THE HINDU Editorial Vocabulary-December 17, 2016- Topic 2
The U.S. Federal Reserve’s widely
anticipated decision to resume its course
of normalisation of monetary policy by raising the benchmark Federal Funds rate
by one-quarter of a percentage point has unequivocally signalled that the
world’s largest economy is well and truly back on track. Fed Chair Janet Yellen
has said the U.S. central bank now expects the economy to “continue to perform
well”. The median projection of real gross domestic product growth among the
Federal Open Market Committee’s participants is for the expansion to accelerate
to 2.1 per cent in 2017, from 1.9 per cent this year. This bodes well for the
world economy as an improvement in demand for goods and services in one of the
biggest markets will potentially spur economic activity all over. That the
improvement in momentum has been accompanied by “solid” job gains and moderate
increases in household spending is particularly heartening since personal
consumption undergirds overall demand in the U.S. The Fed has also stated that
it expects future interest rate increases to be gradual. The median projection
for the funds rate at the end of 2017 is estimated at 1.4 per cent, indicating
at most another 3 to 4 quarter point moves over the next 12 months. Such a
calibrated approach to policy normalisation will allow international markets
time to reset investment weights and priorities, while ensuring that the
domestic momentum doesn’t unravel. And with indications that Donald Trump’s
administration may unveil policies to bolster
domestic economic activity, the prospects for the U.S. economy appear sanguine
as of now.
From an Indian perspective, however,
there are attendant risks from the Fed’s policy normalisation. For one, the
dollar’s strengthening trend against most major currencies and the rupee have
begun to push up India’s bill for imports — a large share of which does not
lend itself to substitution — and widen the trade deficit. Latest trade data
show India’s import costs in rupee terms climbed 13 per cent in November while
the value in dollar terms rose 10.4 per cent, in a clear reflection of the impact
of the dollar’s appreciation. Also, the very same improvement in U.S. economic
outlook that could lend a glint of anticipation to Indian exporters has already
been a factor in spurring an exodus of portfolio investment capital from
emerging markets, including India, and inflows back into the home market. And
with the U.S. President-elect resorting to protectionist rhetoric, Indian
companies, especially exporters of software services, are likely to remain on
tenterhooks till clarity emerges on the administration’s policy road map. For
the moment, all optimism stemming from the strengthening U.S. economy will need
to be tempered with caution.
Vocabulary
Anticipated: Regard as probable; expect or
predict.
Example: She anticipated scorn on her return to the theater
Synonyms: expect, foresee, predict, be prepared for, bargain
on, reckon on
Accelerate: A vehicle or other physical
object begin to move more quickly.
Example: The car accelerated toward her
Momentum: the quantity of motion of a moving body, measured as a
product of its mass and velocity.
Example: In contrast, the active medium in the mechanical laser is the intrinsic
angular momenta of electrons and nuclei.
Undergird: secure or fasten from the underside, especially by a
rope or chain passed underneath.
Example: That's a philosophy that needs to undergird retailers' business plans this year
Calibrated: mark a gauge or instrument
with a standard scale of readings.
Example: The model was calibrated on the basis of the similar experimental results.
Bolster: a long, thick pillow that is placed under other pillows
for support.
Example: Sessions were kept short or broken for comfort breaks so that she could be
re-positioned with supporting pillows and bolsters .
Synonyms: strengthen, reinforce, boost, fortify, renew, support, sustain, buoy
up
Sanguine: optimistic or positive, especially in an apparently bad
or difficult situation.
Example: He is sanguine about prospects for the global economy
Synonyms: optimistic, bullish, hopeful, buoyant, positive, confident, cheerful
Glint: a small flash of light, especially as reflected from a
shiny surface.
Example: The glint of gold in his teeth
Synonyms: glitter, gleam, sparkle, twinkle, glimmer, flash
Exodus: a mass departure of people, especially emigrants.
Example: It predicted that if they got their way there would be ‘a mass exodus of
money and jobs’.
Synonyms: withdrawal, evacuation, leaving, migration, emigration