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While inflationary fears are picking up, the markets have not shown a readiness to approve greater rates of interest. As a matter of fact, rising small treasury returns over the past couple of months have, on numerous events, prompted market selloffs.
This dilemma puts the Federal Get in a difficult placement, claimed Nouriel Roubini, CEO of Roubini Macro Associates and also professor at the NYU Stern College of Company, because needs to the Fed increase interest rates to try to regulate rising cost of living, the marketplace might see a return of 2013's "taper temper tantrum".
" Either the Fed, at that point, keeps on claiming points are momentary, rising cost of living assumptions begin to climb, they control the brief end of the return contour, yet after that lengthy rates can increase in nominal and also genuine terms, that's one threat. After that, inflation leaves control. Or, like in 2013, they need to backpedal and state no, there is a trouble with rising cost of living as well as we have to start tapering earlier than we stated, we need to begin raising rates sooner than we stated, and we can have a repeat of what occurred in 2013," Roubini informed Michelle Makori, Kitco's editor-in-chief.
0:00 – Is rising cost of living transitory?
4:33 – Is Biden spending economy back into economic downturn?
7:30 – Is Fed still independent?
9:30 – When is following price hike?
12:03 – What occurs next?
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Roubini: Fed is 'cornered'; will either lose control of inflation or crash markets (Pt. 1/2)
While inflationary fears are picking up, the markets have not demonstrated a readiness to accept higher interest rates. In fact, rising nominal treasury yields over the past few months have, on several occasions, prompted market selloffs.
This predicament puts the Federal Reserve in a tough position, said Nouriel Roubini, CEO of Roubini Macro Associates and professor at the NYU Stern School of Business, because should the Fed raise interest rates to try to control inflation, the market may see a return of 2013’s “taper tantrum”.
“Either the Fed, at that point, keeps on saying things are temporary, inflation expectations start to rise, they control the short end of the yield curve, but then long rates can rise in nominal and real terms, that’s one risk. Then, inflation gets out of control. Or, like in 2013, they have to backpedal and say no, there is a problem with inflation and we have to start tapering sooner than we said, we need to start raising rates sooner than we said, and we could have a repeat of what happened in 2013,” Roubini told Michelle Makori, Kitco’s editor-in-chief.
0:00 - Is inflation transitory?
4:33 - Is Biden spending economy back into recession?
7:30 - Is Fed still independent?
9:30 - When is next rate hike?
12:03 - What happens next?
__________________________________________________________________
Kitco News is the world’s #1 source of metals market information. Our videos feature interviews with prominent industry figures to bring you market-affecting insights, with the goal of helping people make informed investment decisions.
Subscribe to our channel to stay up to date on the latest insights moving the metals markets.
For more breaking news, visit http://www.kitco.com/
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Disclaimer: Videos are not trading advice and the views expressed may not reflect those of Kitco Metals Inc.
