Despite the efforts of the Federal Reserve to lower it, the economist Mohamed El-Erian predicts a sticky inflation-
Despite the efforts of the Federal Reserve to lower it, the economist Mohamed El-Erian predicts a sticky inflation-
While investors check the next step of the Federal Reserve, analysts, economists and market participants also observe the level of inflation. In December 2022, the annual inflation rate fell to 6.5 %, and many experts predict that it will continue to decrease. However, economist Mohamed El-Erian from the University of Cambridge believes that inflation will "get stuck" in the middle of the year. The central bank, on the other hand, primarily focuses on reducing inflation to 2 %.
5 % are the new 2 %: tight monetary policy and interest rate increases cannot dampen inflation pressure
Members of the Federal Reserve, including its 16th chairman, Jerome Powell, have often explained that the bank's goal is to reduce inflation to 2 %. Powell has that the comprehensive focus of the Federal Open Market Committee (FOMC) is currently in. to lower our goal of 2 % ”. In order to tame inflation, the central bank has used its monetary policy tightening policy and interest rate increases. So far, the Fed has raised interest rates since last year, with monthly Increases.
Inflation in the USA has decreased since it approached in the double digits in October and November 2022. Back then the economist and goldenenthusiast Peter Schiff that specified "America's days of inflation of less than 2 % are over". At the event of the World Economic Forum 2023 in Davos last week JLL-CEO Christian Ulbrich told the financial Times that his colleagues start saying that 5 % will be the new 2 %. "Inflation will remain permanently at around 5 %," Ulbrich told the FT reporters. "Shares and bonds have made an exuberant start to 2023, but there is still a lot of uncertainty about global growth, inflation and political prospects," said El-Erian wrote in a guest comment published on Bloomberg. "The improvement of the US growth prospects is accompanied by a decline in savings that had benefited from the considerable tax transfers to households during the pandemic, and an increase in debt," added the economist. el-erian also noticed that the value of Bitcoin (btc) has received a remarkable increase in value this year, and he attributes this to the fact that investors looser financial restrictions and one Increasing increasing risk to risk increasingly accept. "Bitcoin has risen by around 25 % this year thanks to relaxed financial conditions and greater risk to risk," the economist wrote. While the Federal Reserve aims to reduce inflation to the range of 2% and some again
"This transition is particularly remarkable, since the inflation pressure is now less sensitive to the measures of the central bank," wrote the economist. "The result could be a more persistent inflation that is about twice as high as the current inflation goal of the central banks." Will inflation "get stuck" in around 4 %, as the EL-Erian economist suggests? Share your thoughts in the comments below. Bedy verification : Shutterstock, Pixabay, Wikicommons el-Erian: "Growth pressure on wages" is supposed to trigger a remarkable change in inflation
