Two weeks ago, the Bank of Canada raised its key interest rate by one percentage point to 2.5% to rein in inflation, the largest hike in 24 years. Inflation in Canada hit 8.1% in the year to June, its highest level in nearly three decades. Meanwhile, the US consumer price index rose to 9.1% in June, a 41-year high that may prompt similarly aggressive policy tightening from the US Federal Reserve.
Swiss Re has cut its annual GDP growth forecast for the US to 2.0% this year, from a 2.8% forecast in June. It also predicted just over 1% GDP growth in the US in 2023 amid tighter financial conditions and softer consumption activity.
The reinsurance giant also expects the Fed to raise fund rates by 3.50-3.75% as the central bank fights inflation. Higher interest rates will gradually bring benefits to insurers, but the short-term…
