• Video
  • Expect US Inflation to Go to 4% in 2025, Citi Says

Expect US Inflation to Go to 4% in 2025, Citi Says

Show Transcript
Bloomberg Apr 7 21:22 · 57.7k Views

Expect US Inflation to Go to 4% in 2025, Citi Says

Disclaimer: This content is for informational and educational purposes only and does not constitute a recommendation or endorsement of any specific investment or investment strategy. Read more

Transcript

  • 00:00 And I think the challenge at the moment is the market is processing the downside risks to economic growth.
  • 00:06 And so
  • 00:07 banks like ours are out there busy cutting their forecasts.
  • 00:10 You know, we kind of expected to see maybe another 3% year for global growth.
  • 00:14 Most people have taken anything from 1:00 to 2:00 percentage points off the
  • 00:18 US
  • 00:19 We're certainly at the nearer 2% end of that range, which is sort of skating dangerously close to recessionary territory.
  • 00:25 Lots of markets around the world, including obviously Europe, probably faces about a percentage point down crown from where we were to GDP.
  • 00:32 And you pull all of that together,
  • 00:34 you know, you're probably wiping out most, if not more than all of the 13% earnings growth you saw
  • 00:41 at the beginning of this year for U.S.
  • 00:42 markets.
  • 00:43 And Europe had been expecting 7%.
  • 00:45 You know, we've come out and said, look, we're looking pretty close to getting 0 growth out of these markets from an EPS perspective.
  • 00:51 Now, if you see the US going back into an earnings recessionary type environment, it's really hard even for markets like Europe who might be relatively better placed to avoid catching that cold, as we know from old.
  • 01:02 Yeah.
  • 01:03 I mean, Lucy, there's a million questions on actually, you know, there's a chatter of a global recession.
  • 01:07 But also, if you're the Fed right now, I don't know how you deal with it because I know there's a big pricing to cuts, but they probably have to hike and then cut to deal with inflation, then growth.
  • 01:15 Well, the Fed has got the hardest job of all the central banks, right?
  • 01:19 I think the prescription to your point is clear.
  • 01:21 In the rest of the world, you can aggressively cut into this because you're having such a bad growth shock and it's a deflationary impulse for everybody else.
  • 01:27 But for the Fed, to your point, you know, we're expecting to see inflation
  • 01:32 go from
  • 01:33 previously expecting 2% to being more like 4% this year for CPI, for PCA.
  • 01:38 Now that is a problem for the Fed.
  • 01:40 Now our view is still actually that they will focus on the growth problem, right.
  • 01:45 And so we think they're going to cut.
  • 01:46 Now markets are already suggesting 110 basis points of cuts from the Fed this year.
  • 01:51 We're at 125.
  • 01:53 So you can see that's why people are pushing into, into fixed income as an asset class that sort of,
  • 01:57 you know, where are the safe havens is another big question.
  • 02:00 We've just upgraded Treasury.
  • 02:01 So we've kind of gone long duration.
  • 02:03 And I think that's the the natural response that we're going to see as this continues and people try and find a floor here and look for what is being described as either the Fed put
  • 02:12 or the Trump put.