Moody's Senior Researcher: "Inflation Pressure Approaching... No Safe Haven"

"The Market Is Too Optimistic About Interest Rate Hike Concerns"
"Sharp Market Fluctuations Possible... Short-Term Investment May Be Difficult"

[Image source=EPA Yonhap News]

[Asia Economy Reporter Hyunwoo Lee] It has been reported that a senior researcher at the international credit rating agency Moody's has warned investors that inflationary pressures on the global economy are imminent. If inflation accelerates rapidly, central banks around the world may abandon the low-interest-rate policy that has supported the liquidity-driven market and resort to raising interest rates, raising concerns in the investment industry about increasing inflationary pressures.

According to CNBC on the 7th (local time), Mark Zandi, a senior researcher at Moody's, said in an interview with CNBC, "Inflationary pressures will develop very quickly," and added, "I think there is no safe haven." Zandi warned that the market is too optimistic about interest rates, stating, "Inflation is right around the corner."

He particularly pointed out that Wall Street is underestimating the seriousness of the return of inflation. Regarding the recent recovery trend of the U.S. economy, which was hit by COVID-19, Zandi said, "Growth will be very strong," and explained, "Investors need to get used to the sharp market fluctuations that will follow."

He continued, "Even stocks related to economic recovery will not provide investors with a safe haven in an inflationary environment," adding, "It is a broad and macro force that affects all sectors of the market." He also expressed concern, saying, "Valuations are too high by historical standards," and "It will be a market too difficult for investors focused on the short-term outlook to navigate."

In the international financial markets, including the United States, concerns about inflation have been raised this year as vaccination rates have increased and the spread of COVID-19 has slowed. According to The Wall Street Journal (WSJ), on the 4th, Jerome Powell, Chair of the U.S. Federal Reserve (Fed), stated at a job-related virtual forum hosted by WSJ that "we are still far from the goals of maximum employment and average 2% inflation," indicating his intention to maintain the current monetary policy, but the financial market's inflation concerns remain.

WSJ reported that if inflation accelerates rapidly, central banks around the world are expected to raise policy interest rates or reduce the liquidity supplied to the market to curb price increases, raising concerns about a sharp decline in the stock market.

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