US’ historic inflation rise: How experts reacted

#Economy #FederalReserve #Inflation

Consumer prices increased by 7.5% this month, reported the US Labor Department
Inflation rate is unlikely to slow significantly in the near future
Most vulnerable segments of the society are being hit hard

Written By:Devanshu

Updated: February 11 2022 04:50:09 AM ET Washington D.C., DC, USA

Consumer prices increased by 7.5% this month, the highest
year on year increase since February 1982, reported the US Labor Department.
Shortage of supplies and workers, heavy amounts of federal help, ultra-low
interest rates, and strong consumer spending combined to drive inflation higher
in the past year.

In December and January, inflation was 0.6% the same as
the previous month. Prices increased by 0.7% from October to November 2021 and
they increased 0.9% from September to October 2021.

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The inflation rate is unlikely to slow significantly in
the near future. Several factors have driven prices higher since last spring,
including the fastest wage growth in at least 20 years. Last month, hundreds of
workers were out of work at the nation’s busiest ports, Los Angeles and Long
Beach. As a result, many products and parts are in short supply.

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Experts have reacted strongly to the announcement made by
the US Labor Department on February 10.

Mohammad Aly El-Erian, president of Queen’s College
Cambridge and chief economic adviser at Allianz, said the most vulnerable
segments of the society are being hit hard by inflation and also at the risk of
income shock due to a policy error.

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Having lost control of the narrative on inequality and inflation, the #Fed faces further damage to its reputation due to their interaction:
The most vulnerable segments of our society are being hit hard by #inflation and also face the risk of an income shock due to a policy error

— Mohamed A. El-Erian (@elerianm) February 10, 2022

Peter Schiff, an American broker and CEO, Euro Pacific
Capital, said a more aggressive Fed will actually make the inflation problem
worse, even if stocks go into a bear market and the economy is tipped into
recession. Growth does not cause inflation, and recession does not cure it.
Inflation will increase with a weaker economy.

Even if a more aggressive #Fed sends stocks into a bear market and tips the economy into recession, the #inflation problem will actually get worse. Growth doesn't cause inflation and recession won't cure it. A weaker economy will actually result in stronger inflation! Got #gold?

— Peter Schiff (@PeterSchiff) February 11, 2022

Best way to cure inflation? Recession. Yield curve getting close to inverting and making the call – 2s/10s less than 50 basis points away and 5s/10s within 10 basis points. Never mind bonds – things are getting very interesting for the stock market. Will the bulls fight the Fed?

— David Rosenberg (@EconguyRosie) February 10, 2022

7.5% inflation and 0% interest rates! You would think it is an emerging market with poor institutional governance. It is the United States of America ( USA)! In 2013 India paid the price for its ‘taper tantrum’. When US sneezes,world catches a cold. Not this time please, Mr. USA.

— Uday Kotak (@udaykotak) February 11, 2022

Uday Kotak, managing director of Kotak Mahindra Bank said
that with 7.5% inflation and 0% interest rate, you would think it is an
emerging economy with poor governance but it is the United States of America.
He warned that “When the US sneezes, the world catches a cold”. In 2013, India
paid the price for its tantrums but not this time, he warned.