Former Morgan Stanley Asia chairman Stephen Roach spoke with CNBC (link here to check it out for more)
- warns the U.S. is on a dangerous path that leads to higher prices coupled with slower growth.
- “This inflation problem is widespread, it’s persistent and likely to be protracted,”
- "The markets are not even close to discounting the full extent of what’s going to be required to bring the demand side under control... That just underscores the deep hole [Fed chief] Jerome Powell is in right now.”
- “The demand side has really gotten away from the Fed,” he said. “The Fed has a massive amount of tightening to do.”
- Roach expects inflation to stay above 5% through the end of the year. At the current pace of interest rate hikes, the Fed wouldn’t meet that level.
- “50 basis points doesn’t cut it. And, by ruling out something larger than that he [Powell] just sends a signal that his hands are tied,” added Roach. “The markets are uncomfortable with that conclusion.”
I am not sure why Roach isn't known as "Dr. Doom". Its not too late. Unfortunately he may well be correct too.
