“In the short term, I think inflation will ease slightly as past problems are resolved in some areas (eg energy) and then trend upwards again towards 4.5% or 5% in the medium term “Dalio says in a LinkedIn post.
The higher long-term inflation is, the more action the Federal Reserve will need to cool it down to its long-term target of 2%. A rate hike to 4.5% could send shares down an average of 20%.
Dalio’s comments align with recent remarks made by Bridgewater’s co-chief investment officer, Greg Jensen.
“Taken together, let’s say asset markets are down 20% to 25%,” he told Bloomberg.
US inflation: the fear of the market
The market fears that Federal Reserve (Fed) raise rates by 100 basis points at next week’s meeting (September 20-21) following the final August inflation data, which was worse than expected.
“The increase in underlying prices, greater than expected, has caused there is speculation that the Federal Reserve will opt for a more aggressive rate hike of 100 basis pointswhen it meets next week,” CMC Markets experts indicate in their daily report.
“What is more worrying is that the rise in core prices seems to suggest that inflation is likely to be much stronger in the coming months than markets had originally expectedwhich increases the risk that the Federal Reserve will not only be much more aggressive in raising rates, but keep them higher for much longer“, they added.
Source: Ambito
David William is a talented author who has made a name for himself in the world of writing. He is a professional author who writes on a wide range of topics, from general interest to opinion news. David is currently working as a writer at 24 hours worlds where he brings his unique perspective and in-depth research to his articles, making them both informative and engaging.
