Inflation risks: 'too much complacency'?

In this week’s episode of IG’s Trading the Markets podcast, IGTV’s Victoria Scholar speaks to Daniel Lacalle, chief economist at Tressis, about the post-pandemic recovery for the US economy, monetary and fiscal policy, and the potential economic risks ahead.

Lacalle says there is “too much complacency” towards the inflation risks, which could lead to a similar situation to Japan’s ‘lost decade’. He says there is no evidence that inflation is transitory and while the US economy is likely to recover quickly, there are serious stagflation risks in 2022 and 2023. He says the Federal Reserve System (Fed) and the European Central Bank are entirely oriented to markets and market prices, and he believes the Fed should have already tapered bond purchases and started to increase interest rates.

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