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Stephen Roach gives stagflation warning, calls peak inflation absurd


Stephen Roach (ex-chairman of Morgan Stanley Asia) says that Stagflation may be making a comeback.

He warned that the U.S. was on a dangerous course, which will result in higher prices and slower growth.

Roach said that “this inflation problem is widespread,” was persistent, and will likely be protracted.” Roach also spoke on CNBC’sFast Money” Thursday. “On Thursday, the markets were not able to ignore the magnitude of what is going to be needed to reduce demand… It just reinforces the deep hole [Fed chief]Jerome Powell has a job right now.

Roach is a Yale University Senior Fellow and a former Federal Reserve economist. He calls peak inflation and stagflation both absurd.

He stated that “the Fed has lost the demand side” The Fed still has much tightening work to do.

Roach expects inflationTo maintain a level of 5% at the end the year. With the pace at which interest rates are rising, it is unlikely that the Fed will reach this goal.

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“50 basis points doesn’t cut it. By excluding anything greater, he [Powell]Roach said that Roach just sent a message to his hand that his hands were tied. This conclusion has been criticized by markets.

The DowIt is moving at a rapid pace for its eighth negative weekFor the first time in 1932, they have been able to win consecutively. It was the S&P 500And the tech-heavy NasdaqThey are on track for the worst losing streaks weekly since 2001.

Roach began sounding alarms about inflation risk of the 1970s two years ago.he early stages of the pandemic. He cited historically low interest rates and Fed’s ease-money policies as well as the nation’s massive debt.

Last night, his warning was even louder September on CNBC. Roach said that there was only one source chain error away from stagflation in the U.S.

He sees more reason to be on high alert.

Roach added, “I would increase that zero-Covid China and the repercussions for the war on the Ukraine,” Roach explained. That will prevent the demand side from clogging the price discovery over the next several decades.

CNBC’s Chris HayesThis report was contributed by you.