KPMG: The Federal Reserve is expected to be forced to raise interest rates in the second half of the year

Mars Finance news. On April 3, the Iran war has intensified the global risk of stagflation and economic stagnation. Diana Swonk, chief economist at KPMG, said that once a stagflation scenario takes hold, “a deep recession” may be the only way out. Stagflation is a worrisome economic situation characterized by persistently high inflation and weak economic growth. Swonk said: “The Strait of Hormuz blockade and the resulting surge in oil prices have long since gone beyond the scope of a mere oil shock.” She believes the shock caused by the current situation is more severe than in any of the historical oil crises. This directly drives up various costs, which in turn leads to higher prices, while businesses’ willingness to hire drops significantly, and the job market is affected. With multiple factors intertwined, the risk of stagflation continues to heat up. Swonk’s view is consistent with that of market investors. She explained: “The likelihood of the Federal Reserve raising interest rates in the second half of the year is rising. I expect the Federal Reserve will be forced to take this action, and other countries’ central banks will follow.” (Jinshi)