U.S. inflation exceeded expectations, for the Federal Reserve Board early “water” pressure. Some hedge fund moguls warned that if the Federal Reserve hints that monetary easing will end later this year, U.S. stocks could plunge 20%.
Hedge fund Satori Fund founder Dan Niles said, the U.S. inflation surge, coupled with other global central banks have been canceled loose monetary policy, may prompt the Federal Reserve to cancel the easing policy early. However, Niles believes that if food prices, energy prices, housing prices continue to rise, the Federal Reserve will have no choice and may need to hint at slowing the pace of $120 billion in monthly bond purchases this summer.
Niles also pointed out that, including Canada and the United Kingdom and other economies around the world today, their central banks have indicated that they will withdraw from the easing of monetary policy implemented during the epidemic, indirectly forcing the Federal Reserve to accelerate action, the U.S. stock market is expected to appear 10% to 20% adjustment.
The Fed is currently buying $120 billion of bonds per month and has said it will continue to do so at this rate until substantial progress is made toward employment and inflation targets. Federal Reserve Chairman Jerome Powell has said that it will take some time to make substantial progress. However, the U.S. consumer price index rose 4.2% y/y in April, the largest increase in inflation since 2008.
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