New crown pneumonia (CCP virus) outbreak in the past few weeks in Japan, South Korea, Taiwan and Vietnam and other major manufacturing economies in Asia, may once again impact the global supply chain, leading to an accelerated rise in inflation in the United States.
Richard Martin, executive director of management consulting firm IMA Asia, said Wednesday (19), with the world’s two largest economies, the United States, China, a surge in demand, driving the rapid rise in production prices in East Asian economies so far last year. However, any “glitches” in the global supply chain, such as the closure of key production sites across Asia, may lead to a significant rise in inflation, which will essentially affect prices in the United States and China. Vietnam has reportedly temporarily closed four industrial zones in the city of Bei Giang, while Taiwan’s semiconductor giant Hon Hai has plants in three of them.
Martin believes that the FED will have to raise interest rates at the end of this year, will be earlier than they originally expected. He pointed out that, excluding the epidemic crisis in Asian economies, the U.S. manufacturing sector will also allow inflation to accelerate the climb. U.S. President Joe Biden’s $2.25 trillion infrastructure case eventually passed, will improve manufacturing demand, and will very quickly push up prices.
The market has recently worried that accelerating inflation will prompt the U.S. Federal Reserve (FED) to raise interest rates early. Although the FED previously said that inflationary pressure is only a temporary phenomenon, will maintain an accommodative monetary policy. However, the minutes of the April Federal Reserve Board meeting released on Wednesday (19) hinted that it may be appropriate to start discussing adjustments to the bond-buying program at the upcoming meeting.
Recent Comments