Forecast: Second wave of global financial crisis will arrive in 2018

Baku. 8 March. REPORT.AZ/ Announcement of US Federal Reserve (Fed) on start of raising interest rate combined with following collapse of oil prices, boosted demand in USD and strengthened it against other currencies, resulting in first wave of global financial crisis.

Report’s expert group expects the world to face second wave of global financial crisis in first quarter of 2018.

Notably, unlike 2008-2009 crisis, this time financial asset values dropped for longer period. Despite oil price slump to 36 USD/barrel during 2008-2009 crises, it recovered to 120 USD/barrel in short time. US dollar exchange rate remained stable and Fed never mentioned rise of interest rate. Because that time US banking system had problems and its economic indicators weren’t positive. Whereas currently US economy is growing, with declining unemployment rate and rising customer confidence. This creates favorable climate for Fed to increase interest rate.

Report’s expert group predicts USD rate and commodity prices to remain stable in case of Fed fixing interest rate at 2 percent: “US dollar has already strengthened for 24% against its main rival EURO from 1.3993 point in May 2014. Oil prices slumped by 52% in the same period. It means that up to 2 percent interest rate has already been absorbed by the market”.

Expert group predicts Fed interest rate to rise to 1.75-2 percent by first quarter of 2018, with further acceleration of the process, resulting in US dollar surpassing parity with EURO and drop of oil prices to 30 USD/barrel: “Fed will increase interest rate to 6-7 percent until 2022”.