• Billionaire Chamath Palihapitiya predicts that sticky inflation and high interest rates will remain until the end of the decade.
• According to Palihapitiya, China’s effort to stimulate its economy will prevent a hard landing or sharp economic downturn.
• The Federal Reserve may have to impose additional rate hikes if China decides to introduce further stimulus packages.
Sticky Inflation and High Interest Rates Predicted by Chamath Palihapitiya
Billionaire venture capitalist Chamath Palihapitiya believes that persistent inflation and high interest rates are here to stay, at least until the end of the decade. In a new episode of the All-In Podcast, he claims that sticky inflation will likely force the Federal Reserve to keep interest rates high in the coming years.
China Stimulation Could Prevent Hard Landing
According to Palihapitiya, the government’s effort to control inflation via a hard landing or a sharp economic downturn will likely not yield the expected results now that China has made moves to stimulate its economy. Last week, China cut three policy rates as its government considers issuing $140 billion in bonds to spur economic activity.
Rates Will Likely Remain Sticky
Palihapitiya says that if China does decide on further stimulus packages, then it is likely that the Federal Reserve will have no choice but impose additional rate hikes in order to keep inflation under control. He states: “I think what Powell was forecasting is that if China starts to basically turn on the money printer and go through a huge spate of quantitative easing, it’s going to just inflate everything because they’re just a critical artery to the world economy and so you just have to get prepared for rates just being sticky and inflation being sticky, and I think that’s probably the most reasonable base case for the rest of the decade.”
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