpectJapan’seconomicgrowthtobemodestlyabovetrendin2026.Privateconsumptionshouldcontinueto

acceleratemoderatelyasrealandnominalwagegrowth

increases.Businesssurveysandcommentarysuggestthatbusinessinvestmentwillremainstrong.Thisshouldbe

supportedbynear-record-highprofitmarginsandthemostseverelaborshortagessincethe1980sbubble.Despite

recentdeclinesincorporateprofitgrowth,weexpect

firmstocontinueinvestinginlabor-savingareassuchas

digitalizationandAI.Externaldemandshouldpickupin

2026asmostmajoreconomiesbottomout.Finally,we

expectbothfiscalandmonetarypolicytobesupportiveofgrowth,butincreasesininterestrateswillreducetheextentofcurrentaccommodation.

Australianeconomicgrowthislikelytopickupin2026,

drivenbyrecentReserveBankofAustralia(RBA)interest-ratecuts,solidconsumerconfidence,anddecentincomegrowth.However,lowproductivitygrowthwillremain

aproblemfortheAustralianeconomy.NewZealand’s

economicgrowthislikelytobeweak,whileconsumptiongrowthisexpectedtoremaindepressedasunemploymentremainshighthrough2026asaresultofpooreconomicgrowthin2025.

WeexpectChina’srealeconomicgrowthtoremainbroadlyunchangedatcurrentlevelsin2026(seeFigure3).Wedo

Risks

Appendix

Markets

Privatemarkets

notexpectdomesticdemandtoreboundfromitsrecent

slowdownwithoutameaningfulincreaseinstimulative

policyorashiftinconsumersentiment.Whilehouseholdsavingsratesarehigh,theyareunlikelytobeputtoworkintheabsenceofacatalystsuchasaturnaroundinthe

housingmarket.Nevertheless,China’sgovernmentis

committedtosupportingproductivitygrowthandChinaremainsaworldleaderinseveralmajorhigh-techsectors.ChinaissupportingeffortstolocalizeAIcapabilitiesandbecomelessreliantontheUS.ExportstotheUSmayfall

further,althoughthisshouldbeoffsetbyexportstrengthelsewhere.Shouldtherebeasignificantgrowthslowdown,China’sauthoritiesmayrespondwithfurtherstimulus.

Figure3.Chineseeconomicgrowthislikelytoremainbroadlyunchangedthrough2026

10%

AnnualrealGDP(year-on-year)

8%

6%

4%

2%

0%

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

Source:Bloomberg,Mercer.LightblueshadedbarsindicateBloombergforecast.DataasofOctober28,2025.

Weexpectemergingmarket(EM)economicgrowth,ex-

China,toremaindecentin2026.Withafewexceptions,

monetarypolicyremainsloose,andEMsarelikelyto

continuebenefittingfromthepast(andpossiblyfuture)

weakeningintheUSdollar.Asianeconomies,especially

thosehigherupthevaluechainsuchasTaiwanandSouthKorea,shouldcontinuetoseetechandAIupsidesupportingexports.India’sGST4reformsshouldsupportconsumer

sentimentandbusinessearningsin2026.Meanwhile,LatinAmerican(Latam)economiesareexpectedtoseegrowthatmoresubduedrates,givenmoreelevatedinterestratesincertaineconomies,notablyBrazilandColombia.

EconomicandMarketOutlook20266

Inflation

Executivesummary

Economicgrowth

Monetarypolicy

Inflation

HeadlineandcoreinflationintheUSshouldriseinthe

neartermandremainelevatedin2026asaresultoftariffs,beforereturningtotargetinearly/mid2027(seeFigure4).Coreservicesinflation,ontheotherhand,shouldbenearimplicittargetlevels,withwagegrowthatgoldilockslevels.Market-basedmeasuresofinflationexpectationsremaininlinewiththeFed’s2%target.

Figure4.USinflationtoremainabovetargetin2026beforereturningtotargetin2027

CorePCE(year-on-year)

6%

5%

4%

3%

2%

1%

0%

Fedtarget

2020202120222023202420252026

Source:Bloomberg,Mercer.Dashedlineindicatesconsensusforecast.DataasofOctober28,2025.

Headlineinflationintheeuroareashouldremainnear2%.

Astheweaknessinenergypricesfallsoutoftheyear-on-

yearnumbers,thedeflationarydragfromthesepricesis

expectedtofade.CoreinflationislikelytocontinuetotrendtowardstheECB’s2%targetin2026,asaresultofsofter

wagegrowth,whichweexpecttodeclinebelow3%inthecomingquarters(seeFigure5).

Risks

Appendix

Markets

Privatemarkets

Figure5.EuroareacoreinflationisexpectedtotrendtowardstheECB’s2%target

Inflation(year-on-year)

6%

5%

4%

3%

2%

1%

0%

20192020202120222023202420252026

Source:Bloomberg,Macrobond,Mercer.Dashedlineindicatesconsensusforecast.DataasofOctober28,2025.

IntheUK,weexpectinflationtofallnotably.One-offfactors,suchasVATonindependentschoolfees,VehicleExcise

Dutyhikesandsomeotherregulatedprices,arelikelytofallfromtheyear-on-yearnumbers,whichshouldleadtolowerinflation.Slowerwagegrowthasaresultoflooseninglabormarketsshouldalsoleadtodecliningservicesinflation.

BankofEnglandsurveyssuggestwagegrowthof3%to3.5%,whichisroughlyconsistentwith2%inflation5.

EconomicandMarketOutlook20267

Inflation

Executivesummary

Economicgrowth

Monetarypolicy

InJapan,weexpectatemporaryslowingininflationratesbeforetheypickupagain,withthevirtuouscycleofwagegrowthandhigherpricessettocontinue(seeFigure

6).Labormarketconditionsshouldremaintightasthe

economycontinuestogrowabovepotential,whilelaborparticipationhaslimitedroomtoincreasefurther.Assuch,thestrongwagegrowthmomentumofthepastfewyears

Risks

Appendix

Markets

Privatemarkets

shouldcontinue.Wethinkunderlyinginflationwillbe

closetotheBoJ’s2%target.Nevertheless,bothheadline

andcoremeasuresarelikelytobebiaseddownwardsbyanumberofpotentialnewpolicymeasuresfromtheTakaichiadministration,includingcuttingtheVATonfoodtozerofortwoyearsandfreehighschooltuition.

Figure6.Japaneseinflationcontinuestobesupportedbyincreasedservicesinflation

5%

4%

3%

Year-on-year

2%

1%

0%

-1%

-2%

-3%

2016201720182019202020212022202320242025

SamesamplescheduledcashearningsCoreCPI(exfreshfood)(6mlag)

Source:Macrobond,Bloomberg,Mercer.DataasofOctober28,2025.

WeexpectinflationinAustraliatoremainatcurrentlevelsin2026,inlinewiththeRBA’stargetband.InNewZealand,whileinflationhasreturnedtowithintheReserveBankof

NewZealand’stargetband,itcurrentlyremainshigherthantheBankiscomfortablewith.

WeexpectChinatoremainclosetodeflationin2026asdemandandsupplyimbalancescontinuetogeneratedeflationarypressures.Onthedemandside,weaklabormarketconditionsandhousepricessuggesthousehold

demandshouldremainfairlyweak.Onthesupplyside,

overcapacityisbroad-basedacrossmostindustriesand

bothpublicandprivateenterprises.Whilepolicymakers

havesteppeduptheir“anti-involution”effortsaimedat

solvingtheovercapacityissue,wethinktheywillachievelimitedsuccessinthenearterm.Moreover,fundamentally,China’seconomywillrequirestructuralreforms,suchas

taxreforms,toredirectlocalgovernmentincentivesfromproductiontoconsumption,whichwillbeamulti-year

effort.

EconomicandMarketOutlook20268

Executive

Economic

Inflation

Monetary

Risks

Markets

Private

Appendix

summary

growth

policy

markets

WithinEMAsia,webelieveinflationwillremainrelatively

softin2026,thoughlikelyhigherthanin2025aspast

ratecutsmayboostgrowthandcreatesomeinflationarypressures(seeFigure7).InLatam,weexpectinflationto

tickdowngraduallythrough2026,thoughwithlevelsmuchhigherthanthoseofEMAsiaandlikelytoremainabove

target.

Figure7.Stabilizedinflationshouldallowforloosermonetarypolicy,ifneeded

10%

EMinflation(year-on-year)

8%

6%

4%

2%

0%

2007200920112013201520172019202120232025

Source:Bloomberg,Mercer.WeightedaverageofselectEMeconomiesyear-on-yearinflation.DataasofSeptember30,2025.

EconomicandMarketOutlook20269

Executive

Economic

Inflation

Monetary

Risks

Markets

Private

Appendix

summary

growth

policy

markets

Monetarypolicy

WeexpecttheFedtocontinuecuttinginterestratesin2026asitrespondstoweaknessinthelabormarket.Atthetimeofwriting,thebondmarketiscurrentlypricinginterestratestoend-2026atorjustbelow3%,whichimpliesclosetofourmore25bpsinterest-ratecuts.WebelievetheFedwillnot

lowerinterestratesbyasmuchshouldeconomicgrowthpickup,andwithinflationabovetarget(seeFigure8).

WethinktheECBissettokeepinterestratesat2%,possiblyforalongtime.Weexpectinflationtostayaroundthe2%target,withgrowthexpectedtopickupalittlein2026.

MembersoftheECB’sGoverningCouncilwouldnotwanttochangeinterestrateswithoutasufficientlylargeshocktoeithergrowthorinflation.

WeexpecttheBoEtocutratesmoreaggressivelythan

marketsarecurrentlypricing,asinflationreturnstotargetlevelsandwithitsoutlookremainingsoft.Wealsothinktheneutralrate6ofinterestissomewhatlowerthanmarkets

expect.

WethinktheBoJislikelytohikepolicyratesatleasttwicein2026,followinganother25bpsratehikebytheendof

2025.ThisshouldbringthepolicyratetomoderatelyabovethelowerendoftheBoJ’sneutralestimate.Withtariff

uncertaintyreceding,economicgrowthabovetrendandunderlyinginflationarypressureexpectedtorisefurther,weexpecttheBoJtogaingreatercomfortinthebalanceofriskstogrowth.Whiletherisksshouldbeskewedtomore

ratherthanfewerhikes,itremainstobeseenwhetherPMTakaichiwillpressuretheBoJtokeeppolicyexcessively

accommodative.InherPartyPresidentvictoryspeech,shestatedthatthegovernmentisresponsibleformonetary

(andfiscal)policy;however,thatpre-datedthecooperationagreementwiththeJapanInnovationParty,whichmadenoreferencetomonetarypolicy.

TheRBAislikelytocontinuetocutratesin2026buttobemoredata-dependentthanin2025duetosub-trendeconomicgrowthandthelabormarketsofteningataslowerratethanpreviouslyexpected.TheRBNZ,ontheotherhand,maycutinterestratesfurthertosupport

economicgrowth,giventhesignificantamountofsparecapacityintheeconomy.

Wearenotanticipatingameaningfulexpansionof

monetarystimulusinChinaaspolicymakersappearrelaxedaboutthegrowthandinflationoutlook.Weexpectthe

People’sBankofChina(PBoC)tomaintainitseasingstancebutcontinuetoemphasizetheimplementationofexistingtargetedeasingmeasuresinsteadofnewpolicyratecuts.

WeexpecttoseecontinueddivergenceinmonetarypolicyreactionsacrossEMcentralbanks,giventhedifferenceininflationprints,growthtrajectories,andtheirstageinthemonetarypolicycycle.Nonetheless,broadlystableinflationprintsandEMFXresilienceshouldsupportthecasefor

continuedeasingin2026.However,thepaceofeasingwilllikelybeslowerthanbefore,consideringthatmostcentralbankshavealreadycutinterestratesnotably.

Figure8.Bondmarketexpectationssignalmixedmonetarypolicyactionaroundtheworld

Bondmarketexpectations

ExpectedPolicyAction

5%

4%

3%

2%

1%

0%

FedECBBoEBoJPBoC

Today1year2years

Source:Bloomberg,Mercer.DataasofOctober28,2025.

EconomicandMarketOutlook202610

Executivesummary

Economicgrowth

Inflation

Monetarypolicy

Risks

Markets

Privatemarkets

Appendix

Risks

Eachyear,wehighlightanumberofrisks.Thisyear,weaskedeachofouranalyststodiscussakeyrisktheythinkisimportant.

ArtificialIntelligence(AI)hassupportedtheeconomyand

markets,withbusinessesinvestingheavilytomeetanticipateddemand,whilepositivewealtheffectsviastrongstockmarketshavealsoboostedconsumption(seeFigure9).However,I

thinkthereisabigriskthattheseinvestmentsfailtogeneratethedesiredreturns,evenifAIdoesprovetobeahugely

consequentialtechnology.Techequitiesaretradingonhighmultiplesandembedalotofgoodnews,whilethereare

emergingsignsoffroth.However,whetheranyshockhappensin2026orlaterremainstobeseen.Additionally,techsupply-chainpressures,suchasexportcurbsoranescalationof

tariffsonsemiconductors,areariskandcouldweighonexportsandgrowthoftechexport-relianteconomies.

JoyceAng–Singapore

Figure9.ExpectationsofAIaresupportingvaluations,butwhatistheriskthattheseexpectationswillbedisappointed?

30x

12mforwardprice-to-earnings

25x

20x

15x

10x

5x

0x

200320052007200920112013201520172019202120232025

USEM

Source:Bloomberg,MSCI,Mercer.Dashedlinesindicatemedians.DataasofSeptember30,2025.

EconomicandMarketOutlook202611

Executivesummary

Economicgrowth

Inflation

Monetarypolicy

Risks

Markets

Privatemarkets

Appendix

Iexpectpolicyuncertaintytoeaseslightlyin2026,butbig

riskswillremain.Whileriskssurroundingtariffsmaydecline,USmidtermelectionsandthenominationofanewFedchairpresentnewrisksasweheadinto2026.IfRepublicanslose

controloftheHousefollowingthemidtermelections,adividedCongresscouldleadtogreateroversightoftheadministrationandcomplicatethepassageoflegislation,leadingtoincreasedpolicyuncertainty.Separately,itiswidelyexpectedthat

PresidentTrumpwillnominatean‘a(chǎn)lly’toleadtheFedwhenPowell’stermendsinMay2026,whichmayraisequestionsaboutmonetarypolicyindependence.

MaxBecker–NewYork

Debtsustainabilityrisksareincreasinggloballyasgovernmentdebtcontinuestoriseinmajordevelopedeconomies.Inthe

US,deficitsareexpectedtoremainnear6%ofGDPforeachofthenextseveralyears,outpacingnominalgrowthandpushing

thedebt-to-GDPratiohigher.TheCongressionalBudgetOffice(CBO)estimatesthattheUSdebt-to-GDPratiowillriseto~120%by2035.8Similardynamicsareondisplayinotherpartsof

theworld.WhileIdonotthinkweareclosetoanimminentfiscalmeltdown,someconsolidationbythegovernmentoverthemediumtermisneededto