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By WSJ 3.15.2019 • March 19, 2019

The Fed MAY be reducing rates again!

In a new Wall Street Journal survey, private-sector forecasters said they expect U.S. economic output to grow, on average, at a 1.3% pace in the first quarter. That would be the weakest since the end of 2015. Economists also trimmed their monthly payroll forecast to an average pace of 170,805 new jobs per month, down from 207,583 in the February survey, Harriet Torry reports.

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A growing number of economists say the Federal Reserve’s next move will be a rate cut. About 18% of economists surveyed this month expect the Fed to lower them, up from 10% in February’s survey and 4% in January. As recently as January, more than 80% of economists expected the Fed to raise again before September. Now, most don't expect an increase until September or later, David Harrison reports. 

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The Atlanta Fed's closely watched GDPNow currently has the first quarter pegged at a 0.4% annualized rate. The St. Louis Fed Nowcast is a more robust 2.2%. Either would be a slowdown—but one is downright anemic. Why the difference? One of our favorite themes: Atlanta's GDPNow indicator uses more hard data while the St. Louis’s index is based more on soft data. So, for example, gauges like consumer sentiment have looked a lot better than actual consumer spending. Plus there just isn’t as much first-quarter hard data out yet.

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The Bank of Japan offered a bleaker picture of the economy on Friday and left its ultra-easy monetary policy on hold. The central bank said Japan’s exports and production have shown some weakness, a downgrade from its January assessment. The central bank stuck to its overall assessment that the Japanese economy is “expanding moderately,” Megumi Fujikawa reports.

China’s government will consider cutting interest rates and banks’ reserve requirement ratio to counter new downward pressure on the economy, Chinese Premier Li Keqaing said Friday. Mr. Li said Beijing needed to keep economic growth within a reasonable range to prevent waves of layoffs. China’s economy reported its slowest growth in nearly 30 years last year and momentum continued to slow at the start of 2019. In response, the government earlier this month announced tax cuts and efforts to spur infrastructure investment, Grace Zhu reports.

China made last-minute changes to a proposed foreign-investment law, trying to address U.S. complaints about forced technology transfer and bolster prospects for a trade deal with Washington. The national legislature quietly amended a draft of the law to tighten up channels used to leak intellectual property. The new language takes aim at the regulatory review panels, known as “conformity assessments,” that foreign companies must pass.

Chinese Premier Li Keqiang, addressing an irritant in relations with the U.S., said that China’s government doesn’t ask companies to spy on its behalf. Asked at a news conference about China-U. S. competition and whether Beijing forces its companies to conduct espionage, Mr. Li first didn’t respond but later returned to give an emphatic denial, Chun Han Wong reports. “Let me tell you explicitly that this is not consistent with Chinese law. This is not how China behaves,” Mr. Li said. “We do not do that and will not do that in the future.”

British lawmakers voted to delay the U.K.’s departure from the European Union by at least three months beyond a March 29 deadline. The other 27 EU governments must unanimously agree to any extension, a matter they will consider next week.

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