Evgeny Goryunov, Head of the Monetary Policy Department at the Gaidar Institute, commented to RBC on the current economic situation in the USA and on the possible consequences of the interest rates solutions.
He said that the combination of high producer inflation, rising consumer prices, and geopolitical factors makes premature policy easing risky.
According to the US Bureau of Labor Statistics, producer price inflation (PPI) reached 6% year-on-year, while consumer prices rose by 3.8%. In this context, the expert notes, rate cuts could increase the risk of stagflation, especially if tensions in energy markets persist. The 4.3% unemployment rate also indicates that the US economy does not yet require additional stimulus through monetary easing.
"Lowering rates in this environment would risk stagflation," emphasized Evgeniy Goryunov.
He also drew attention to the contradictions in the rhetoric of politicians and economic signals.
"Warsh is known as a proponent of tighter monetary policy and a critic of quantitative easing, while Trump favors easing. It is hard to understand why Trump chose a “hawk” when he needs a “dove.” Either the expectations of the administration are not fully defined, or there are some unclear agreements," noted Evgeniy Goryunov.
According to his assessment, a massive sell-off in the markets is not expected under current conditions, since there are no clear economic grounds for it.