Inflation has already peaked, but will still be above pre-Covid levels in 2023, said David Mann, chief economist for Asia-Pacific, Middle East and Africa at the Mastercard Institute for Economics.
“Inflation has peaked this year, but it will still be higher than we used to be before the pandemic next year,” Mann told CNBC.Squawk Box Asia” Friday.
He said it would take a few years to return to 2019 levels.
“We expect to ease back into the direction we were in in 2019 as we were still debating how many countries needed negative interest rates.”
Central banks around the world raised interest rates as recently as November in response to rising inflation.
They include central banks from the G10 countries — such as the US Federal Reserve, Bank of England, and Reserve Bank of Australia — as well as emerging market banks, such as Indonesia, Thailand, Malaysia, and the Philippines, Reuters reported.
The Fed will hold its December policy meeting this week, which is where it is It is expected to raise interest rates by 50 basis points. The central bank has raised interest rates by 375 basis points so far this year.
“Inflation has become that big challenge. It’s gone up and it’s stayed very high,” Mann said. But he warned that it would be risky if central banks ended up raising interest rates more than they needed to.
“The challenge is if you lose your orientation as to where heaven and earth are, you’re not quite sure where you want to end up,” Mann said.
He added that it would be a “serious scenario” if central banks end up “a little too far and then need to back off relatively quickly”.
consumer expenses
Mann said that despite rising inflation, American consumers are still willing to engage in discretionary spending in areas such as travel.
Mann said the U.S. travel recovery is strong and people are still choosing to spend on experiences over material goods.
He added that they are frugal in their spending on necessities in order to be able to afford the non-essential.
“There is something in the back of people’s minds that worries them that although it’s not very likely, it could still be possible.” [Covid] restrictions [will] He said.
More Stories
JPMorgan expects the Fed to cut its benchmark interest rate by 100 basis points this year
Shares of AI chip giant Nvidia fall despite record $30 billion in sales
Nasdaq falls as investors await Nvidia earnings