USA and other economies with very strong economic growth
June 22, 2021 – 8:43 am
The United States and other countries are likely to experience strong economic growth, fueled by the introduction of vaccinations, said Steven Mnuchin, 77th Treasury Secretary of the United States.
Doha: The United States and other countries are likely to experience strong economic growth, fueled by the introduction of vaccinations, said Steven Mnuchin, 77th Treasury Secretary of the United States. He spoke at the first Qatar Economic Forum, Powered by Bloomberg.
The high-profile forum began yesterday and was attended by over 100 speakers and over 2,000 heads of government, business leaders, influential voices and decision-makers from the fields of finance, business, investment, technology, energy, education and sport.
“With the advent of the massive spread of vaccines and a better understanding of the disease, I think economies are opening up and you will see very strong growth rates especially in the US, but also in other parts of the world,” Steven Mnuchin said yesterday in conversation with David Westin, host of Bloomberg Television.
He said there was a chance that US inflation would stay firm. âIn the foreseeable future, we could easily see 6-8 percent growth. Inflation is good for certain parts of the economy and very bad for other parts of the economy. I worry that the odds are higher than lower, that this is ongoing inflation and that the Fed will have to adjust to it, âMnuchin said.
He added that the US Federal Reserve should handle the inflation situation cautiously.
âIn the meantime, I think there will be companies that are growth companies, companies with high profit margins whose consumer spending will do very well with higher inflation, and companies with lower margins and high labor costs will be affected. So I think the inflation outlook needs to be managed very carefully, âhe said.
The former Treasury Secretary said he believed inflation will force the Federal Reserve to tighten monetary policy in the coming months and years, a scenario that investors may not be prepared for.
“There is no question that the Fed must enter a phase of normalizing rates and the portfolio” of the bond holdings.
Mnuchin said he was concerned that the recent surge in inflation would continue. He suggested that the Federal Reserve reacted cautiously in part because it relies on economic models that struggle to incorporate massive amounts of fiscal and monetary stimulus that feed into price movements.
“I think this needs to be watched very closely and I think the markets are underestimating this risk,” he said.
The US Federal Reserve surprised the markets last week by signaling that it would hike rates and end its emergency bond purchases sooner than expected.
Fed officials accelerated their expected pace of monetary tightening amid optimism about the labor market and heightened inflation concerns. Their projections show they expect two rate hikes by the end of 2023, earlier than many thought, and they have raised inflation estimates for the next three years.
The Federal Reserve held its short-term benchmark rate near zero on Wednesday and said it would continue to add money to the economy through monthly bond purchases. The US Federal Reserve has brought forward its forecasts for the first rate hikes after the pandemic by 2023 from 2024.