United States: Growth impulse questioned – Standard Chartered
Standard Chartered analysts Dan Pan and Steve Englander discuss the Federal Reserve’s Financial Conditions Impulse on Growth (FCI-G) index, noting it was highly accommodative in May 2026 and still supportive after the July FOMC.
Standard Chartered analysts Dan Pan and Steve Englander have questioned the growth potential based on the Federal Reserve’s Financial Conditions Impulse on Growth (FCI-G) index. While the index was highly accommodative in May 2026, it remained supportive after the July FOMC meeting. Recent factors such as equity sell-offs, a stronger Dollar, and higher long-term rates have only moderately tightened conditions.
The FCI-G index was at its most accommodative level since the early 2000s, excluding the COVID period. The Fed’s model estimated loose financial conditions ahead of June’s FOMC to add over 1.1 percentage points to GDP growth over the next year. However, our updated FCI-G estimate, following the July FOMC, indicates financial conditions still contribute 0.9 percentage points to one-year-ahead GDP growth.
The growth impulse would have been 0.1 percentage points higher if financial markets remained at pre-June FOMC levels.
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