July 6, 2022

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L-Ariane: Stagnation in US economy "inevitable"

L-Ariane: Stagnation in US economy “inevitable”

Dubai: Hisham Mugan
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Mohamed L-Erian, economist and head of grumarcy fund management, warned that the stagnation in the US economy was inevitable, with the Federal Reserve finally reaching 8.3%, despite decades of high inflation. April by sharply raising interest rates.
Al-Arian told Bloomberg Television: “We see growth slowing and inflation rising, and the Federal Reserve is finally following the ground, but much remains to be done.” The US Reserve and in its view, in 2021, blame inflation as a “temporary phenomenon” that, in part, will fade at some point. But the central bank has since changed that “temporary” theory and is now working to tighten monetary policy.
Stockfillation or “stockfilmation” is a term used to refer to periods of rapid or high inflation, also known as the pace or stagnation of economic growth. Periods of stagnation may be associated with higher unemployment rates.
L-Ariane continued: “For central banks, especially the Federal Reserve, inflation is a very bad thing. If inflation had not been described as a volatile matter, this situation could have been avoided.” “The federal government has to make a very difficult decision, which requires a lot of luck and skill at this point,” he said.
According to L-Arian; U.S. stock markets are likely to slide in the coming days as long-term losses continue due to investors’ fears that the impact of the Federal Reserve raising interest rates will not be mitigated.
As to how investors will respond, the Alliance’s chief economist said they need to continue to act in this significant recession, which means more adjustment needs to be made. Considering that sluggish economic growth in a market that has already seen steady sales due to inflation and high central bank rates has not yet been fully priced.
(Bloomberg)

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