Inflation warning and ‘hard landing’ from crisis prophet Roubini

Famed economist Nouriel Roubini, known as the ‘crisis seer’ for predicting the 2008 financial crisis, claimed that high levels of inflation would continue due to geopolitical factors.

The famous economist claimed that the world economy is at risk of a “hard landing” due to the efforts of central banks to control high inflation in developed economies.

Roubini spoke yesterday at a summit organized by the Australian Financial Review. The famous economist said that central banks are trying to bring inflation to target levels, and for this they will have to raise interest rates to higher than expected levels.

INFLATION IS MORE PERMANENT THAN FORECAST

Roubini, who earned the nickname ‘Doctor Apocalypse’ due to his long-term downward forecasts for the global economy; He said that the level of inflation in the United States, Europe and Australia is more persistent than the forecasts of the market and the central bank.

Stating that the continuation of the Russia-Ukraine war and increased demand for basic goods from China will increase inflation, Roubini said: “Inflation will remain high this year because commodity prices will remain high.”

Speaking at the same summit, Australian Wealth Fund Chairman Peter Costello said: “The worst that can happen is that central banks say they are on a policy of reducing inflation and they don’t. Because then we would have accepted interest rate hikes without benefit”.

CONCERNS RISE

On the other hand, uncertainties about the monetary policies of the main central banks, especially the Federal Reserve (Fed) of the United States, continue to impact the markets.

In recent months, markets have thought that the Fed would peak interest rates in May and could enter an easing cycle in the following months. However, fears that inflation is permanent and messages from Fed officials added to uncertainty.

NEVERTHELESS INFLATION IN EUROPE

In Europe, record core inflation raised concerns in the market. While headline inflation in the euro zone was announced at 8.5 percent in January, core inflation rose to 5.6 percent.

Analysts recalled that inflation in Europe exceeded market expectations in February and noted that signals from the macroeconomic data to be announced on economic activity are expected to have an impact on asset prices.