'Stagflation' fears haunt US markets despite Trump's pro-growth agenda
Stagflation has emerged as a possibility due to President Donald Trump's hard-line trade policies and stubborn inflation, which could pressure a range of assets and limit the Federal Reserve's ability to maneuver. The market may be underestimating stagflation risks, with economists warning that tariffs and deportations could fuel inflation and hurt growth. Fund managers' expectations for stagflation are rising, as they weigh the potential impact of Trump's policies on consumer demand and economic growth.
- The long-term consequences of a stagflation scenario would likely involve significant changes to monetary policy, fiscal policy, or even the very fabric of the US economy, necessitating a more fundamental reassessment of risk management strategies.
- How will policymakers navigate the complexities of trade wars, supply chain disruptions, and inflationary pressures in a way that does not inadvertently create a self-reinforcing cycle of economic instability?