There were signs that inflation in the U.S. was picking up in certain segments within the services industry even before the Federal Reserve decided to stop raising interest rates, says James Sweeney, the chief economist of Credit Suisse.
Inflation in the U.S. could climb to"surprisingly high" levels in the next two years if global growth holds up after the Federal Reserve stops raising interest rates, according to Credit Suisse.
The Fed last week kept interest rates unchanged and indicated that it may not raise rates at all this year. The central bank also lowered its forecast for U.S. economic growth and inflation, citing concerns about weaker Chinese and European economies. "This further stimulus by the Fed — if global growth picks up and the U.S. is okay — is likely to lead to some surprisingly high inflation numbers," he said.
Such a development could push the Fed to resume interest rate hikes, which will hurt markets and the economy if investors are caught off guard, the economist explained.
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