JPMorgan Economist: "Inflation Will Occur but Won't Last Long"

"Central Banks of Each Country to Maintain Expansionary Monetary Policies"

[Asia Economy New York=Correspondent Baek Jong-min] Regarding the recent sharp rise in U.S. Treasury yields amid inflation concerns, JP Morgan emphasized that uncertainties in economic recovery remain and assessed that the worries are excessive.

Michael Hanson, JP Morgan economist (photo), at a recent seminar with New York correspondents, forecasted that the U.S. and global economies will grow beyond expectations in the second quarter of this year, while repeatedly emphasizing that inflation concerns cannot be prolonged. Inflation may occur, but it cannot continue for a long time.

He predicted, "Due to the expanded vaccination efforts, the global economy is expected to grow by about 6.5% this year, and inflation will temporarily rise in the U.S. and Europe." He believed that inflation could approach the central banks' target levels.

This means inflation could exceed the Federal Reserve's (Fed) target of 2%.

However, he argued it would not go beyond that. Economist Hanson said, "The causes of inflation are base effects and temporary factors resulting from the COVID-19 pandemic. We need to look at the fundamental trends."

Although volatility may increase due to base effects, he judged that there is no driving force to sustain continuous inflation.

He particularly expressed concern that the recent spread of variant COVID-19 could become a major obstacle to the U.S. economy. A research team at Columbia University Medical Center recently warned that the detection rate of variant COVID-19 is steadily increasing. If variant viruses that could weaken vaccine efficacy re-spread, the pace of the U.S. economic reopening may be limited.

He expected that this situation will ultimately form the basis for central banks in countries such as the U.S., Japan, and Europe to continue maintaining expansionary monetary policies.

This content was produced with the assistance of AI translation services.