The IMF has once again downgraded its forecast for global output growth

The IMF has once again downgraded its forecast for global output growth. It has judged that the clearly beneficial effects of low oil prices will be insufficient to compensate for drags on growth from other sources. Tellingly, the Fund's head of research highlighted the possibility that it might have been too pessimistic about the effects of the oil price holding out the prospect of later upgrades. Despite the forecast cutback, the Fund continues to see a modest acceleration in global growth during 2015 and 2016, as illustrated in the chart. Global commodity markets need an acceleration to rebalance. Without that, thoughts of a cyclical upturn are premature. The Fund's outlook does not constitute material momentum in that direction. For all the pessimism, the currently anticipated 2016 outcome will take growth over the average of annual outcomes since 1980. On Europe, the Fund's chief economist warned not to expect significant change in market interest rates as a result of any forthcoming ECB quantitative easing saying that markets have already embedded the policy measure in the rate structure.