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"Accordingly, we think consumer spending will ensure GDP growth falls to around zero in the second half of this year, rather than turning significantly negative".
In its statement, the bank acknowledged that inflation might fall to "around zero" in the near term, but argued that a rate rise was warranted to guard against "excess financial and economic activities".Consumer prices in America rose by 0.2% in January.
"Accordingly, we think that growth will fall to around zero in the third quarter and fourth quarter, as uncertainty about future trading relationships hits investment".
If you look at changes in GDP - these figures are from the OECD - it does show things have improved considerably since early 2009, although growth rates have hovered around zero in the last couple of years.
Pimco writes thatthere is a risk that the global economy - not just the US - will be unable to grow and generate inflaton at pre-crisis levels for many years to come - even if monetary policy remains at zero in nominal terms and negative in real terms.That leads Pimco to expect real rates to be around zero in the US which, assuming a 2% inflation rate, would mean 2% nominal for short rates.
Specifically, the errors are around zero in the high reflectivity region.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com