The head of the investment company Independent Strategy, David Rush, in an interview with CNBC, warned of an imminent sharp rise in prices in the United States.
According to the financier, by the middle of 2022, the inflation rate in the United States can reach 3-4 percent per annum-with the target of the Federal Reserve System (Fed) of two percent.
вЂњAnd this is completely incompatible with, say, the yield of 10-year US bonds at 1.6 percent. This yield can easily double, and when it does, you will come to a critical point that the markets will experience, " Roche said.
One of the reasons for high inflation, he said, is excessive demand from consumers вЂ” due to savings accumulated during the coronavirus pandemic and allocated subsidies from the government. The latest economic assistance package announced by President Joe Biden includes a total of $300 million for households.
The danger of too high inflation is to reduce the purchasing power of the population, as well as to increase the cost of borrowing for the state and business (since investors agree to invest only on terms that cover the price increase). At the same time, the Fed, like most other central banks, seeks to maintain inflation at a certain level to ensure stable economic growth.