Trend forecaster Gerald Celente told Kitco News that he believes a slow down in economic growth is coming and that we’re nearing a period of “dragflation.” “All of the countless trillions of dollars that they’ve [the Fed] pumped into the economy to artificially boost it up is what’s pushing up inflation,” he said. “Dragflation is…it’s not going to be a stagnant economy, or stagflation, the economy is going down as inflation continues to go up.” In other news, a CNBC survey predicts that the Fed will double the pace of tapering to $30 billion, which would roughly end the $120 billion in monthly asset purchases by March.
‘Dragflation’ is here, Fed will ‘blow everything up’ once interest rates hit this level – Gerald Celente
The Federal Reserve is now fighting the strongest inflationary environment since the 1980s, and pressure is mounting for the Federal Open Market Committee (FOMC) to begin not just tapering asset purchases, but hiking interest rates.
Gerald Celente, publisher of The Trends Journal told Michelle Makori, editor-in-chief of Kitco News, that should an “artificially low” interest rate policy end, disaster would hit global financial markets.
“When [the Fed] starts raising interest rates seriously, this thing is going to go down big and it’s going to go down hard,” Celente said. “I believe they’re going to [raise rates] sooner rather than later, near the beginning of the year, in January, February, and they’re going to do it step by step, they’re going to play the markets out. I believe we’re going to get through a lot of 2022 in moderately good shape. My hit point is where the Fed gets interest rates up to 1.5%. That’s going to be the end.”
“The end” refers to a meltdown of risk assets like equities.
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The Fed will halt asset purchases by March and hike rates in June, CNBC survey predicts
Here comes the Fed.
After 20 months of the most aggressive easing policies ever put in the place by the Federal Reserve — designed to combat the economic effects of the coronavirus pandemic — market participants now forecast a gradual reversal of central bank policy that will bring both a faster taper and quicker rate hikes over the next several years.
The CNBC Fed Survey finds that respondents expect the Fed to double the pace of the taper to $30 billion at its December meeting, which would roughly end the $120 billion in monthly asset purchases by March. The 31 respondents, including economists, strategists and money managers, then see the Fed embarking on a series of rate hikes, with about three forecast in each of the next two years. The funds rate is expected to climb to 1.50% by the end of 2023 from its range near zero today.
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Fox Business/Megan Henney
Americans’ inflation expectations soar to new high as consumer prices surge
Americans’ inflation fears accelerated again in November, climbing for the 13th consecutive month to a new record high, according to a key Federal Reserve Bank of New York survey published Monday.
The median expectation is that the inflation rate will be up 6% one year from now, the highest level for the gauge since its launch in June 2013, according to the New York Federal Reserve’s Survey of Consumer Expectations. Inflation expectations over the next three years fell slightly to a median of 4%, a drop that was precipitated by responses from those without college degrees. It marked the first decline in six months.
“Median inflation uncertainty — or the uncertainty expressed regarding future inflation outcomes — increased at both the short- and medium-term horizons, with both reaching new series highs,” the survey said.
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