Economic expansion across the US, Japan, eurozone and UK may be varied in strength but will cool only gradually, ensuring steady Federal Reserve policy and higher rates elsewhere, Reuters polls showed on Thursday.
Economists surveyed between August 3 and 9 appeared mostly convinced that the wild swings on world stock markets and great gasps for air in credit markets in recent days would not ignite smouldering worries about economic trouble on the horizon.
The polls of around 200 economists were taken before renewed turmoil in financial markets on Thursday which saw a rally in the yen and safe-haven bonds and the biggest one-day jump in US dollar deposit rates in eight years.
What does linger, however, is the threat that a still-reeling US housing market could have more floorboards ripped out from underneath it and seriously dent consumer spending in the world's largest economy.
But for now at least, the economy should be fine, picking up speed next year and still generating enough inflation in the interim to keep Fed Chairman Ben Bernanke from indicating any intention to trim the cost of borrowing.
"The economic data continue to show slower US growth, but the weakness remains isolated in the housing market," said David Wyss, chief economist at Standard & Poor's in New York. "We continue to expect growth to be depressed by housing into early 2008. However, the longer-term outlook remains solid, with growth likely to return to near its 3 percent trend by the second half of next year."
A pick-up in America will provide a benign backdrop for a moderating European expansion that is well-entrenched and a still-budding Japanese emergence from deflation that will nonetheless probably see an interest rate hike this month.
"Consumer prices can be expected to head upward, albeit very gradually," said Makoto Ishikawa, senior economist at Japan Research Institute.
While Japanese inflation is not a threat but instead barely alive, the outlook for UK prices remains sticky and a Bank of England rate hike in the coming months now seems likely after its own forecasts pointed to such a need, albeit not pressing.
In the euro area, a September hike to 4.25 percent looks a done deal after a hastily-called August news conference to give European Central Bank President Jean-Claude Trichet a platform to say "strong vigilance", now more a clich‚ than a codeword for a quarter point rate hike about 30 days on.
Indeed the Reuters poll showed Euro zone GDP expansion of 0.6 percent every quarter until the end of next year and scant let-up in inflation, meaning the ECB could well deliver a second hike to 4.50 percent this year.
"The ECB will hike rates again in December, and then stay put since growth is expected to move toward potential next year," said Aurelio Maccario, economist at Unicredit. In addition to US housing, oil prices, which have thwarted forecasts from earlier this year for a big fall in energy-related consumer inflation in the second half, could still derail the broad picture.
A separate poll conducted in late July forecast persistently high oil although Brent crude had taken a spill in the past few weeks after nearly touching a record.