While the conflict in Ukraine is a hot topic, Americans living in the country are still concerned about rising inflation, as economists and analysts predict that U.S. inflation will remain high. Furthermore, according to Goldman Sachs, inflation is likely to be worse than expected this year in a report released on Sunday. Furthermore, an economics professor at American International College (AIC) stated that there is “a perfect storm brewing” in terms of inflation and the invasion of Ukraine.
‘A Strong Job Market and Rising Inflation Could Ignite a Moderate Wage-Price Spiral,’ according to Goldman Sachs.
According to a new inflation report released on Sunday by Goldman Sachs economists, inflation was atrocious in 2022 and is unlikely to improve this year. “As we expected, inflation has worsened this winter, and how much it will improve later this year is now in doubt,” the financial institution explained in a note. Goldman’s note to investors comes on the heels of the Consumer Price Index (CPI) report, which revealed that inflation in the United States has risen at its fastest rate in 40 years, since February 1982.
According to Goldman’s report released on Sunday, the financial institution believes that if supply chains and energy producers are disrupted as a result of Ukraine’s conflict with Russia, inflation could rise even higher.
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“The initial inflation surge may have lasted long enough and reached a high enough peak to raise inflation expectations in a way that feeds back to wage and price setting,” according to Goldman Sachs analysts. In addition, according to the Goldman Sachs report, a strong job market combined with rising inflation could “threaten to ignite a moderate wage-price spiral.”
‘We’ve got a perfect storm brewing,’ says an AIC economics professor. Raphael Bostic, President of the Atlanta Fed, favors a March 25 basis point rate hike.
Economists and analysts speculate about what the Federal Reserve of the United States will do in March. According to John Rogers, things will depend on what the Federal Reserve does about inflation, an economics professor at AIC. “At the end of the year, inflation will be fairly high,” Rogers told wwlp.com’s news desk.
It’s just a matter of geopolitical unrest. The stock market has been volatile. Anyone who has a 401k plan is probably concerned. Energy is energy; it is a global market and will impact us.
The Federal Reserve has hinted that the benchmark interest rate will likely rise “soon,” with Fed Chair Jerome Powell predicting it will happen in March. However, last week, gold investor and economist Peter Schiff suggested that the Fed’s benchmark interest rate could be kept low due to the conflict in Ukraine. “Perhaps the Fed is relieved that Russia invaded Ukraine because it now has an excuse not to raise interest rates in March,” Schiff speculated on Twitter.
Federal Reserve Bank of Atlanta President Raphael Bostic told attendees at a Harvard virtual event on Monday that he favors a hike of around 25 basis points. “I am still in favor of a 25 basis-point move at the March meeting,” Bostic told the virtual discussion group of Harvard University students.
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